Hangzhou Hikvision Digital Technology Co., Ltd.
2022 Half Year Report
January to June 2022
August 13th 2022
Hikvision 2022 Half Year Report
Section I Important Notes, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior management of
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the “Company”) hereby
guarantee that the information presented in this report shall be together be wholly liable for the
truthfulness, accuracy and completeness of its contents and free of any false records, misleading
statements or material omissions, and will undertake individual and joint legal liabilities.
Chen Zongnian, the Company's legal representative, Jin Yan, the person in charge of the
accounting work, and Zhan Junhua, the person in charge of accounting department (accounting
supervisor) hereby declare and warrant that the financial statements in this half year report are
authentic, accurate and complete.
All directors of the Company have attended the board meeting to review this report.
The half year proposal of profit distribution or share distribution from capital reserve passed upon
deliberation at the meeting of the Board of Directors (not applicable): The Company will not
distribute cash dividend, distribute bonus shares, or distribute shares from capital reserve during the
current reporting period.
Note:
This document is a translated version of the Chinese version 2022 Half Year Report (“2022 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2022 Half Year Report may be obtained at www.cninfo.com.cn.
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Hikvision 2022 Half Year Report
Please read the full half year report and pay particular attention to the following risk factors:
(1) Global COVID-19 epidemic risk: The global threat of COVID-19 epidemic is difficult to subside, and
epidemic prevention has a direct impact on the economic development. The Company will pay close
attention to the changes in the epidemic and respond in a timely manner. If the epidemic causes the
domestic and foreign economic or business environment to deteriorate, the adverse impact on the
Company's business will increase accordingly.
(2) Economic downside risk: The current domestic and foreign economic environment is complex and
volatile. The domestic macroeconomic growth has entered a new stage of medium-low growth. If demand
recovers slowly and investment growth is sluggish, it will bring adverse impacts on the Company's
business development.
(3) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and
the economic and social impact caused by local wars and confrontations is huge. The Company's
operations in the countries and regions where the conflict is located may be adversely affected.
(4) Global business risks: The Company operates in more than 150 countries and regions around the world.
The potential risks such as the trend of deglobalization, economic fluctuation and debt default around the
world are difficult to eliminate, so the Company’ overseas business operations may be adversely affected.
(5) Supply chain risks: The global supply system is suffering from a variety of adverse impacts, such as
volatile commodity prices, restrictions on global production and logistic, and intensifying competition.
The Company has been making efforts to enhance management for our supply chain and optimize
inventory adjustment and control. However, if systemic risks arise in the global supply chain, the stability
of the Company's supply chain may be adversely affected
(6) Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The laws
and regulations of various regions that need to be complied with for business activities are very
complicated. China and overseas countries have stricter data supervision and business compliance
requirements. If the Company's legal compliance capabilities cannot keep up with the situation, it will
bring adverse impacts on the Company's operations.
(7) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions
with different currencies, mainly settled in non-RMB currency. Exchange rate fluctuations could have
impact on foreign exchange exposures arising out of sales, procurement and financing, which could likely
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Hikvision 2022 Half Year Report
affect the profitability level of the Company.
(8) Risk of technology upgrade: Technologies such as IoT perception, artificial intelligence (AI) and big
data are developing rapidly. If the Company is unable to closely track and adapt to the changes in cutting-
edge technologies, or fails to quickly realize business innovation, the risk of uncertainty in the Company's
future development will increase.
(9) Receivable risk caused by the decline in customers’ ability to pay: The enterprises’ financial liquidity
is negatively impacted by the macroeconomic downturn. The Company has accumulated a certain amount
of cash reserves due to the stable operation in history, and the financing cost is low. If the liquidity risk
increases, it will adversely affect the Company’s account receivables.
(10) Risk of internal management: The continual expansion of business scale, the continuous increase of
new products and new businesses, and the continuous growth in total number of employees lead to a
significant rise of internal management complexity, which brings challenges to the Company’s
management and higher requirements on the Company management system. The Company’s sustainable
development will face certain risks if the management level fails to proportionally address the Company’s
business expansion.
(11) Risk of cybersecurity: The Company has always attached great importance and taken active measures
to enhance cybersecurity performance of our products and systems. However, in the context of internet
applications, there is still a possibility of deliberate attempts, including computer viruses, malicious
software, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.
(12) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of
R&D investment, and produces considerable technical milestones. At the same time, the Company
implements well-organized intellectual property right (IPR) protection measures. However, the risk of
intellectual property disputes and the risk of intellectual property rights violations still exist.
The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential
investment risks.
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Hikvision 2022 Half Year Report
CONTENTS
Section I Important Notes, Contents and Definitions ...................................................................................... 1
Section II Corporate Profile & Key Financial Data......................................................................................... 7
Section III Management Discussion and Analysis ......................................................................................... 11
Section IV Corporate Governance .................................................................................................................. 29
Section V Environmental and Social Responsibility ...................................................................................... 32
Section VI Significant Events ........................................................................................................................... 33
Section VII Changes in Shares and Information about Shareholders ......................................................... 49
Section VIII Information of Preferred Shares ............................................................................................... 61
Section IX Bonds ............................................................................................................................................... 62
Section X Financial Report .............................................................................................................................. 63
Section XI Documents Available for Reference ........................................................................................... 195
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Hikvision 2022 Half Year Report
Definitions
Term Definition
Reporting Period From January 1st 2022 to June 30th 2022
Articles of Association Articles of Associations for Hangzhou Hikvision Digital Technology Co., Ltd
Hikvision, our Company, the
Hangzhou Hikvision Digital Technology Co., Ltd
Company
CETC China Electronics Technology Group Ltd., the actual controller of the Company
CETHIK CETHIK Group Co., Ltd., the controlling shareholder of the Company
EZVIZ, EZVIZ Network, Smart Hangzhou EZVIZ Network Co., Ltd.(According to the context, also refers to the corresponding
Home business)
HikRobot, Robotic business Hangzhou Hikrobot Co., Ltd. (According to the context, also refers to the corresponding
business)
HikAuto, Auto electronics Hangzhou HikAuto Technology Co., Ltd. (According to the context, also refers to the
business corresponding business)
HikMicro, Micro Sensing, Hangzhou Hikmicro Sensing Technology Co., Ltd. (According to the context, also refers to the
Thermal imaging business corresponding business)
HikSemi, HikStorage, Storage Wuhan Hikstorage Technology Co., Ltd. (According to the context, also refers to the
business corresponding business)
HikImaging Hangzhou Hikimaging Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikFire Hangzhou Hikfire Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikRayin, Rayin, Hangzhou Rayin Technology Co,. Ltd. (According to the context, also refers to the corresponding
HikSecurityCheck business)
Hangzhou Innovation Industrial Located in Hangzhou, Zhejiang Province, the planned use is for R&D, office space and
Park supporting facilities.
Chengdu Science and Technology Located in Chengdu, Sichuan Province, the planned use is for R&D, office space and supporting
Park facilities.
Xi’an Science and Technology Located in Xi'an, Shaanxi Province, the planned use is for R&D, office space and supporting
Park facilities.
Shijiazhuang Science and Located in Shijiazhuang City, Hebei Province, the planned use is R&D, office space and
Technology Park supporting facilities.
Located in Hangzhou, Zhejiang Province, the planned use is for production factories, warehouses,
Security Industrial Base (Tonglu)
logistic centers and supporting facilities.
Wuhan Intelligence Industrial Located in Wuhan, Hubei Province, the planned use is for production plants, warehouses and
Park supporting facilities.
Zhengzhou Science and Located in Zhengzhou, Henan Province, the planned use is R&D, office space and supporting
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Hikvision 2022 Half Year Report
Term Definition
Technology Park facilities, etc.
EZVIZ smart home product industrial park, located in Hangzhou, Zhejiang Province, is planned
EZVIZ Industrial Park
to be used for R&D, office space and supporting facilities of Hangzhou EZVIZ Network Co., Ltd.
A long investment cycle, business prospects uncertain, has the high risk and uncertainty, in need
for direct or indirect investment in exploration, in order for the Company to timely enter into new
areas of business. Initially disclosed in Announcement about Management Measures for Core
Innovative Business Staff Investment in Innovative Business (《核心员工跟投创新业务管理办法》)
(www.cninfo.com.cn).
In this report, innovative business also refers to EZVIZ, HikRobot, HikAuto, HikMicro,
HikStorage, HikImaging, HikFire, HikRayin and their related products.
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Hikvision 2022 Half Year Report
Section II Corporate Profile & Key Financial Data
I. Corporate information
Stock abbreviation HIKVISION Stock code 002415
Stock exchange where the shares of the Company
Shenzhen Stock Exchange
are listed
Name of the Company in Chinese 杭州海康威视数字技术股份有限公司
Abbr. of the Company name in Chinese (if any) 海康威视
Name of the Company in English (if any) HANGZHOU HIKVISION DIGITAL TECHNOLOGY CO., LTD
Abbr. of the Company name in English (if any) HIKVISION
Legal representative Chen Zongnian
II. Contacts and contact information
Board Secretary Securities Affairs Representative
Name Huang Fanghong
No. 518 WuLianWang Street, Binjiang
Address
District, Hangzhou
Tel. 0571-88075998; 0571-89710492
Fax 0571-89986895
E-mail hikvision@hikvision.com
III. Other relevant information
1. Company’s contact information
Whether there is any change in the Company’s registered address, office address, zip code, company website or
company email address during the reporting period.
□Applicable √ Inapplicable
There is no change in the Company’s registered address, office address, zip code, company website or company
email address during the reporting period. Please refer to 2021 Annual Report for details.
2. Information disclosure and place of the report
Whether there is alteration in information disclosure and place of the report during the current reporting period.
√ Applicable □ Inapplicable
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Hikvision 2022 Half Year Report
Securities Times, China Securities Journal, ShangHai
Newspaper designated by the Company for information disclosure
Securities News
Website for release of the Half Year Report www.cninfo.com.cn
Place where the Half Year Report is available for inspection Office of the Board of Directors of the Company
3. Other relevant information
Whether other relevant information has changed during the current reporting period
□ Applicable √ Not applicable
IV. Key accounting data and financial indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
□Yes √ No
Unit: RMB
First half year of 2022 First half year of 2021 YoY Change (%)
Revenue (RMB) 37,257,516,590.62 33,902,098,368.10 9.90%
Net profit attributable to shareholders of the
5,759,254,775.26 6,481,424,653.39 -11.14%
Company (RMB)
Net profit attributable to shareholders of the
Company excluding non-recurring gains and 5,645,859,017.51 6,221,476,627.98 -9.25%
losses (RMB)
Net cash flows from operating activities (RMB) -2,158,492,209.08 1,962,853,772.15 -209.97%
Basic earnings per share (RMB/share) 0.608 0.695 -12.52%
Diluted earnings per share (RMB/share) 0.608 0.695 -12.52%
Weighted average ROE 8.81% 11.62% -2.81%
Change(%) between
On June 30th 2022 On December 31st 2021 December 31st 2021 and June
30th 2022
Total assets (RMB) 104,894,333,859.54 103,864,543,195.18 0.99%
Net assets attributable to shareholders of the
62,013,808,608.79 63,460,886,665.26 -2.28%
Company (RMB)
The total share capital of the Company as of the previous trading day of the report disclosure:
The total share capital of the Company as of the previous trading day of the annual report disclosure (share) 9,433,208,719
Fully diluted earnings per share (RMB/share) calculated with the latest share capital 0.6105
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Hikvision 2022 Half Year Report
V. Differences in accounting data between domestic and overseas accounting standards
1. Difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of International
Financial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.
2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards
□ Applicable √ Inapplicable
There is no difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards in the reporting period.
3. Explanation of the differences in accounting data under domestic and overseas accounting standards
□ Applicable √ Inapplicable
VI. Items and amounts of non-recurring gains and losses
√ Applicable □ Inapplicable
Unit：RMB
Item Amount
Profit or loss from disposal of non-current assets (including the write-off for the impairment provision
-11,313,272.36
of assets)
The government subsidies included in the current profits and losses (excluding the government
subsidy closely related to regular course of business of the Company and government subsidy based 161,588,740.80
on standard quota or quantitative continuous application according to the state industrial policy.)
Investment income from disposal of subsidiaries, other business units and other non-current financial
4,635,870.42
assets
Profits and losses attributed to change in fair value for held-for-trading financial assets and held-for-
trading financial liabilities; and investment income from disposal of held-for-trading financial assets,
-35,838,000.40
held-for-trading financial liabilities and available-for-sale financial assets, excluding the effective
hedging business related to the regular business operation of the Company.
Other non-operating income and expenditures except the items mentioned above 28,455,075.15
Less: Impact of income tax 16,882,070.40
Impact of the minority interests (after tax) 17,250,585.46
Total 113,395,757.75
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Hikvision 2022 Half Year Report
Explain the reasons if the Company classifies an item as a non-recurring gain/loss according to the definition in the
, or classifies any non-recurring gain/loss item mentioned in the
aforementioned note as a recurrent gain/loss item.
□ Applicable √ Inapplicable
In the reporting period, the Company did not classify an item as a non-recurring gain/loss according to the
definition in the into a recurrent gain/loss item.
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Hikvision 2022 Half Year Report
Section III Management Discussion and Analysis
I. The principal business of the Company during the reporting period
There was no significant change for the principal business of the Company during the current reporting period.
Please refer to 2021 Annual Report for details.
II. Core competitiveness analysis
There was no significant change in the Company's core competitiveness during the current reporting period. For
details, Please refer to 2021 Annual Report.
III. Core business analysis
Whether consistent with the Company’s core business disclosure during the current reporting period
√Yes □ No
In the first half year of 2022, the severe situation of epidemic prevention and control brought continuous challenges
to the domestic economy. Meanwhile, the trend of de-globalization has intensified and conflicts broke out in some
countries and regions. The changes in the political and economic situation between countries and/or regions have
brought greater uncertainty to business operations. In the context of uncertain business environment, the Company
has firmed its confidence and has always focused on the growth of its own capabilities. We endeavored to promote
robust development by harnessing the comparative advantages in R&D innovation, industry understanding,
marketing network, manufacturing, warehousing and logistics, etc.
During the reporting period, the Company achieved revenue of RMB 37.26 billion, with year over year growth of
9.90%; the net profits attributable to shareholders of the Company was RMB 5.76 billion, a decrease of 11.14%
over the same period of the previous year.
(1) Increase inputs in R&D and focus on technological innovation
During the reporting period, the Company continued to focus on technological innovation, enriched product lines,
built system capabilities, and consolidated the foundation for long-term sustainable development. In the first half
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Hikvision 2022 Half Year Report
year of 2022, the Company invested RMB 4.68 billion in R&D, with year over year growth of 20.56%. The
Company will continue to maintain investment in R&D, continue to consolidate the foundation of intelligent
technology, continue to enrich the types of intelligent devices, and devote great attention to exploring the effect of
intelligent applications, so as to promote the Company's steady development in the field of AIoT.
(2) Adhere to stable operation and cope with external challenges
During the reporting period, the domestic market was challenged by the epidemic and the overseas market
encountered negative public opinion, which impacted the Company's stable operation. In the face of the epidemic,
the Company was diligent and pragmatic, overcame difficulties, quickly followed up with market demand, and
strived to ensure the steady development of its businesses. In the face of uncertainties brought about by changes in
the external political and economic situation, the Company maintained smooth communication with all parties in
order to eliminate misunderstandings, maintained the high inventory strategy, and ensured the steady progress of
the businesses.
(3) Continuously improve operational capabilities and optimize internal management
During the reporting period, the Company continued to promote business process reform, promote the integration
and mutual improvement of organizational systems, improve operational capabilities and operational efficiency,
and give full play to the advantages of economies of scale. The Company continuously strengthens compliance
construction, keeps pace with the times, promotes the optimization and improvement of the business system, and
enhances organizational effectiveness.
(4) Rapidly develop innovative businesses and open up new market patterns
During the reporting period, the revenue of innovative businesses reached RMB 7.01 billion, with year over year
growth of 25.62%, accounting for 18.81% of the total revenue. The innovative businesses have good momentum of
development, constantly injecting new impetus into the Company's long-term sustainable development. EZVIZ’s
initial public offering of shares and its application for listing on the Shanghai Stock Exchange STAR Market (SSE
STAR Market) was reviewed and approved by the SSE STAR Market's Listing Committee, HikRobot's spin-off
and listing plan was reviewed and approved by the Company’s Board of Directors, and the spin-off of innovative
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Hikvision 2022 Half Year Report
business subsidiaries were progressing steadily and orderly.
YoY changes in key financial data
Unit: RMB
First half year of First half year of
YoY (%) Note of Change
2022 2021
Market demand has grown steadily, and
Revenue 37,257,516,590.62 33,902,098,368.10 9.90%
revenue has grown accordingly
Increase in accordance with revenue's
Cost of sales and services 21,182,955,700.93 18,205,195,764.46 16.36%
growth
Continue to increase investment in domestic
Selling expenses 4,536,589,939.10 4,190,678,349.80 8.25%
and overseas marketing networks
Due to the expansion of the Company's
Administrative expenses 1,200,010,815.48 880,577,747.56 36.28% business scale and increased number of
employees
Affected by fluctuation in foreign exchange
Financial expenses -785,465,257.61 -122,524,438.07 -541.07% rate, increase in foreign currency exchange
gains
Differences in filing and payment of income
Income Tax Expenses 628,419,906.49 427,530,365.26 46.99%
tax in previous reporting years
R&D investments 4,675,061,688.81 3,877,769,884.09 20.56% Continue to increase R&D investment
Net cash flows from
-2,158,492,209.08 1,962,853,772.15 -209.97% Increase in inventory purchases
Operating Activities
Net cash flows from Increase in long-term asset investment
-1,697,236,516.09 -1,093,875,260.68 -55.16%
Investment Activities expenditures
Net cash flows from
-3,061,978,055.06 -8,179,553,539.73 62.57% Increase in cash received from investments
Financing Activities
Net decrease in cash and
-6,845,043,236.57 -7,384,873,758.46 7.31% Increase in cash received from investments
cash equivalents
Whether there is significant change in Company’s profit structure or profit source during the reporting period
□ Applicable √ Inapplicable
There is no such case during the reporting period.
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Hikvision 2022 Half Year Report
Revenue structure
Unit：RMB
First half year of 2022 First half year of 2021
YoY Change
Proportion to total Proportion to total
Amount Amount (%)
revenue revenue
Total revenue 37,257,516,590.62 100.00% 33,902,098,368.10 100.00% 9.90%
Classified by industry
AIoT products and services 37,257,516,590.62 100.00% 33,902,098,368.10 100.00% 9.90%
Classified by product/business
Products and services for
29,365,919,626.68 78.82% 27,912,531,793.59 82.33% 5.21%
main business1
Constructions for main
883,860,678.27 2.37% 411,198,176.84 1.21% 114.95%
business
Subtotal 30,249,780,304.95 81.19% 28,323,729,970.43 83.54% 6.80%
Smart home business 1,959,836,601.63 5.26% 1,871,108,774.85 5.52% 4.74%
Robotic business 1,766,179,532.22 4.74% 1,220,189,435.48 3.60% 44.75%
Thermal imaging business 1,360,474,051.98 3.65% 1,029,049,652.47 3.04% 32.21%
Auto electronics business 823,757,230.56 2.21% 551,986,917.97 1.63% 49.23%
Storage business 728,160,403.93 1.95% 680,185,514.54 2.01% 7.05%
Other innovative businesses2 369,328,465.35 1.00% 225,848,102.36 0.66% 63.53%
Subtotal 7,007,736,285.67 18.81% 5,578,368,397.67 16.46% 25.62%
Classified by region
Domestic 25,544,764,018.60 68.56% 24,434,618,189.74 72.07% 4.54%
Overseas 11,712,752,572.02 31.44% 9,467,480,178.36 27.93% 23.72%
Revenue structure3
Unit: RMB 100mn
First half year of First half year of YoY Change
2022 2021 (%)
PBG 69.75 70.74 -1.40%
Domestic main
EBG 68.31 66.59 2.58%
business
SMBG 62.86 60.46 3.97%
1 Main business refers to the business parts other than innovative businesses
2 Other innovative businesses include the products and services of the innovative business subsidiaries, such as HikFire, Rayin and
HikImaging. Same below.
3 The revenue from domestic main business and overseas main business only include Hikvision's main business's products and
services, excluding revenue from innovative businesses.
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Hikvision 2022 Half Year Report
First half year of First half year of YoY Change
2022 2021 (%)
Other products and services for main business 4.72 3.98 18.59%
Overseas main
Products and services for main business 96.86 81.47 18.89%
business
Innovative businesses4 70.08 55.78 25.62%
Total 372.58 339.02 9.90%
Industries, products or regions accounting for more than 10% of the Company’s revenue or operating profit
√ Applicable □ Inapplicable
Unit: RMB
YoY Change YoY Change (%) YoY Change
Cost of sales and Gross
Revenue (%) of of cost of sales (%) of gross
services margin
revenue and services margin
Classified by industry
AIoT products and
37,257,516,590.62 21,182,955,700.93 43.14% 9.90% 16.36% -3.16%
services
Classified by product/business
Products and services
29,365,919,626.68 16,266,758,741.00 44.61% 5.21% 10.97% -2.88%
for main business
Constructions for
883,860,678.27 728,908,400.81 17.53% 114.95% 149.76% -11.50%
main business
Innovative businesses 7,007,736,285.67 4,187,288,559.12 40.25% 25.62% 28.63% -1.39%
Subtotal 37,257,516,590.62 21,182,955,700.93 43.14% 9.90% 16.36% -3.16%
Classified by region
Domestic 25,544,764,018.60 14,639,769,948.64 42.69% 4.54% 10.47% -3.08%
Overseas 11,712,752,572.02 6,543,185,752.29 44.14% 23.72% 32.09% -3.54%
When the statistical caliber of the Company's major business data is adjusted during the reporting period, the
Company's major business data would be adjusted according to the end of the reporting period in the most recent
period.
□Applicable √ Inapplicable
4 Innovative businesses’ revenue includes its domestic and overseas revenue.
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Hikvision 2022 Half Year Report
Cost of sales and services structure
Classified by industry
Unit: RMB
First half year of 2022 First half year of 2021
Proportion to Proportion to YoY
Industry Item
Amount cost of sales Amount cost of sales Change (%)
and services and services
AIoT products and Cost of sales and
21,182,955,700.93 100.00% 18,205,195,764.46 100.00% 16.36%
services services
Classified by product/business
Unit: RMB
First half year of 2022 First half year of 2021
Proportion to Proportion to YoY
Product/business Item
Amount cost of sales Amount cost of sales Change (%)
and services and services
Products and Services Cost of sales and
16,266,758,741.00 76.79% 14,658,060,589.78 80.52% 10.97%
for main business services
Constructions for main Cost of sales and
728,908,400.81 3.44% 291,842,825.70 1.60% 149.76%
business services
Cost of sales and
Innovative businesses 4,187,288,559.12 19.77% 3,255,292,348.98 17.88% 28.63%
services
Cost of sales and
Subtotal 21,182,955,700.93 100.00% 18,205,195,764.46 100.00% 16.36%
services
Explanations on relevant data changed for more than 30% on a year-over-year base
□Applicable √ Inapplicable
IV. Non-core business analysis
□Applicable √ Inapplicable
V. Analysis of assets and liabilities
1. Material changes of asset items
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Hikvision 2022 Half Year Report
Unit：RMB
June 30th 2022 December 31st 2021 Change between
st
Percentage Percentage December 31
Note of significant change
Amount to total Amount to total 2021 and June
assets assets 30th 2022
Cash dividend distributions
Cash and bank
28,026,753,554.36 26.72% 34,721,870,931.36 33.43% -6.71% lead to a decrease in cash and
balances
bank balances
Accounts
29,113,163,447.64 27.75% 26,174,773,100.42 25.20% 2.55% Due to the increase in revenue
receivable
Contract assets 1,351,087,065.82 1.29% 1,411,372,624.91 1.36% -0.07% No significant change
Expansion of production and
Inventories 20,675,229,472.10 19.71% 17,974,112,407.60 17.31% 2.40% sales scale led to increased
procurement and stocking
Long-term Increase in investment income
equity 1,112,866,990.60 1.06% 982,165,546.45 0.95% 0.11% and other changes in equity in
investment associates and joint ventures
Security Industrial Base
Fixed assets 7,756,708,670.69 7.39% 6,695,590,671.27 6.45% 0.94% (Tonglu) Phase II continued
project transferred to fixed
assets in construction
Increase
Construction in investments on Science and
2,845,209,423.58 2.71% 2,323,336,098.68 2.24% 0.47%
process Technology Parks in various
locations
Right-of-use
571,513,353.19 0.54% 566,393,672.75 0.55% -0.01%
assets No significant change
Lease liabilities 361,747,620.12 0.34% 317,951,879.21 0.31% 0.03%
Short-term Increase in demands for short-
4,588,003,450.26 4.37% 4,074,962,469.97 3.92% 0.45%
borrowings term working capital
Contract
2,385,309,266.27 2.27% 2,580,894,226.59 2.48% -0.21% No significant change
liabilities
Long-term
4,730,784,322.12 4.51% 3,284,371,642.52 3.16% 1.35%
borrorwings
Increase in demands for long-
term working capital
Non-current
liabilities due 672,339,752.76 0.64% 596,915,360.58 0.57% 0.07%
within one year
17
Hikvision 2022 Half Year Report
2. Main overseas assets
□ Applicable √ Inapplicable
18
Hikvision 2022 Half Year Report
3. Assets and liabilities measured at fair value
√ Applicable □ Inapplicable
Unit: RMB
Profit or loss from Difference on Provision for Purchased
Sales
change in fair value translation of financial decline in value amount
Item Opening balance during the Other changes Closing balance
during the current statements dominated in during the current during the
period
reporting period foreign currency reporting period period
Financial assets
Derivative financial assets 34,320,010.83 13,688,362.53 27,107.00 48,035,480.36
Other non-current financial assets 438,724,172.22 -26,448,715.78 -29,000,000.00 383,275,456.44
Receivables for financing 1,316,035,122.06 -16,448,897.26 1,299,586,224.80
Subtotal of financial assets 1,789,079,305.11 -12,760,353.25 27,107.00 -45,448,897.26 1,730,897,161.60
Financial Liabilities 4,062,317.57 -105,701,739.57 6,201.76 109,770,258.90
Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period:
□ Yes √ No
4. Assets right restrictions as of the end of reporting period
Unit: RMB
Item Closing book value (RMB) Reasons for being restricted
Cash and bank balance 267,852,361.73 Various cash deposits and other restricted funds
Notes receivable 535,994,308.24 Endorsed to suppliers
Accounts receivable 279,555,212.04 Pledge for long-term borrowings
Contract assets 115,346,377.65 Pledge for long-term borrowings
19
Hikvision 2022 Half Year Report
Item Closing book value (RMB) Reasons for being restricted
Intangible assets 85,551,551.85 Pledge for long-term borrowings
Other non-current assets 1,667,505,427.25 Pledge for long-term borrowings
Right-of-use assets 13,343,562.59 Fixed assets leased in by finance lease
Total 2,965,148,801.35
VI. Analysis of investments
1. Overview
√Applicable □ Inapplicable
Investment during the first half year of 2022 (RMB) Investment during the first half year of 2021 (RMB) YoY (%)
2,343,440,503.77 1,097,198,077.60 113.58%
2. Significant equity investment during the current reporting period
□Applicable √ Inapplicable
3. Significant non-equity investment during the current reporting period
√ Applicable □ Inapplicable
20
Hikvision 2022 Half Year Report
Unit: RMB
Fixed Cumulative amount Reasons for not
Investment during Disclosure
Invest assets Project of investment by the Project reaching planned Disclosure Index (if
Project name the current reporting Source of funds Date (if
method investment industry end of the current schedule progress and applicable)
period applicable)
or not reporting period expected benefits
Announcement on
Chengdu Science AIoT Investment and Construction
Self- September
and Technology YES products and 176,292,467.96 1,072,579,958.05 Self-fund 75.59% None of Chengdu Science and
built 23rd 2017
Park Project services Technology Park Project in
Chengdu (No. 2017-033)
Announcement on
Hangzhou AIoT Investment and Construction
Self- September
Innovation YES products and 115,034,429.06 508,345,211.22 Specific loan 70.48% None of Hangzhou Innovation
built 23rd 2017
Industrial Park services Industrial Park Project in
Hangzhou (No. 2017-034)
Announcement on the
Security Industrial investment and
Base (Tonglu) establishment of a wholly-
AIoT
Phase II Self- October 16th owned subsidiary in Tonglu
YES products and 185,607,325.35 576,309,567.09 Self-fund 100.00% None
Continued built 2014 and the new Hikvision
services
Construction Security Industrial Base
Project (Tonglu) project (No. 2014-
044)
Announcement on
Xi’an Science AIoT Investment and Construction
Self- September
and Technology YES products and 128,086,229.18 309,095,556.39 Self-fund 13.57% None of Xi’an Science and
built 23rd 2017
Park Project services Technology Park in Xi’an
(No. 2017-031)
21
Hikvision 2022 Half Year Report
Fixed Cumulative amount Reasons for not
Investment during Disclosure
Invest assets Project of investment by the Project reaching planned Disclosure Index (if
Project name the current reporting Source of funds Date (if
method investment industry end of the current schedule progress and applicable)
period applicable)
or not reporting period expected benefits
EZVIZ Industrial
Base Self- Self-fund
YES Smart home 88,292,568.12 183,614,740.45 24.24% None - -
(infrastructure built /specific loan
part)
Announcement on
Shijiazhuang Investment and Construction
AIoT
Science and Self- March 22nd of Shijiazhuang Science and
YES products and 80,920,614.13 181,105,254.34 Self-fund 20.17% None
Technology Park built 2018 Technology Park in
services
Project Shijiazhuang (No. 2018-
016)
Security
AIoT
Industrial Base Self-
YES products and 92,787,002.54 141,555,908.49 Self-fund 18.38% None - -
(Tonglu) Phase built
services
III
Zhengzhou
AIoT
Science and Self-
YES products and 17,053,989.97 59,083,442.79 Self-fund 12.18% None - -
Technology built
services
Park Project
Announcement on
Wuhan
AIoT Investment and Construction
Intelligence Self- September 2
YES products and 106,435,935.98 128,041,076.47 Self-fund 5.36% None of Wuhan Intelligence
Industrial Park built 3rd 2017
services Industrial Park in Wuhan
Project
(No. 2017-036)
Total -- -- -- 990,510,562.29 3,159,730,715.29 -- -- -- -- --
22
Hikvision 2022 Half Year Report
Note 1: In accordance with the Company's Authorization Management System, EZVIZ Industrial Park, Security Industrial Base (Tonglu) Phase III Project and
Zhengzhou Science and Technology Park Project were approved by the chairman of the Board of Directors.
Note 2: In accordance with the Company's Authorization Management System, the increased investment in the Chengdu Science and Technology Park Project and the
Xi'an Science and Technology Park Project were approved by the Strategy Committee of the Board of Directors.
4. Financial asset investment
4.1 Securities Investments
□ Applicable √ Inapplicable
There no such case in the reporting period.
4.2 Derivatives Investments
√ Applicable □ Inapplicable
Unit: 0,000 RMB
Initial Purchased Sold Proportion of closing
Operation Whether Actual gain or
Whether Type of investment Opening amount amount Impairment Closing investment amount to
party of related Termination loss during the
Related derivatives amount of Initial date investment during the during the provisions investment the Company’s net
derivatives transacti date reporting
party investment derivatives amount reporting reporting (if any) amount assets at the end of the
investment on period
investment period period reporting period
foreign
Commercial August 30th August 30th
No No exchange 205,031.34 205,031.34 431,822.00 237,730.13 3.69% 8,262.41
bank 2021 2024
contract
Total 205,031.34 -- -- 205,031.34 431,822.00 237,730.13 3.69% 8,262.41
Capital source of derivatives investment Company’s own fund
Prosecution (if applicable) Inapplicable
Announcement date for approvals of April 16th 2022
23
Hikvision 2022 Half Year Report
derivatives investment from the Board of
Directors (if any)
Announcement date for approvals of
derivatives investment from the general Inapplicable
meeting of shareholders (if any)
Risk analysis and control measures
(including but not limited to, market risk,
For details of the risk analysis and control measures, please refer to the Announcement on Conducting Foreign Exchange Hedging Transactions in
liquidity risk, credit risk, operational risk,
2022 (NO. 2022-023) dated April 16th 2022.
legal risk, etc.) of holding derivatives
during the reporting period
Change of market price or fair value of
invested derivatives during the reporting In accordance with the Accounting Standards for Business Enterprises No.22- Recognition and Measurement of Financial Instruments, Chapter
period; specific methods, related VII "Determination of Fair Value", the Company recognised and measured a total of RMB 92.01 million as loss from changes in the fair value of
assumptions and parameter setting of the derivatives. The fair value is determined according to the exchange rate and interest rate provided by banks and other pricing service institutions,
derivatives’ fair value analysis should be and the fair value is measured and recognised on a monthly basis.
disclosed
During the current reporting period,
whether there was significant changes of
accounting policies and accounting Inapplicable
principles of the Company’s derivatives
comparing to the prior reporting period
The relevant approval procedures for the Company’s foreign exchange hedging business comply with the relevant national laws and regulations
and the relevant provisions of the Articles of Association. The Company has established a sound process for the organization, business operation
Specific opinions on the Company’s
and approval for conducting foreign exchange hedging business, as well as the Foreign Exchange Hedging Management System. Under the
derivatives investments and risk control
premise of ensuring normal production and operation, the Company conducts foreign exchange hedging business, which enables the Company to
from independent directors
avoid and prevent sharp exchange rate fluctuation and its adverse effects on the Company’s operations, and contributes to controlling foreign
exchange risks. There is no damage to the interests of the Company nor of its shareholders.
24
Hikvision 2022 Half Year Report
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
VII. Disposal of significant assets and equity
1. Disposal of significant assets:
□ Applicable √ Inapplicable
There is no disposal of significant assets for the Company during the current reporting period.
2. Sale of significant equity:
□ Applicable √ Inapplicable
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Hikvision 2022 Half Year Report
VIII. Analysis of major subsidiaries and holding companies
□Applicable √Inapplicable
The Company has no important holding company information that should be disclosed during the current
reporting period.
Information about obtaining and disposal of subsidiaries during the reporting period
√ Applicable □ Inapplicable
Equity acquisition and disposal Impact on overall production
Company name
method during the reporting period results
Zhejiang Zhiyuan Fire Safety Engineering Co., Ltd. Transfer of equity in cash Business development
Shijiazhuang Sensor Tech Intelligent Technology Co. Ltd Cash contribution Business development
Hikvision Adriatic doo Beograd Cash contribution Expand overseas sales channels
HIKVISION TECHNOLOGY PTE. LTD. Cash contribution Expand overseas sales channels
Hikrobot Korea Limited Cash contribution Expand overseas sales channels
IX. Structural entities controlled by the Company
□ Applicable √ Inapplicable
X. Risks of the Company and risk response solutions
During the reporting period, there was no material change in the risk exposure of the Company. For details, please
refer to Section I - Important Notes. The Company has been striving to identify various risk exposures, and
actively adopting countermeasures to avoid and reduce risks:
(1) Global COVID-19 epidemic risk: The Company attached great importance to epidemic control and strove to
protect the health of its employees. Meanwhile, the Company relied on its own technical reserves and product
capabilities to help the whole society to prevent and control the epidemic. The Company continues to pay close
attention to the impact of the epidemic on the economy and make active adjustments to the business tactics.
(2) Economic downside risk: The current domestic and foreign economic environment is complex and volatile.
The domestic macroeconomic growth has entered a new stage of medium-low growth. In the face of various external
uncertainties, the Company focuses on growing its own capabilities, maintains a stable business strategy, and strives
to ensure the smooth development of global businesses.
(3) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased. Facing the
26
Hikvision 2022 Half Year Report
complex external environment, the Company strives to improve the localized operation capabilities to ensure the
effective operation of global services and businesses.
(4) Global business risk: The Company actively learns the information and major changes of the policies, trade
laws and regulations of various countries around the world, formulates countermeasures, and strives to control
various trade compliance risks that may arise.
(5) Supply chain risk: The Company made its best efforts to make appropriate arrangements for the supply chain,
reasonably regulated and controlled its inventory, and formulated effective alternative solutions in a timely manner.
In the meantime, the Company reinforced its R&D efforts in basic areas and enhanced the accumulation of
underlying fundamental technologies.
(6) Legal compliance risk: The Company continued to strengthen the construction of compliance and risk control
system, conducted immediate and full-cycle risk supervision and control of business, and improved its legal
compliance capability.
(7) Exchange rate fluctuation risk: The Company attached great importance to the control of exchange rate risk,
and hedged and avoided exchange rate risk by legitimate means while ensuring security and liquidity. For exchange
rate risk exposure, the Company actively adopted financial hedging tools (e.g. hedging), not taking speculation as
the purpose, and conducted risk management in a reasonable manner.
(8) Risk of technology upgrade: the Company maintained its investments in R&D, explored cutting-edge
technologies in depth, and held the lead in core and key technologies; The Company has formed effective and
market-oriented R&D through stable and reliable R&D management, kept its products and technologies responsive
to market demands.
(9) Receivable risk caused by the decline in customers' ability to pay: The enterprises’ financial liquidity is
negatively impacted by the macroeconomic downturn. The Company continues to strengthen the collection
management of accounts receivable, and strives to control the financial risk of accounts receivable.
(10) Internal management risk: The continual expansion of business scale, the continuous increase of new
products and new businesses, and the continuous growth in total number of employees lead to a rise in company
management complexity. The Company is committed to continuously strengthening the management system
construction, optimizing the management level, and improving the Company's operational capability and
operational efficiency.
(11) Network security risk: The Company has always attached great importance to and actively taken measures to
improve the security performance of its products and systems, established the product security system by setting up
27
Hikvision 2022 Half Year Report
a professional information security team, integrated product security requirements, security design, security
development, security testing and other links into the product development process, ensured continuous
improvement of product and system security and provided customers with more secure products and solutions.
(12) Risk of intellectual property rights: The Company has set up a professional team for intellectual property
rights which is responsible for the daily management and maintenance of intellectual property rights (e.g.,
trademarks and patents) and for protecting the Company's intellectual property rights in accordance with various
legal means (e.g., administrative investigation and court litigation).
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Hikvision 2022 Half Year Report
Section IV Corporate Governance
I. Annual General Meeting and Extraordinary General Meetings convened during the
reporting Period
1. Annual General Meeting convened during the reporting period
Proportion of
Meeting Nature participating Convened date Disclosure date Resolution of the meeting
investors
4 proposals including the 2021
The first Restricted Share Incentive Scheme
Extraordinary Extraordinary January 17th January 18th (Revised Draft) and its Summary
65.6154 %
General Meeting in General Meeting 2022 2022 were reviewed and voted. For details,
2022 please refer to the Company's
announcement: No. 2022-002.
12 proposals including the 2021
Annual Report and Summary were
2021 Annual Annual General
67.3841 % May 13th 2022 May 14th 2022 reviewed and voted. For details,
General Meeting Meeting
please refer to the Company's
announcement: No. 2022-035
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ Inapplicable
II. Changes of directors, supervisors and senior management personnel
□ Applicable √ Inapplicable
There were no changes in the Company's directors, supervisors and senior management during the reporting
period. For details, please refer to the 2021 annual report.
III. Profit distribution and capitalizing of capital reserves for the current reporting period
□ Applicable √ Inapplicable
The Company did not plan to distribute cash dividends, send bonus shares, or convert capital reserve into share
capital during the first half of 2022.
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Hikvision 2022 Half Year Report
IV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or other
incentive plans
√Applicable □ Inapplicable
1. During the reporting period, the Company completed the grant of the 2021 restricted share incentive scheme.
On December 30th 2021, the 7th meeting of the 5th session of the Board of Directors of the Company reviewed and
approved the proposals such as 2021 Restricted Share Incentive Scheme (Revised Draft) and its Summary and
Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to Handle Matters
Related to the 2021 Restricted Share Incentive Scheme. Proposed to the General Meeting of Shareholders to
authorize the Board of Directors to implement the 2021 restricted share incentive scheme related matters.
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors and the 8th meeting of the 5th
session of the Board of Supervisors reviewed and approved the Proposal on Granting Restricted Stocks to Incentive
Objects under the 2021 Restricted Share Incentive Scheme. In accordance with the Measures for the Administration
of Equity Incentives of Listed Companies and other relevant laws, regulations, departmental rules, and normative
documents, as well as the 2021 Restricted Share Incentive Scheme (Revised Draft) and related authorizations passed
by the resolution of the first extraordinary general meeting in 2022, the Company has completed the share grant and
registration of the 2021 restricted share incentive scheme. The incentive objects granted are 9,738 people, and the
total number of restricted shares granted is 97,402,605 shares, accounting for 1.04% of the total share capital of the
Company before the grant. The granted shares were listed on February 11th 2022.
For details, please refer to the Announcement on the Completion of the Grant of Shares under the 2021 Restricted
Share Incentive Scheme published by the Company on www.cninfo.com.cn on February 10th 2022 (No. 2022-011).
2. During the current reporting period, the Company completed the second unlocking of the 2018 restricted share
incentive scheme.
On May 5th 2022, the 10th meeting of the 5th session of the Board of Directors and the 10th meeting of the 5th session
of the Board of Supervisors reviewed and approved the Proposal on the achievement of unlocking conditions for
the second unlocking period of the 2018 restricted Share Incentive Scheme. According to the authorization of the
30
Hikvision 2022 Half Year Report
Company's second extraordinary general meeting in 2018, the Company has handled the unlocking of a total of
33,142,730 restricted shares for 5,533 incentive objects, and the unlocked shares were listed for circulation on May
18th 2022. For details, please refer to the Company's Indicative Announcement on the Listing and Circulation of
Unlocked Shares in the Second Unlocking Period of the 2018 Restricted Share Incentive Scheme published on
www.cninfo.com.cn on May 17th 2022 (No.: 2022-036).
As of the end of the current reporting period, the Company has a total of 133,022,558 granted but unvested shares,
accounting for 1.41% of the Company's total share capital.
The Company performs accounting treatments related to restricted share incentive plans in accordance with the
requirements of Accounting Standards for Business Enterprises No. 11-Share Payments and other related accounting
standards. The cost of the shares granted by the 2018 restricted share incentive scheme and 2021 restricted share
incentive scheme is amortized during the vesting period.
During the reporting period, the amortization cost of the Company's 2018 restricted share incentive scheme and
2021 restricted share incentive scheme had no significant impact on the Company's financial status and operating
results. For details, please refer to Financial Statement Note (XI)-Share-based Payment.
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Hikvision 2022 Half Year Report
Section V Environmental and Social Responsibility
I. Significant environmental issues
Whether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprises published
by national environmental protection department.
□Yes √ No.
II. Social responsibilities
During the reporting period, the Company has not yet carried out poverty alleviation and rural revitalization.
32
Hikvision 2022 Half Year Report
Section VI Significant Events
I. Complete and incomplete commitments of the Company and its actual controller,
shareholders, related parties, acquirers, and other related parties for the commitments during
the current reporting period.
□ Applicable √ Inapplicable
No such case during the current reporting period.
II. The Company’s funds used by the controlling shareholder or its related parties for non-
operating purposes.
□ Applicable √ Inapplicable
No such case during the current reporting period.
III. Illegal provision of guarantees for external parties
□ Applicable √ Inapplicable
No such case in the current reporting period.
IV. Engagement and disengagement of the CPA firm
Has the half year report been audited?
□ Yes √ No
The Company's half year report has not been audited.
V. Explanation given by the Board of Directors, supervisory committee and independent
directors (if applicable) regarding the “non-standard auditor’s report” issued by the CPA firm
for the current reporting period
□ Applicable √ Inapplicable
VI. Explanation given by the Board of Directors regarding the “non-standard auditor’s report”
for the prior reporting period
□ Applicable √ Inapplicable
VII. Bankruptcy and restructuring
□ Applicable √ Inapplicable
33
Hikvision 2022 Half Year Report
No such case during the reporting period.
VIII. Material litigations
Material litigation and arbitration
□ Applicable √ Inapplicable
The Company had no material litigation or arbitration during the current reporting period.
Other litigation matters
□ Applicable √ Inapplicable
IX. Punishments and rectifications
□ Applicable √ Inapplicable
No such case during the reporting period.
X. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ Inapplicable
XI. Significant related-party transaction
1. Related-party transactions arising from routine daily operations
√ Applicable □ Inapplicable
34
Hikvision 2022 Half Year Report
Pricing Proportion to Approved Whether
Type of Content of Trading amount
principles for the amount trading exceed the Settlement Disclosure Disclosure
Related party Relationship related related （0’000
related party of similar quota (0’000 approved method date reference
transaction transaction RMB）
transactions transactions. RMB） quota
Under the common
Subsidiaries or
control of the Payment on
research institutes of Procurement 105,389.09 4.51% 500,000 No
Company’s actual delivery
CETC
controller.
Joint ventures in which
Payment on Announcement
Joint ventures the Company holds Procurement 33.73 0.00% 300 No
delivery on the forecast
shares Reference
Procurement of daily related-
Associated companies market price; April 16th
, receiving Payment on party
Associated companies in which the Company Procurement Agreed on 22,910.77 0.98% 120,100 No 2022
services delivery transactions in
holds shares price
2022 (No. 2022-
Enterprises with Enterprises with
022)
directors, supervisors, directors, supervisors,
senior executives and senior executives and Payment on
Procurement 91,629.80 3.92% 225,150 No
related natural persons related natural persons delivery
of the Company of the Company serving
serving as directors as directors
Under the common Announcement
Subsidiaries or Providing
control of the Payment on on the forecast
research institutes of Sales services, Reference 16,804.22 0.45% 70,000 No
Company’s actual delivery of daily related-
CETC selling market price; April 16th
controller. party
products, Agreed on 2022
Joint ventures in which transactions in
commercial price Payment on
Joint ventures the Company holds Sales 3,313.24 0.09% 32,500 No 2022 (No. 2022-
goods delivery
shares 022)
35
Hikvision 2022 Half Year Report
Pricing Proportion to Approved Whether
Type of Content of Trading amount
principles for the amount trading exceed the Settlement Disclosure Disclosure
Related party Relationship related related （0’000
related party of similar quota (0’000 approved method date reference
transaction transaction RMB）
transactions transactions. RMB） quota
Associated companies
Payment on
Associated companies in which the Company Sales 3,973.99 0.11% 28,000 No
delivery
holds shares
Enterprises with Enterprises with
directors, supervisors, directors, supervisors,
senior executives and senior executives and Payment on
Sales 401.60 0.01% 3,700 No
related natural persons related natural persons delivery
of the Company of the Company serving
serving as directors as directors
Total 244,456.44 979,750
Details on significant sales return None
Total amount of related transactions projected based on
different categories, and the actual performance during the None
current reporting period (if any)
Reasons on significant difference between trading price and
Not applicable
market referencing price (if applicable)
36
Hikvision 2022 Half Year Report
2. Related-party transactions regarding purchase and disposal of assets or equity
□ Applicable √ Inapplicable
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□ Applicable √ Inapplicable
No such case in the reporting period.
4. Related credit and debt transactions
□ Applicable √ Inapplicable
No related-parties’ creditor’s rights or debts during the reporting period.
5. Deals with related-party financial companies and financial companies controlled by the Company
√ Applicable □ Inapplicable
Deposit business
Amout incurred
Maximum daily Deposit Total deposit Total amount
Related Opening balance Clsoing balance
Relationship deposit limit interest amount in the withdrawn in the
party (0,000 RMB) (0,000 RMB)
(0,000 RMB) rate range current period current period
(0,000 RMB) (0,000 RMB)
Under the
CETC
common control
Finance 1,307,892.85 0.3%-2% 450,000.67 20,402.53 70,400.00 400,003.20
of the Company's
Co., Ltd.
ultimate controller
Credit or other financial services
Total amount Actual amout incurred
Related party Relationship Busiess type
(0,000 RMB) (0,000 RMB)
Under the common control of
CETC Finance Co., Ltd. the Company's ultimate Credit 300,000.00 3,332.25
controller
6. Transactions between the financial company controlled by the Company and related parties
□ Applicable √ Inapplicable
37
Hikvision 2022 Half Year Report
7. Other significant related party transactions
√ Applicable □ Inapplicable
On October 22nd 2021, the 6th meeting of the 5th session of the Board of Directors of the Company reviewed and
approved the Proposal on Investing in the Establishment of Entrepreneurship Investment Partnerships and
Related Transactions, agreeing that the Company, CETHIK Group Co., Ltd., Hangzhou High-tech Venture Capital
Management Co., Ltd. and CETHIK (Hangzhou) Equity Investment Management Co., Ltd. jointly invested and
established Hangzhou Haina Yuzhi Entrepreneurship Investment Partnership Co., Ltd. (hereinafter referred to as
"Haina Yuzhi Fund"). The scale of Haina Yuzhi Fund is RMB 600 million, of which Hikvision, as a limited
partner, invested RMB 400 million yuan in currency, holding 66.6666% of the total shares. On January 29th 2022,
Haina Yuzhi Fund, which the Company participated in the establishment of, has completed the filing procedures
for private investment funds in the Asset Management Association of China in accordance with the requirements
of the Securities Investment Fund Law and the Interim Measures for the Supervision and Administration of
Privately-Raised Investment Funds. And obtained the Private investment fund record certificate.
Disclosure website for provisional reports on significant related-party transactions:
Title of provisional repo/rts Disclosure date Disclosure website
Announcement on Investing in the Establishment of Entrepreneurship
Investment Partnerships and Related Transactions (Announcement No. October 23rd 2021 www.cninfo.com.cn
2021-064)
Announcement on the Completion of the Filing of Entrepreneurship
February 10th 2022 www.cninfo.com.cn
Investment Partnerships" (Announcement No. 2022-013)
XII. Significant contracts and their execution
1. Trusteeship, contracting and leasing
1.1 Trusteeship
□ Applicable √ Inapplicable
No such case in the reporting period.
1.2 Contracting
□ Applicable √ Inapplicable
No such case in the reporting period.
1.3 Leasing
√ Applicable □ Inapplicable
On December 3rd 2018, the Proposal on Carrying out Financial Leasing Related Party Transactions between the
Holding Innovative Business Subsidiary and China Electronics Technology Leasing Co. Ltd. was approved at the
38
Hikvision 2022 Half Year Report
7th meeting of the 4th Board of Directors of the Company. In 2019, the Company's holding subsidiary Hangzhou
Hikmicro Sensing Technology Ltd. and China Electronics Technology Leasing Co. Ltd. signed the Financial
Leasing Contract, where HikMicro used some of its own equipment to start leaseback business with China
Electronics Technology Leasing Co. Ltd.; the financing amount was RMB 70 million, term of lease 48 months and
annual lease rate 3.80%.
39
Hikvision 2022 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
Unit: 0,000 RMB
Guarantees provided by the Company to its subsidiaries
Disclosure date of Actual Actual Guarantee
Guarantee Fulfilled
Guaranteed party announcement of the occurrence guaranteed Type of guarantee Term of guarantee for a related
cap or not
guarantee cap date amount party or not
Hangzhou Hikvision Technology December 1st
April 16th 2022 1,136,000.00 466,350.04 Joint guarantee 2019.12.01-2025.09.25 No No
Co., Ltd. 2019
Hikvision Singapore Pte. Ltd. April 16th 2022 107,200.00 July 15th 2021 46,529.32 2021.07.15-2029.01.07 No No
Urumqi HaiShi Xin’An Electronic March 26th
April 16th 2022 37,000.00 22,793.71 Joint guarantee 2019.03.26-2028.06.20 No No
Technology Co., Ltd. 2019
Luopu HaiShi Ding Xin Electronic March 26th
April 16th 2022 29,000.00 21,440.00 Joint guarantee 2019.03.26-2035.03.26 No No
Technology Co., Ltd. 2019
Piahan HaiShi Yong An Electronic March 26th
April 16th 2022 28,000.00 21,178.00 Joint guarantee 2019.03.26-2040.03.26 No No
Technology Co., Ltd. 2019
Moyu HaiShi Electronic March 26th
April 16th 2022 24,000.00 17,340.00 Joint guarantee 2019.03.26-2035.03.26 No No
Technology Co., Ltd. 2019
Hangzhou Hikvision System March 23rd
April 16th 2022 70,000.00 11,024.51 Joint guarantee 2021.03.23-2024.03.30 No No
Technology Co., Ltd. 2021
Yu Tian HaiShi Mei Tian Electronic March 26th
April 16th 2022 30,000.00 9,480.00 Joint guarantee 2019.03.26-2034.03.26 No No
Technology Co., Ltd. 2019
Hangzhou Hikvision Electronics November
April 16th 2022 45,000.00 3,163.06 Joint guarantee 2021.11.20-2024.3.30 No No
Co., Ltd. 20th 2021
40
Hikvision 2022 Half Year Report
Chongqing Hikvision Technology March 23rd
April 16th 2022 30,000.00 2,400.00 Joint guarantee 2021.3.23-2024.3.30 No No
Co., Ltd. 2021
Hikvision International Co., Ltd. April 16th 2022 37,800.00 Not happened during the reporting period
Hikvision Europe B.V. April 16th 2022 5,100.00 Not happened during the reporting period
Wuhan Hikvision Technology Co.,
April 16th 2022 33,000.00 Not happened during the reporting period
Ltd.
Xi’an Hikvision Digital Technology
April 16th 2022 28,000.00 Not happened during the reporting period
Co., Ltd.
Shijiazhuang Hikvision Technology
April 16th 2022 20,000.00 Not happened during the reporting period
Co., Ltd.
Shanghe Smart City Technology
April 16th 2022 20,000.00 Not happened during the reporting period
Co., Ltd.
Zhenping Haikang Juxin Digital
April 16th 2022 19,000.00 Not happened during the reporting period
Technology Co., Ltd.
Nanjing Hikvision Digital
April 16th 2022 15,000.00 Not happened during the reporting period
Technology Co., Ltd.
Hikvision Technology Pte.Ltd. April 16th 2022 12,600.00 Not happened during the reporting period
Zhengzhou Hikvision Digital
April 16th 2022 10,000.00 Not happened during the reporting period
Technology Co., Ltd.
Hefei Hikvision Digital Technology
April 16th 2022 10,000.00 Not happened during the reporting period
Co., Ltd.
Hikvision Digital Technology
April 16th 2022 10,000.00 Not happened during the reporting period
(Shanghai) Co., Ltd.
Chengdu Hikvision Digital
April 16th 2022 10,000.00 Not happened during the reporting period
Technology Co., Ltd.
41
Hikvision 2022 Half Year Report
Nanchang Hikvision Digital
April 16th 2022 8,000.00 Not happened during the reporting period
Technology Co., Ltd.
Chongqing Hikvision System
April 16th 2022 5,000.00 Not happened during the reporting period
Technology Co., Ltd.
Fuzhou Hikvision Digital
April 16th 2022 5,000.00 Not happened during the reporting period
Technology Co., Ltd.
Hikvision UK Limited April 16th 2022 1,900.00 Not happened during the reporting period
PT. Hikvision Technology
April 16th 2022 1,400.00 Not happened during the reporting period
Indonesia
Wuhan Hikvision Technique Co.,
April 16th 2022 1,000.00 Not happened during the reporting period
Ltd
Hikvision FZE April 16th 2022 650.00 Not happened during the reporting period
Hikvision Turkey Technology And
April 16th 2022 350.00 Not happened during the reporting period
Security Systems Commerce JSC
Total guarantee cap for subsidiaries approved during the Total actual guarantee amount
1,790,000.00 for subsidiaries during the 858,430.46
reporting period (B1)
reporting period (B2)
Total actual guarantee balance
Total approved guarantee cap for subsidiaries at the end of the
1,790,000.00 for subsidiaries at the end of the 621,698.64
reporting period (B3)
reporting period (B4)
Guarantees provided by the Company’s subsidiary to another subsidiary
Disclosure date of Actual Actual Guarantee for
Guarantee Fulfilled or
Guaranteed party announcement of the occurrence guaranteed Type of guarantee Term of guarantee a related party
cap not
guarantee cap date amount or not
Hangzhou Haikang Intelligent March 14th 2022.03.14-
April 16th 2022 80,000.00 13,577.95 Joint guarantee No No
Technology Co., Ltd. 2022 2023.11.30
42
Hikvision 2022 Half Year Report
Hangzhou Hikrobot Automation
April 16th 2022 145,000.00 Not happened during the reporting period
Co., Ltd.
Hangzhou Hikmicro Software Co.,
April 16th 2022 105,000.00 Not happened during the reporting period
Ltd.
Hangzhou Hikmicro Intelligent
April 16th 2022 32,000.00 Not happened during the reporting period
Technology Co., Ltd.
Chongqing EZVIZ Electronics Co.,
April 16th 2022 32,000.00 Not happened during the reporting period
Ltd.
Hangzhou Hikstorage Technology
April 16th 2022 10,000.00 Not happened during the reporting period
Co., Ltd.
Zhejiang Hikfire Technology Co.,
April 16th 2022 3,000.00 Not happened during the reporting period
Ltd
Zhejiang Zhiyuan Fire Safety
April 16th 2022 3,000.00 Not happened during the reporting period
Engineering Co., Ltd.
Total actual guarantee amount
Total guarantee cap for subsidiaries approved during the
410,000.00 for subsidiaries during the 15,164.69
reporting period (C1)
reporting period (C2)
Total actual guarantee balance
Total approved guarantee cap for subsidiaries at the end of the
410,000.00 for subsidiaries at the end of the 13,577.95
reporting period (C3）
reporting period (C4)
The total amount of Company’s guarantees (that is, the total of the first three items)
Total actual guarantee amount
Total guarantee cap approved during the reporting period
2,200,000.00 during the reporting period 873,595.15
（A1+B1+C1）
（A2+B2+C2）
Total approved guarantee cap at the end of reporting period Total actual guarantee balance at
2,200,000.00 635,276.59
（A3+B3+C3） the end of the reporting period
43
Hikvision 2022 Half Year Report
（A4+B4+C4）
Portion of the total actual guarantee (A4+B4+C4) amount in
10.24%
net assets of the Company
Of which:
The balance of guarantee for shareholders, actual controllers
0
and their affiliates. (D)
Amount of debt guarantees provided directly or indirectly for
611,609.02
entities with a liability-to-asset ratio over 70% (E)
Total amount of guarantee exceeding 50% of net assets (F) 0
Total guarantee amount of the above-mentioned 3 kinds of
611,609.02
guarantees (D+E+F)
44
Hikvision 2022 Half Year Report
3. Entrusted financial management
□Applicable √Inapplicable
No such case during the reporting period
4. Other significant contracts
□Applicable √ Inapplicable
The Company has no other significant contracts in the reporting period.
XIII. Other significant events
√Applicable □ Inapplicable
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors of the Company deliberated and
approved the Proposal on the Investment and Construction of HikRobot Products’ Industrial Base Project by the
Company’s Holding Subsidiary, and approved the Company's innovative business, a holding subsidiary of the
Company, Hangzhou Hikrobot Technology Co., Ltd. (hereinafter referred to as "HikRobot") to invest self-raised
funds of RMB 1.1661 billion to build the above project. The project undertaker is HikRobot. For details, please
refer to the Announcement on the Investment and Construction of HikRobot Products’ Industrial Base Project by
the Company’s Holding Subsidiary published by the Company on cninfo website (www.cninfo.com.cn) on
January 19th 2022 (Announcement No. 2022-007).
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors of the Company deliberated and
approved the Proposal on the Investment and Construction of Infrared Thermal Imaging Products’ Industrial Base
Project by the Company’s Holding Subsidiary, and approved the Company's innovative business, a holding
subsidiary of the Company, Hangzhou Hikmicro Sensing Technology Co., Ltd. (hereinafter referred to as
"HikMicro") to invest self-raised funds of RMB 1.28018 billion to build the above project. The project undertaker
is HikMicro’s wholly-owned subsidiary, Hangzhou Microimage Software Co., Ltd. For details, please refer to the
Announcement on the Investment and Construction of Infrared Thermal Imaging Products’ Industrial Base Project
by the Company’s Holding Subsidiary published by the Company on cninfo website (www.cninfo.com.cn) on
January 19th 2022 (Announcement No. 2022-008).
45
Hikvision 2022 Half Year Report
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors of the Company deliberated and
approved the Proposal on the Investment and Construction of HikRobot Intelligent Manufacturing (Tonglu) Base
Project by the Company’s Holding Subsidiary, and approved the Company's innovative business, a holding
subsidiary of the Company, HikRobot to invest self-raised funds of RMB 1.53422 billion to build the above
project. The project undertaker is HikRobot’s wholly-owned subsidiary, Hangzhou Hikrobot Automation Co., Ltd.
For details, please refer to the Announcement on the Investment and Construction of HikRobot Intelligent
Manufacturing (Tonglu) Base Project by the Company’s Holding Subsidiary published by the Company on cninfo
website (www.cninfo.com.cn) on January 19th 2022 (Announcement No. 2022-009).
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors of the Company deliberated and
approved the Proposal on the Investment and Construction of Hikvision Global Warehousing and Logistics Center
Project, and approved the Company to invest self-raised funds of RMB 1.28605 billion to build the above project.
The project undertaker is Hangzhou Hikvision Electronics Co., Ltd. (hereinafter referred to as "Electronics
Company"), which is a holding subsidiary of Hikvision. For details, please refer to the Announcement on the
Investment and Construction of Hikvision Global Warehousing and Logistics Center Project (Announcement No.
2022- 010). On January 24th 2022, the Electronics Company won the use right of the state-owned construction
land for the project (Phase I) with a total of RMB 53.77 million. On February 10th 2022, the Electronics Company
and Tonglu Planning and Natural Resources Bureau signed the Contract for Assigning the Right to Use State-
owned Construction Land. On June 10th 2022, the project (Phase I) completed the processing of the Construction
License for the storage plot and started construction.
On December 30th 2021, the 7th meeting of the 5th session of the Board of Directors of the Company deliberated
on and approved the Proposal on Authorizing Company Management to Begin Preparatory Work for the Split-off
and Domestic Listing of Subsidiary Hangzhou Hikrobot Technology Co., Ltd., which authorized the management
of the Company to begin preparatory work for the Split-off and domestic listing of subsidiary Hangzhou Hikrobot
Technology Co., Ltd.. For details, please refer to the Indicative Announcement on Authorizing Company
Management to Begin Preparatory Work for the Split-off and Domestic Listing of Subsidiary Hangzhou Hikrobot
Technology Co., Ltd. published by the Company on cninfo website (www.cninfo.com.cn) on December 31st 2021
(Announcement No. 2021-074). On June 10th 2022, the 11th meeting of the 5th session of the Board of Directors
46
Hikvision 2022 Half Year Report
and the 11th meeting of the 5th session of the Board of Supervisors reviewed and approved the relevant proposals
including Proposal on the Initial Public Offering of Shares by Hangzhou Hikrobot Technology Co., Ltd., a
Subsidiary of the Company, and Listing on the SZSE ChiNext Market, and Plan on Spin-off of Hangzhou
Hikrobot Technology Co., Ltd., a subsidiary of the Company, and Listing on the SZSE ChiNext Market. Approved
the initial public offering of RMB ordinary shares (A shares) and listing on the SZSE ChiNext Market by the
subsidiary HikRobot after completing the joint-stock system reform. For details, please refer to the Plan on Spin-
off of Hangzhou Hikrobot Technology Co., Ltd., a Subsidiary of the Company, and Listing on the SZSE ChiNext
Market published by the Company on June 11th 2022 on cninfo website (www.cninfo.com.cn). On July 20th 2022,
the 5th meeting of the 5th session of the Board of Directors' Strategy Committee in 2022 reviewed and approved
the Proposal on the Change of the Hangzhou Hikrobot Technology Co., Ltd., a Holding Subsidiary of the
Company, to a Limited-Liability Company by Shares. On July 21st 2022, HikRobot was established as a limited-
liability company by shares as a whole.
XIV. Significant events of the Company’s subsidiaries
√Applicable □ Inapplicable
During the reporting period, the Company steadily promoted the spin-off of EZVIZ Network to be listed on the
Shanghai Stock Exchange STAR Market. On January 8th 2021, the Proposal on the Spin-off of the Company’s
Subsidiary Hangzhou EZVIZ Network Co., Ltd. to be Listed on the SSE STAR Market was deliberated and adopted
by the 21st Meeting of the 4th session of the Board of Directors and the 18th Meeting of the 4th session of the Board
of Supervisors of the Company. On June 23rd 2021, the Proposal on the Overall Restructuring of the Company’s
Holding Subsidiary Hangzhou EZVIZ Network Co., Ltd. as a Limited Liability Company by Shares was deliberated
and adopted by the 3rd Meeting of the Strategy Committee in 2021 of the 5th session of the Board of Directors of the
Company. On June 24th 2021, EZVIZ Network as a whole was restructured and changed to a limited-liability
company by shares. On July 2nd 2021, Zhejiang Securities Regulatory Bureau of China Securities Regulatory
Commission accepted the application filed by EZVIZ Network for initial public offering of A shares and pre-listing
counseling for listing on the SSE STAR Market. On August 10th 2021, the 4th meeting of the 5th session of the Board
of Directors and the 4th meeting of the 5th session of the Board of Supervisors reviewed and approved the Proposal
on the Initial Public Share Offering and Listing on the STAR Market of the Shanghai Stock Exchange of the
Subsidiary, Hangzhou EZVIZ Network Co., Ltd. (revised draft). On September 27th 2021, the Company's second
47
Hikvision 2022 Half Year Report
extraordinary general meeting in 2021 reviewed and approved the proposal to spin-off EZVIZ Network to be listed
on the SSE STAR Market. On December 13th 2021, EZVIZ Network submitted the application materials for the
initial public shares offering and listing on the STAR Market of the Shanghai Stock Exchange. On January 11th 2022,
the Shanghai Stock Exchange issue the Inquiry Letter on Review of Application Documents for Initial Public Share
Offering and Listing on the SSE STAR Market (Shang Zheng Ke Shen (Review) [2022] No. 11). EZVIZ Network
has submitted the Reply to the Inquiry Letter on the Review of Hangzhou EZVIZ Network Co., Ltd.'s Application
Documents for Initial Public Share Offering and Listing on the SSE STAR Market on March 15th 2022. On June 6th
2022, according to the Announcement on the Results of the 46th Review Meeting of the Listing Committee of the SSE
STAR Market in 2022 issued by the Shanghai Stock Exchange, the review result is: Hangzhou EZVIZ Network Co.,
Ltd. (initial offering) meets the issuance conditions, listing conditions and information disclosure requirements,
EZVIZ Network’s initial public offering of shares and its application for listing on the SSE STAR Market was
reviewed and approved by the SSE STAR Market's Listing Committee. For details, please refer to Announcement
on the Initial Public Offering of Shares by Hangzhou EZVIZ Network Co., Ltd., a Subsidiary of the Company, and
its Application for Listing on the SSE STAR Market was Reviewed and Approved by the SSE STAR Market's Listing
Committee published by the Company on the cninfo website (www.cninfo.com.cn) on June 7th 2022 (Announcement
No. 2022-038). The above spin-off matters are subject to (including but not limited to) obtaining the issuance
registration procedures of the China Securities Regulatory Commission before implementation.
48
Hikvision 2022 Half Year Report
Section VII Changes in Shares and Information about Shareholders
I. Changes in share capital
1. Table of changes in share capital
Unit: Share
Before the change Changes in the period (+, -) After the change
Share
New Shares Bonus transferred
Shares Ratio Others Sub-total Shares Ratio
Issued share from capital
reserve
1. Shares subject to conditional restriction(s) 215,314,570 2.31% 97,402,605 -55,180,574 42,222,031 257,536,601 2.73%
1)State holdings
2)Shares held by State-owned corporate
3) Other domestic shares 215,200,030 2.31% 97,266,605 -55,123,304 42,143,301 257,343,331 2.73%
Including: held by domestic corporates
held by domestic natural person 215,200,030 2.31% 97,266,605 -55,123,304 42,143,301 257,343,331 2.73%
4) Foreign shares 114,540 0.00% 136,000 -57,270 78,730 193,270 0.00%
Including: held by overseas corporates
held by overseas natural person 114,540 0.00% 136,000 -57,270 78,730 193,270 0.00%
2. Shares without restriction 9,120,491,544 97.69% 55,180,574 55,180,574 9,175,672,118 97.27%
1) RMB common shares 9,120,491,544 97.69% 55,180,574 55,180,574 9,175,672,118 97.27%
49
Hikvision 2022 Half Year Report
Before the change Changes in the period (+, -) After the change
Share
New Shares Bonus transferred
Shares Ratio Others Sub-total Shares Ratio
Issued share from capital
reserve
2) Domestically listed foreign shares
3) Foreign shares listed overseas
4) Others
3. Total 9,335,806,114 100.00% 97,402,605 97,402,605 9,433,208,719 100.00%
Reason for the changes in share capital
√Applicable □ Inapplicable
Grant Completion of 2021 Restricted Share Incentive Plan
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors and the 8th meeting of the 5th session of the Board of Supervisors of the Company
deliberated and approved the Proposal on Granting Restricted Shares to Incentive Objects under the 2021 Restricted Share Scheme. In accordance with the Measures
for the Administration of Equity Incentives of Listed Companies and other relevant laws, regulations, departmental rules, normative documents, as well as the 2021
Restricted Share Scheme (Revised Draft) and related authorizations that approved by the first extraordinary general meeting in 2022, the Company's Board of Directors
has completed the share grant and registration of the 2021 Restricted Share Scheme. The granted incentive objects are 9,738 people, and the total number of granted
restricted shares is 97,402,605 shares. The granted shares were listed on February 11th 2022. Upon completion of this restricted share scheme grant, the Company's
total share capital increased by 97,402,605 shares from 9,335,806,114 shares to 9,433,208,719 shares.
Approval for changes in share capital
√Applicable □ Inapplicable
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors and the 8th meeting of the 5th session of the Board of Supervisors of the Company
deliberated and approved the Proposal on Granting Restricted Shares to Incentive Objects under the 2021 Restricted Share Scheme. In accordance with the Measures
for the Administration of Equity Incentives of Listed Companies and other relevant laws, regulations, departmental rules, normative documents, as well as the 2021
Restricted Share Scheme (Revised Draft) and related authorizations that approved by the first extraordinary general meeting in 2022, the Board of Directors agreed
50
Hikvision 2022 Half Year Report
that the Company to grant 99,417,229 restricted shares to 9,933 incentive objects of the 2021 restricted share incentive scheme, and the grant date is January 18th
2022. In the process of determining the payment of funds after the grant date, some incentive objects were disqualified due to resignation, and some incentive objects
partially or completely gave up subscriptions due to personal reasons. Therefore, the actual grant objects of the Company's 2021 restricted share incentive scheme
were 9,738 people. The actual number of shares granted was 97,402,605 shares. For details, please refer to the Announcement on the Completion of the 2021
Restricted Share Incentive Scheme Share Grant (Announcement No. 2022-011) published by the Company on cninfo website (www.cninfo.com.cn) on February 10th
2022.
Transfer for changes in share capital
√Applicable □ Inapplicable
On February 11th 2022, the restricted shares granted by the 2021 restricted share incentive scheme were listed, and the Company's total share capital increased by
97,402,605 shares from 9,335,806,114 shares to 9,433,208,719 shares
Information about the implementation of share repurchase
□Applicable √ Inapplicable
The implementation progress of reducing and repurchasing shares by centralized bidding
□Applicable √ Inapplicable
Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per share attributable to common shareholders of the Company, and
other financial indexes over the last year and last period
□Applicable √ Inapplicable
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Inapplicable
51
Hikvision 2022 Half Year Report
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
Opening restricted Increased in current Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares period period shares
Grantees of restricted
share incentive plan 68,762,683 33,142,730 97,402,605 133,022,558 Equity Incentive Restricted Shares May 18th 2022
(consolidated)
Hu Yangzhong 116,434,858 0 0 116,434,858 Restricted shares for senior executives
Wu Weiqi 6,473,317 0 0 6,473,317 Restricted shares for senior executives
Restricted shares for senior executives + partial of the
Huang Fanghong 235,875 0 33,000 268,875 unlocked restricted shares turning into restricted shares According to the
for senior executives relevant provisions of
shares management for
Xu Lirong 227,250 0 0 227,250 Restricted shares for senior executives senior executives
He Hongli 248,625 0 0 248,625 Restricted shares for senior executives
Restricted shares for senior executives + partial of the
Pu Shiliang 161,925 0 30,000 191,925 unlocked restricted shares turning into restricted shares
for senior executives
52
Hikvision 2022 Half Year Report
Opening restricted Increased in current Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares period period shares
Restricted shares for senior executives + partial of the
Jin Yan 147,000 0 33,000 180,000 unlocked restricted shares turning into restricted shares
for senior executives
Restricted shares for senior executives + partial of the
Bi Huijuan 130,950 0 36,900 167,850 unlocked restricted shares turning into restricted shares
for senior executives
Jin Duo 82,125 0 0 82,125 Restricted shares for senior executives
Cai Changyang 82,125 0 0 82,125 Restricted shares for senior executives
Restricted shares for senior executives + partial of the
Xu Ximing 29,550 0 59,100 88,650 unlocked restricted shares turning into restricted shares
for senior executives
Wang Qiuchao 26,250 0 0 26,250 Restricted shares for senior executives
Qu Liyang 11,812 0 0 11,812 Restricted shares for senior executives
Restricted shares for senior executives + partial of the
Xu Peng 0 0 19,311 19,311 unlocked restricted shares turning into restricted shares
for senior executives
53
Hikvision 2022 Half Year Report
Opening restricted Increased in current Vested in current Closing restricted
Name of shareholder Note for restricted shares Date of unlocking
shares period period shares
Restricted shares for senior executives + partial of the
Guo Xudong 0 0 11,070 11,070 unlocked restricted shares turning into restricted shares
for senior executives
Total 193,054,345 33,142,730 97,624,986 257,536,601 -- --
Note: Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the total incentive restricted
shares (consolidated statistics) on the first row.
II. Issuance and listing of securities
√Applicable □ Inapplicable
Name of the stock Date of
Issuing price Number of Number approved
and its derivative Issuing date Listing date termination of Disclosure index Disclosure date
(or interest rate) issuing for listing
securities the transaction
Stock
February 11th February 11th
Restricted stock RMB 29.71/share 97,402,605 97,402,605 www.cninfo.com.cn February 10th 2022
2022 2022
Explanation on the issuance of securities during the reporting period
On December 30th 2021, the 7th meeting of the 5th session of the Board of Directors of the Company reviewed and approved the proposals including 2021 Restricted
Share Incentive Scheme (Revised Draft) and its Summary and Proposal on Requesting the General Meeting of Shareholders to Authorize the Board of Directors to
Handle Matters Related to the 2021 Restricted Share Incentive Scheme. Proposed to the General Meeting of Shareholders to authorize the Board of Directors to
implement the 2021 restricted share incentive scheme related matters.
On January 18th 2022, the 8th meeting of the 5th session of the Board of Directors and the 8th meeting of the 5th session of the Board of Supervisors reviewed and
54
Hikvision 2022 Half Year Report
approved the Proposal on Granting Restricted Stocks to Incentive Objects under the 2021 Restricted Share Incentive Scheme. In accordance with the Measures for the
Administration of Equity Incentives of Listed Companies and other relevant laws, regulations, departmental rules, and normative documents, as well as the 2021
Restricted Share Incentive Scheme (Revised Draft) and related authorizations passed by the resolution of the first extraordinary general meeting in 2022, the Company
has completed the share grant and registration of the 2021 restricted share incentive scheme. The incentive objects granted are 9,738 people, and the total number of
restricted shares granted is 97,402,605 shares, accounting for 1.04% of the total share capital of the Company before the grant. The granted shares were listed on
February 11th 2022.
For details, please refer to the Announcement on the Completion of the Grant of Shares under the 2021 Restricted Share Incentive Scheme published by the Company
on www.cninfo.com.cn on February 10th 2022 (Announcement No. 2022-011).
III. Total number of shareholders and their shareholdings
Unit: Share
Total number of common shareholders at the end of the Total number of preferred shareholders with voting rights restored at the end of
428,282 0
reporting period the current reporting period (if any)
Particulars about shares held by common shareholders with a shareholding percentage over 5% or the Top 10 of them
The number of Pledged or frozen
Share- Total common Increase/
common shares The number of
holding shares held at the decrease during
Name of shareholder Nature of shareholder held with shares held without Shares'
percentage end of the the reporting Amount
trading trading restrictions Status
(%) reporting period period
restrictions
China Electronics
State-owned
Technology HIK Group 36.08% 3,403,879,509 0 0 3,403,879,509 Pledged 50,000,000
corporation
Co., Ltd.
Gong Hongjia Overseas individual 10.20% 962,504,814 0 0 962,504,814 Pledged 119,220,000
Xinjiang Weixun Domestic
Investment Management non-state-owned 4.78% 450,795,176 0 0 450,795,176 Pledged 28,300,000
Limited Partnership corporation
55
Hikvision 2022 Half Year Report
Shanghai Perseverance
Asset Management
Partnership (Limited
Other 4.22% 398,000,000 194,200,000 0 398,000,000 - -
Partnership) - Perseverance
Adjacent Mountain 1
Yuanwang Fund
CETC Investment
State-owned corporation 2.46% 232,307,903 0 0 232,307,903 -
Holdings Co., Ltd.
Xinjiang Pukang Domestic
Investment Limited non-state-owned 1.93% 182,510,174 0 0 182,510,174 Pledged 112,533,000
Partnership corporation
The 52nd Research Institute
at China Electronics State-owned
1.92% 180,775,044 0 0 180,775,044 - -
Technology corporation
Group Corporation
Hu Yangzhong Domestic Individual 1.65% 155,246,477 0 116,434,858 38,811,619 - -
Central Huijin Investment
State-owned corporation 0.69% 64,700,691 0 0 64,700,691 - -
Co., Ltd.
Shenwan Hongyuan
State-owned corporation 0.50% 46,786,112 -39,012,112 0 46,786,112 - -
Securities Co., Ltd
China Electronics Technology HIK Group Co., Ltd., CETC Investment Holdings Co., Ltd. and The 52nd Research Institute at China
Electronics Technology Group Co., Ltd. are all subject to control of China Electronics Technology Group Co. Ltd.. Ms. Chen
Chunmei, limited partner of Xinjiang Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign
Explanation on associated relationship or concerted
individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Xinjiang Weixun Investment
actions among the above-mentioned shareholders:
Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-
concert parties in accordance with the Administration of the Takeover of Listed Companies Procedures.
Particulars about shares held by the Top 10 common shareholders holding shares that are not subject to trading restriction(s)
56
Hikvision 2022 Half Year Report
Number of common shares without Type of shares
Name of shareholder trading restrictions held at the
Type Number
period-end
China Electronics Technology HIK Group Co., Ltd. 3,403,879,509 RMB common shares 3,403,879,509
Gong Hongjia 962,504,814 RMB common shares 962,504,814
Xinjiang Weixun Investment Management Limited Partnership 450,795,176 RMB common shares 450,795,176
Shanghai Perseverance Asset Management Partnership (Limited Partnership) -
398,000,000 RMB common shares 398,000,000
Perseverance Adjacent Mountain 1 Yuanwang Fund
CETC Investment Holdings Co., Ltd. 232,307,903 RMB common shares 232,307,903
Xinjiang Pukang Investment Limited Partnership 182,510,174 RMB common shares 182,510,174
The 52nd Research Institute at China Electronics Technology Group Co. Ltd. 180,775,044 RMB common shares 180,775,044
Central Huijin Investment Co., Ltd. 64,700,691 RMB common shares 64,700,691
Shenwan Hongyuan Securities Co., Ltd 46,786,112 RMB common shares 46,786,112
Hong Kong Securities Clearing Company Ltd.(HKSCC) 46,449,732 RMB common shares 46,449,732
China Electronics Technology HIK Group Co., Ltd., CETC Investment Holdings Co., Ltd. and The 52 nd Research Institute at China
Explanation on associated relationship and concerted Electronics Technology Group Co., Ltd. are all subject to control of China Electronics Technology Group Co. Ltd. Ms. Chen
actions among top ten common shareholders holding Chunmei, limited partner of Xinjiang Pukang Investment Limited Partnership, is the spouse of Mr. Gong Hongjia, foreign
shares without trading restrictions, and among top ten individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Xinjiang Weixun Investment
common shareholders and top ten common Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership.
shareholders holding shares without trading restrictions Except for these, the Company does not know whether the other shareholders are related parties or whether they are acting-in-
concert parties in accordance with the Administration of the Takeover of Listed Companies Procedures.
Note: The shareholders Xinjiang Weixun Investment Management Limited Partnership and Xinjiang Pukang Investment Limited Partnership have changed their
names to Hangzhou Weixun Equity Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (Limited Partnership) in July
2022 ).
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.
57
Hikvision 2022 Half Year Report
IV.Shareholding changes of directors, supervisors, senior management personnel
√ Applicable □ Inapplicable
Number of Number of
Shares Shares Number of
Shares held at restricted restricted
increased decreased restricted
Shares held at the the end of the stocks stocks held at
during the during the stocks held at
Tenure beginning of the current granted in the end of the
Name Title current current the beginning
status current reporting reporting the current current
reporting reporting of the current
period (shares) period reporting reporting
period period reporting
(Shares) period period
(shares) (shares) period (shares)
(shares) (shares)
Chen Zongnian Chairman Incumbent 0 0 0 0 0 0 0
Qu Liyang Director Incumbent 15,750 0 0 15,750 0 0 0
Wang Qiuchao Director Incumbent 35,000 0 0 35,000 0 0 0
Director,
Hu Yangzhong Incumbent 155,246,477 0 0 155,246,477 0 0 0
General Manager (CEO)
Director,
Wu Weiqi Standing Deputy Incumbent 8,631,089 0 0 8,631,089 0 0 0
General Manager
Independent
Wu Xiaobo Incumbent 0 0 0 0 0 0 0
Director
Independent
Hu Ruimin Incumbent 0 0 0 0 0 0 0
Director
Independent
Li Shuhua Incumbent 0 0 0 0 0 0 0
Director
Independent
Guan Qingyou Incumbent 0 0 0 0 0 0 0
Director
Hong Tianfeng Supervisor Chairman Incumbent 0 0 0 0 0 0 0
Lu Jianzhong Supervisor Incumbent 0 0 0 0 0 0 0
58
Hikvision 2022 Half Year Report
Number of Number of
Shares Shares Number of
Shares held at restricted restricted
increased decreased restricted
Shares held at the the end of the stocks stocks held at
during the during the stocks held at
Tenure beginning of the current granted in the end of the
Name Title current current the beginning
status current reporting reporting the current current
reporting reporting of the current
period (shares) period reporting reporting
period period reporting
(Shares) period period
(shares) (shares) period (shares)
(shares) (shares)
Xu Lirong Supervisor Incumbent 303,000 0 0 303,000 0 0 0
Senior Deputy General
He Hongli Incumbent 331,500 0 0 331,500 0 0 0
Manager
Senior Deputy General
Cai Changyang Incumbent 109,500 0 0 109,500 0 0 0
Manager
Senior Deputy General
Xu Ximing Incumbent 197,000 90,000 0 287,000 118,200 90,000 149,100
Manager
Senior Deputy General
Bi Huijuan Incumbent 273,000 0 0 273,000 73,800 0 36,900
Manager
Senior Deputy General
Pu Shiliang Incumbent 295,900 90,000 0 385,900 60,000 90,000 120,000
Manager
Senior Deputy General
Jin Duo Incumbent 109,500 0 0 109,500 0 0 0
Manager
Senior Deputy General
Jin Yan Manager, Incumbent 284,000 80,000 0 364,000 66,000 80,000 113,000
Person in charge of finance
Senior Deputy General
Huang
Manager, Incumbent 402,500 80,000 0 482,500 66,000 80,000 113,000
Fanghong
Board Secretary
Senior Deputy General
Chen Junke Incumbent 0 0 0 0 0 0 0
Manager
59
Hikvision 2022 Half Year Report
Number of Number of
Shares Shares Number of
Shares held at restricted restricted
increased decreased restricted
Shares held at the the end of the stocks stocks held at
during the during the stocks held at
Tenure beginning of the current granted in the end of the
Name Title current current the beginning
status current reporting reporting the current current
reporting reporting of the current
period (shares) period reporting reporting
period period reporting
(Shares) period period
(shares) (shares) period (shares)
(shares) (shares)
Senior Deputy General
Xu Peng Incumbent 77,244 70,000 0 147,244 77,244 70,000 108,622
Manager
Senior Deputy General
Guo Xudong Incumbent 44,280 0 0 44,280 44,280 0 22,140
Manager
Total -- -- 166,355,740 410000 0 166,765,740 505,524 410,000 662,762
Note: Number shares held at the beginning of the period, shares increased during the period, shares decreased during the period for directors, supervisors, and senior
management personnel above are all shares directly held by them accordingly, including restricted shares.
V. Changes in controlling shareholders or actual controllers
Change of the controlling shareholder during the reporting period
□ Applicable √ Inapplicable
The Company's controlling shareholder has not changed during the reporting period.
Change of the actual controller during the reporting period
□ Applicable √ Inapplicable
No such change during the reporting period.
60
Hikvision 2022 Half Year Report
Section VIII Information of Preferred Shares
□ Applicable √ Inapplicable
There is no preferred share existed for the Company during the current reporting period.
61
Hikvision 2022 Half Year Report
Section IX Bonds
□ Applicable √ Inapplicable
62
Hikvision 2022 Half Year Report
Section X Financial Report
I. Audit report
Whether audit has been performed on the half year report
□ Yes √ No
The Company’s 2022 Half Year Report has not been audited
63
Hikvision 2022 Half Year Report
On June 30th 2022
Consolidated Balance Sheet
Unit: RMB
Item Notes On June 30th 2022 On December 31st 2021
Current Assets:
Cash and bank balances (V)1 28,026,753,554.36 34,721,870,931.36
Held-for-trading financial assets (V)2 48,035,480.36 34,320,010.83
Notes receivable (V)3 1,288,013,706.27 1,522,760,905.30
Accounts receivable (V)4 29,113,163,447.64 26,174,773,100.42
Receivables for financing (V)5 1,299,586,224.80 1,316,035,122.06
Prepayments (V)6 623,465,090.39 505,798,253.35
Other receivables (V)7 701,025,124.55 359,620,445.88
Inventories (V)8 20,675,229,472.10 17,974,112,407.60
Contract assets (V)9 1,351,087,065.82 1,411,372,624.91
Non-current assets due within one year (V)10 929,050,417.26 975,960,437.14
Other current assets (V)11 1,150,677,072.25 1,022,600,377.78
Total Current Assets 85,206,086,655.80 86,019,224,616.63
Non-current Assets:
Long-term receivables (V)12 585,772,563.78 613,067,944.97
Long-term equity investment (V)13 1,112,866,990.60 982,165,546.45
Other non-current financial assets (V)14 383,275,456.44 438,724,172.22
Fixed assets (V)15 7,756,708,670.69 6,695,590,671.27
Construction in progress (V)16 2,845,209,423.58 2,323,336,098.68
Right-of-use assets (V)17 571,513,353.19 566,393,672.75
Intangible assets (V)18 1,524,688,956.96 1,304,247,415.07
Goodwill (V)19 213,996,760.47 202,381,895.37
Long-term deferred expenses (V)20 157,911,083.23 158,007,174.90
Deferred tax assets (V)21 1,425,447,500.25 1,210,877,575.24
Other non-current assets (V)22 3,110,856,444.55 3,350,526,411.63
Total Non-current Assets 19,688,247,203.74 17,845,318,578.55
Total Assets 104,894,333,859.54 103,864,543,195.18
64
Hikvision 2022 Half Year Report
On June 30th 2022
Consolidated Balance Sheet-continued
Unit: RMB
Item Notes On June 30th 2022 On December 31st 2021
Current Liabilities:
Short-term borrowings (V)23 4,588,003,450.26 4,074,962,469.97
Held-for-trading financial liabilities (V)24 109,770,258.90 4,062,317.57
Notes payable (V)25 777,786,052.56 1,339,998,383.34
Accounts payable (V)26 14,758,328,901.40 15,889,694,981.12
Contract liabilities (V)27 2,385,309,266.27 2,580,894,226.59
Payroll payable (V)28 3,373,121,582.34 4,595,552,073.12
Taxes payable (V)29 1,359,762,591.98 1,461,470,029.69
Other payables (V)30 2,607,868,914.21 1,830,626,583.03
Non-current liabilities due within one year (V)31 672,339,752.76 596,915,360.58
Other current liabilities (V)32 864,170,079.25 917,479,922.61
Total Current Liabilities 31,496,460,849.93 33,291,656,347.62
Non-current Liabilities:
Long-term borrowings (V)33 4,730,784,322.12 3,284,371,642.52
Lease liabilities (V)34 361,747,620.12 317,951,879.21
Long-term payables (V)35 7,662,432.39 9,009,331.50
Provisions (V)36 221,289,572.47 200,675,950.96
Deferred income (V)37 776,675,177.34 738,586,458.05
Deferred tax liabilities (V)21 76,299,876.50 93,315,151.17
Other non-current liabilitie (V)38 2,833,228,372.94 534,334,158.27
Total Non-current Liabilities 9,007,687,373.88 5,178,244,571.68
Total Liabilities 40,504,148,223.81 38,469,900,919.30
Owners’ Equity
Share capital (V)39 9,433,208,719.00 9,335,806,114.00
Capital reserves (V)40 8,843,377,782.09 5,404,070,600.07
Less: Treasury shares (V)41 3,304,135,992.99 1,023,188,723.04
Other comprehensive income (V)42 (49,391,626.99) (77,184,125.29)
Surplus reserves (V)43 4,672,505,348.00 4,672,505,348.00
Retained earnings (V)44 42,418,244,379.68 45,148,877,451.52
Total owners' equity attributable to owner of the
62,013,808,608.79 63,460,886,665.26
Company
Minority equity 2,376,377,026.94 1,933,755,610.62
Total Owners' Equity 64,390,185,635.73 65,394,642,275.88
Total Liabilities and Owners' Equity 104,894,333,859.54 103,864,543,195.18
The accompanying notes form part of the financial statements.
The financial statements were signed by the following:
Legal Representative: Chen Zongnian；Person in Charge of the Accounting Work: Jin Yan;
Person in Charge of the Accounting Department: Zhan Junhua
65
Hikvision 2022 Half Year Report
On June 30th 2022
Balance Sheet of the Parent Company
Unit: RMB
Item Notes On June 30th 2022 On December 31st 2021
Current Assets:
Cash and bank balances 22,727,548,883.86 26,656,489,813.38
Held-for-trading financial assets 9,578,357.87 4,489,098.88
Notes receivable 193,204,820.26 254,830,140.51
Accounts receivable (XV)1 28,326,601,855.11 23,878,118,071.42
Receivables for financing 8,199,874.68 3,116,794.78
Prepayments 103,335,368.49 116,908,227.97
Other receivables (XV)2 1,742,318,956.56 1,514,142,364.05
Inventories 289,330,266.03 346,835,446.94
Contract assets 1,084,908.85 2,627,800.33
Non-current assets due within one year 135,477,718.70 123,112,934.70
Other current assets 17,322,430.12 46,183,195.94
Total Current Assets 53,554,003,440.53 52,946,853,888.90
Non-current Assets:
Long-term accounts receivable 235,379,383.72 237,682,275.59
Long-term equity investment (XV)3 7,646,251,215.60 7,785,916,631.88
Other non-current financial assets 380,391,236.44 435,839,952.22
Fixed assets 2,870,378,156.38 2,834,983,102.39
Construction in progress 551,403,895.21 450,957,191.99
Right-of-use assets 87,027,621.07 67,592,195.40
Intangible assets 120,534,422.24 134,626,963.77
Long-term deferred expenses 44,947,505.24 61,162,816.25
Deferred tax assets 329,174,670.52 281,893,463.93
Other non-current assets 23,897,701.71 21,042,856.65
Total Non-current Assets 12,289,385,808.13 12,311,697,450.07
Total Assets 65,843,389,248.66 65,258,551,338.97
66
Hikvision 2022 Half Year Report
On June 30th 2022
Balance Sheet of the Parent Company - continued
Unit: RMB
Item Notes On June 30th 2022 On December 31st 2021
Current Liabilities:
Short-term borrowings 351,605,587.62 361,117,361.14
Accounts payable 602,973,655.85 713,263,324.12
Contract liabilities 281,544,659.40 368,945,242.08
Payroll payable 2,162,024,811.59 2,838,109,439.40
Taxes payable 834,999,505.67 861,102,872.06
Other payables 2,577,558,344.43 1,334,246,256.62
Non-current liabilities due within one year 68,540,942.56 66,524,298.83
Other current liabilities 539,660,485.29 561,225,504.26
Total Current Liabilities 7,418,907,992.41 7,104,534,298.51
Non-current Liabilities:
Long-term borrowings 1,489,216,400.00 1,254,076,200.00
Lease liabilities 35,533,000.51 27,440,248.49
Provisions 125,522,676.09 113,998,912.05
Deferred income 396,629,147.31 365,699,705.71
Other non-current liabilities 2,806,169,050.05 511,594,361.52
Total Non-current Liabilities 4,853,070,273.96 2,272,809,427.77
Total Liabilities 12,271,978,266.37 9,377,343,726.28
Owners’ Equity
Share capital 9,433,208,719.00 9,335,806,114.00
Capital reserves 8,285,883,490.36 4,937,523,553.84
Less: Treasury shares 3,304,135,992.99 1,023,188,723.04
Surplus reserves 4,672,505,348.00 4,672,505,348.00
Retained earnings 34,483,949,417.92 37,958,561,319.89
Total Owners' Equity 53,571,410,982.29 55,881,207,612.69
Total Liabilities and Owners' Equity 65,843,389,248.66 65,258,551,338.97
67
Hikvision 2022 Half Year Report
For the reporting period from January 1st 2022 to June 30th 2022
Consolidated Income Statement
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Revenue (V)45 37,257,516,590.62 33,902,098,368.10
Less: Cost of sales and services (V)45 21,182,955,700.93 18,205,195,764.46
Business taxes and surcharges (V)46 259,670,277.01 280,470,004.15
Selling expenses 4,536,589,939.10 4,190,678,349.80
Administrative expenses 1,200,010,815.48 880,577,747.56
Research and Development (R&D) expenses 4,675,061,688.81 3,877,769,884.09
Financial expenses (V)47 (785,465,257.61) (122,524,438.07)
Including: Interest expenses 140,732,663.66 110,613,426.61
Interest income 452,305,967.35 411,998,029.35
Add: Other income (V)48 993,271,624.47 1,076,047,292.02
Investment income (V)49 185,304,789.30 169,311,455.72
Including: Investment gains (losses) in associated enterprise
46,152,616.54 (1,821,107.11)
and joint-venture enterprise
Losses from changes in fair values (V)50 (118,462,092.82) (9,549,529.40)
Credit impairment losses (V)51 (372,674,934.04) (311,905,460.79)
Impairment losses of assets (V)52 (125,801,550.90) (258,336,972.38)
Asset disposal gains (losses) (10,638,858.24) 3,760,896.87
II. Operating Profit 6,739,692,404.67 7,259,258,738.15
Add: Non-operating income (V)53 36,155,570.95 42,002,720.90
Less: Non-operating expenses (V)54 9,248,079.55 18,855,336.72
III. Total Profit 6,766,599,896.07 7,282,406,122.33
Less: Income tax expenses (V)55 628,419,906.49 427,530,365.26
IV. Net Profit 6,138,179,989.58 6,854,875,757.07
4.1 Classification by continuous operation
(a) Net profit on continuous operation 6,138,179,989.58 6,854,875,757.07
(b) Net loss on terminated operation
4.2 Classification by attribution of ownership
(a) Profit or loss attributable to minority shareholders 378,925,214.32 373,451,103.68
(b) Net profit attributable to owners of parent company 5,759,254,775.26 6,481,424,653.39
V. Other Comprehensive Income, Net of Income Tax (V)42 52,624,946.63 (8,260,441.80)
Other comprehensive income attributable to owners of the
27,792,498.30 (7,233,190.86)
Company, net of tax
(I) Items that will not be reclassified subsequently to profit or loss
(II) Other comprehensive income to be reclassified to profit or
27,792,498.30 (7,233,190.86)
loss in subsequent periods
1. Exchange differences arising on conversion of financial
27,792,498.30 (7,233,190.86)
statements denominated in foreign currencies
Other comprehensive income attributable to minority interests, net
24,832,448.33 (1,027,250.94)
of tax
68
Hikvision 2022 Half Year Report
Amount for the Amount for the
Item Notes
current period prior period
VI. Total Comprehensive Income 6,190,804,936.21 6,846,615,315.27
Total comprehensive income attributable to owners of the parent
5,787,047,273.56 6,474,191,462.53
company
Total comprehensive income attributable to minority shareholders 403,757,662.65 372,423,852.74
VII. Earnings Per Share
(I) Basic earnings per share (XVI)2 0.608 0.695
(II) Diluted earnings per share (XVI)2 0.608 0.695
69
Hikvision 2022 Half Year Report
For the reporting period from January 1st 2022 to June 30th 2022
Income statement of the parent company
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Revenue (XV)4 11,764,069,657.55 12,917,726,385.73
Less: Cost of sales and services (XV)4 2,181,526,620.42 2,509,299,575.74
Business taxes and surcharges 142,850,255.77 150,551,978.92
Selling expenses 1,748,230,784.18 1,783,224,294.68
Administrative expenses 387,780,229.37 314,616,473.56
Research and Development (R&D) expenses 3,091,156,108.94 2,720,506,560.34
Financial expenses (359,933,229.16) (343,124,665.61)
Including: Interest expenses 70,177,106.44 10,397,669.93
Interest income 372,666,149.98 308,600,906.50
Add: Other income 766,117,498.53 814,486,093.98
Investment income (XV)5 126,490,621.87 111,957,469.10
Including: Investment gains (losses) in associated
51,641,039.76 (3,799,685.50)
enterprise and joint-venture enterprise
Losses from changes in fair values (21,359,456.79) (23,277,319.84)
Credit impairment losses (71,919,000.56) (40,842,757.19)
Losses on asset impairment (3,171,157.67) (78,025.86)
Asset disposal gains 176,984.43 3,833,547.49
II. Operating Profit 5,368,794,377.84 6,648,731,175.78
Add: Non-operating income 10,864,676.52 3,802,072.88
Less: Non-operating expenses 633,999.67 9,890,999.61
III. Total Profit 5,379,025,054.69 6,642,642,249.05
Less: Income tax expenses 363,749,109.56 410,183,878.83
IV. Net Profit 5,015,275,945.13 6,232,458,370.22
V. Other Comprehensive Income, Net of Income Tax - -
VI. Total Comprehensive Income 5,015,275,945.13 6,232,458,370.22
70
Hikvision 2022 Half Year Report
For the reporting period from January 1st 2022 to June 30th 2022
Consolidated Cash Flow Statement
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Cash Flows from Operating Activities:
Cash received from sale of goods or rendering of services 37,991,180,761.41 36,645,553,356.23
Receipts of tax refunds 1,858,427,296.61 1,948,391,576.36
Other cash receipts relating to operating activities (V)56(1) 996,902,818.46 1,110,525,511.10
Sub-total of cash inflows from operating activities 40,846,510,876.48 39,704,470,443.69
Cash payments for goods purchased and services received 28,517,145,082.71 25,383,102,780.25
Cash paid to and on behalf of employees 8,854,819,423.45 6,909,644,086.23
Payments of various types of taxes 2,819,627,091.55 2,538,596,422.62
Other cash payments relating to operating activities (V)56(2) 2,813,411,487.85 2,910,273,382.44
Sub-total of cash outflows from operating activities 43,005,003,085.56 37,741,616,671.54
Net Cash Flows from Operating Activities (V)57(1) (2,158,492,209.08) 1,962,853,772.15
II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments 3,190,133,666.78 3,831,776,958.90
Cash receipts from investment income - 116,643,801.97
Net cash receipts from disposals of fixed assets, intangible assets and
8,886,261.07 6,017,061.25
other long-term assets
Other cash receipts relating to investing activities (V)56(3) 22,123,969.10 6,182,818.55
Sub-total of cash inflows from investing activities 3,221,143,896.95 3,960,620,640.67
Cash payments to acquire or construct fixed assets, intangible assets and
1,827,649,513.03 1,285,789,284.17
other long-term assets
Cash paid to acquire investments 3,090,730,900.01 3,761,350,647.76
Net cash paid for disposal of subsidiaries and other business units - 7,355,969.42
Sub-total of cash outflows from investing activities 4,918,380,413.04 5,054,495,901.35
Net Cash Flows from Investing Activities (1,697,236,516.09) (1,093,875,260.68)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 2,893,831,394.55 5,750,000.00
Including: Cash receipts from capital contributions from minority
- 5,750,000.00
owners of subsidiaries
Cash receipts from borrowings 3,244,389,312.95 1,439,276,251.61
Sub-total of cash inflows from financing activities 6,138,220,707.50 1,445,026,251.61
Cash repayments of borrowings 1,139,832,455.64 2,352,226,510.55
Cash payments for distribution of dividends or profits or settlement of
7,954,111,720.49 7,064,746,308.01
interest expenses
Including: Dividends and profits paid by subsidiaries to minority
1,000,000.00 1,500,000.00
shareholders
Other cash payments relating to financing activities (V)56(4) 106,254,586.43 207,606,972.78
Sub-total of cash outflows from financing activities 9,200,198,762.56 9,624,579,791.34
Net Cash Flows from Financing Activities (3,061,978,055.06) (8,179,553,539.73)
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash
72,663,543.66 (74,298,730.20)
Equivalents
V. Net Decrease in Cash and Cash Equivalents (V)57(1) (6,845,043,236.57) (7,384,873,758.46)
Add: Opening balance of cash and cash equivalents (V)57(1) 34,603,944,429.20 35,024,837,878.31
VI. Closing Balance of Cash and Cash Equivalents (V)57(2) 27,758,901,192.63 27,639,964,119.85
71
Hikvision 2022 Half Year Report
For the reporting period from January 1st 2022 to June 30th 2022
Cash Flow Statements of the Parent Company
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Cash Flows from Operating Activities::
Cash receipts from the sale of goods and the rendering of services 8,600,130,294.66 14,695,266,847.20
Receipts of tax refunds 689,224,260.83 737,640,128.60
Other cash receipts relating to operating activities 494,552,168.22 810,301,539.46
Sub-total of cash inflows from operating activities 9,783,906,723.71 16,243,208,515.26
Cash payments for goods acquired and services received 2,616,584,562.58 3,146,599,060.27
Cash payments to and on behalf of employees 4,226,728,575.81 3,533,262,244.48
Payments of various types of taxes 1,747,511,934.99 1,854,362,234.39
Other cash payments relating to operating activities 1,736,522,589.02 1,193,441,671.96
Sub-total of cash outflows from operating activities 10,327,347,662.40 9,727,665,211.10
Net Cash Flows from Operating Activities (543,440,938.69) 6,515,543,304.16
II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments 30,260,000.00 -
Cash receipts from investment income 44,492,681.25 120,143,801.97
Net cash receipts from disposals of fixed assets, intangible assets and
23,954,540.31 6,720,944.51
other long-term assets
Other cash receipts relating to investing activities 34,278,715,825.83 7,834,524,088.17
Sub-total of cash inflows from investing activities 34,377,423,047.39 7,961,388,834.65
Cash payments to acquire or construct fixed assets, intangible assets and
339,052,800.88 189,587,482.90
other long-term assets
Cash payments to acquire investments 25,320,000.00 205,000,000.00
Other cash payments relating to investing activities 34,274,668,870.73 8,126,886,684.35
Sub-total of cash outflows from investing activities 34,639,041,671.61 8,521,474,167.25
Net Cash Flows from Investing Activities (261,618,624.22) (560,085,332.60)
III. Cash Flows from Financing Activities
Cash receipts from capital contributions 2,893,831,394.55 -
Cash receipts from borrowings 280,000,000.00 -
Other cash receipts relating to financing activities 5,694,943,526.50 9,731,292,792.85
Sub-total of cash inflows from financing activities 8,868,774,921.05 9,731,292,792.85
Cash repayments of borrowings 14,436,600.00 1,430,000,000.00
Cash payments for distribution of dividends or profits or settlement of
7,788,147,750.64 6,966,343,191.95
interest expenses
Other cash payments relating to financing activities 4,191,920,331.61 7,859,321,152.86
Sub-total of cash outflows from financing activities 11,994,504,682.25 16,255,664,344.81
Net Cash Flows from Financing Activities (3,125,729,761.20) (6,524,371,551.96)
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash
748,292.11 (7,549,854.62)
Equivalents
V. Net Decrease in Cash and Cash Equivalents (3,930,041,032.00) (576,463,435.02)
Add: Opening balance of cash and cash equivalents 26,639,582,696.49 23,264,693,578.70
VI. Closing Balance of Cash and Cash Equivalents 22,709,541,664.49 22,688,230,143.68
72
Hikvision 2022 Half Year Report
st th
For the reporting period from January 1 2022 to June 30 2022
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for the first half of 2022
Owner’s equity attributable to the parent company
Items Other Minority
Less: Treasury Total owners' equity
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests
share
income
I. Closing Balance of the Prior
9,335,806,114.00 5,404,070,600.07 1,023,188,723.04 (77,184,125.29) 4,672,505,348.00 45,148,877,451.52 1,933,755,610.62 65,394,642,275.88
Year
II. Increase or Decrease in the -
97,402,605.00 3,439,307,182.02 2,280,947,269.95 27,792,498.30 (2,730,633,071.84) 442,621,416.32 (1,004,456,640.15)
Current Period
(I) Total comprehensive income - - - 27,792,498.30 - 5,759,254,775.26 403,757,662.65 6,190,804,936.21
(II) Owners’ contributions and - - -
97,402,605.00 3,439,307,182.02 2,400,667,572.15 39,863,753.67 1,175,905,968.54
reduction in capital
1. Capital contribution from - - -
97,402,605.00 2,796,428,789.55 2,893,831,394.55 - -
shareholders
2. Share-based payment - - -
- 499,737,895.30 - 39,863,753.67 539,601,648.97
recognized in owners’ equity
3. Others - 143,140,497.17 (493,163,822.40) - - - - 636,304,319.57
(III) Profit distribution - - (119,720,302.20) - - (8,489,887,847.10) (1,000,000.00) (8,371,167,544.90)
1. Transfer to surplus reserves - - - - - - - -
2. Distributions to shareholders - - (119,720,302.20) - - (8,489,887,847.10) (1,000,000.00) (8,371,167,544.90)
III. Closing Balance of the
9,433,208,719.00 8,843,377,782.09 3,304,135,992.99 (49,391,626.99) 4,672,505,348.00 42,418,244,379.68 2,376,377,026.94 64,390,185,635.73
Current Period
Amount for the first half of 2021
Owner’s equity attributable to the parent company
Items Other Minority
Less: Treasury Total owners' equity
Share capital Capital reserves comprehensive Surplus reserve Retained profits interests
share
income
I. Closing Balance of the Prior
9,343,417,190.00 5,178,777,462.09 1,121,918,737.47 (84,993,926.94) 4,672,505,348.00 35,806,523,826.37 685,432,238.49 54,479,743,400.54
Year
II. Increase or Decrease in the
(7,611,076.00) 4,311,322.68 (98,730,014.43) (7,233,190.86) - (976,632,753.51) 390,636,208.74 (497,799,474.52)
Current Period
(I) Total comprehensive income - - - (7,233,190.86) - 6,481,424,653.39 372,423,852.74 6,846,615,315.27
(II) Owners’ contributions and
(7,611,076.00) 4,311,322.68 (37,631,007.23) - - - 19,712,356.00 54,043,609.91
reduction in capital
1. Capital contribution from
- - - - - - 5,750,000.00 5,750,000.00
shareholders
2. Share-based payment
- 119,354,237.28 - - - - 14,754,392.73 134,108,630.01
recognized in owners’ equity
3.Others (7,611,076.00) (115,042,914.60) (37,631,007.23) - - - (792,036.73) (85,815,020.10)
(III) Profit distribution - - (61,099,007.20) - - (7,458,057,406.90) (1,500,000.00) (7,398,458,399.70)
1. Transfer to surplus reserves - - - - - - - -
2. Distributions to shareholders - - (61,099,007.20) - - (7,458,057,406.90) (1,500,000.00) (7,398,458,399.70)
III. Closing Balance of the
9,335,806,114.00 5,183,088,784.77 1,023,188,723.04 (92,227,117.80) 4,672,505,348.00 34,829,891,072.86 1,076,068,447.23 53,981,943,926.02
Current Period
73
Hikvision 2022 Half Year Report
For the reporting period from January 1st 2022 to June 30th 2022
Statement of Changes in Owners' Equity of the Parent Company
Unit: RMB
Amount for the first half of 2022
Item Total owners'
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits
equity
I. Closing Balance of the Prior Year 9,335,806,114.00 4,937,523,553.84 1,023,188,723.04 4,672,505,348.00 37,958,561,319.89 55,881,207,612.69
II. Increase or Decrease in the Current Period 97,402,605.00 3,348,359,936.52 2,280,947,269.95 - (3,474,611,901.97) (2,309,796,630.40)
(I) Total comprehensive income - - - - 5,015,275,945.13 5,015,275,945.13
(II) Owners’ contributions and reduction in capital 97,402,605.00 3,348,359,936.52 2,400,667,572.15 - - 1,045,094,969.37
1. Capital contribution from shareholders 97,402,605.00 2,796,428,789.55 2,893,831,394.55 - - -
2. Share-based payment
- 450,746,177.86 - - - 450,746,177.86
recognized in owners’ equity
3. Others - 101,184,969.11 (493,163,822.40) - - 594,348,791.51
(III) Profit distribution - - (119,720,302.20) - (8,489,887,847.10) (8,370,167,544.90)
1.Distributions to shareholders - - (119,720,302.20) - (8,489,887,847.10) (8,370,167,544.90)
III. Closing Balance of the Current Period 9,433,208,719.00 8,285,883,490.36 3,304,135,992.99 4,672,505,348.00 34,483,949,417.92 53,571,410,982.29
Amount for the first half of 2021
Item Total owners'
Share capital Capital reserves Less: Treasury share Surplus reserve Retained profits
equity
I. Closing Balance of the Prior Year 9,343,417,190.00 4,770,210,334.16 1,121,918,737.47 4,672,505,348.00 31,327,891,058.77 48,992,105,193.46
II. Increase or Decrease in the Current Period (7,611,076.00) (7,533,423.24) (98,730,014.43) - (1,225,599,036.68) (1,142,013,521.49)
(I) Total comprehensive income - - - - 6,232,458,370.22 6,232,458,370.22
(II) Owners’ contributions and reduction in capital (7,611,076.00) (7,533,423.24) (37,631,007.23) - - 22,486,507.99
1. Share-based payment recognized in owners’ equity - 107,499,558.04 - - - 107,499,558.04
2. Others (7,611,076.00) (115,032,981.28) (37,631,007.23) - - (85,013,050.05)
(III) Profit distribution - - (61,099,007.20) - (7,458,057,406.90) (7,396,958,399.70)
1.Distributions to shareholders - - (61,099,007.20) - (7,458,057,406.90) (7,396,958,399.70)
III. Closing Balance of the Current Period 9,335,806,114.00 4,762,676,910.92 1,023,188,723.04 4,672,505,348.00 30,102,292,022.09 47,850,091,671.97
74
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
I. Basic information about the Company
Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company" or
“Hikvision”), is a Sino-foreign equity joint venture company, formerly known as "Hangzhou Hikvision Digital
Technology Ltd", established on November 30th 2001 in Hangzhou upon the approval letter of Hangzhou High-tech No.
604 [2001] issued by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25th 2008,
with approval of document No. 598 [2008] issued by the MOFCOM (The Ministry of Commerce of the People's Republic
of China), the Company was renamed as “Hangzhou Hikvision Digital Technology Co., Ltd.”, headquartered in Hangzhou,
and obtained the business license of enterprise No.91330000733796106P. On May 28th 2010, the Company was listed on
the Shenzhen Stock Exchange.
On July 2nd 2021, authorized by the Company’s second Extraordinary General Meeting in 2016 and the second
Extraordinary General Meeting in 2018, the Company completed procedures of repurchase and cancellation of some of
the 7,611,076 restricted stocks that did not meet the incentive conditions, and the total share capital of the Company was
adjusted to 9,335,806,114 shares.
On January 18th 2022, in accordance with the authorization that approved by the Company's first Extraordinary General
Meeting in 2022, as well as the Articles of Association that resolved and revised by the 8th meeting of the 5th session of the
Board of Directors, the Company was approved to issue 99,417,229 RMB common shares (97,402,605 shares after
adjustments) to 9,933 incentive objects (9,738 incentive objects after adjustments). The Company completed the equity
registration procedures on February 10th 2022. The total share capital of the Company was adjusted to 9,433,208,719
shares. For details of the share capital, please refer to Note (V), 39.
As of June 30th 2022, the Company’s total registered capital is RMB 9,433,208,719.00, with total capital shares of
9,433,208,719 shares (face value RMB 1 per share), of which restricted A-shares were 257,536,601 shares, A-shares
without restriction are 9,175,672,118 shares.
The Company is involved in the sector of other electronic equipment manufacturing of the electronic industry. Business
scope of the Company includes development and production of electronic products (including explosion-proof electrical
products, tele-communication equipments and its ancillary equipments, multimedia equipments, transmission and display
equipments), fire protection and control products, big data and IoT software and hardware products, aerial vehicles, robots,
intelligent equipments and intelligent systems, real-time communication systems, auto parts and accessories, electrical
signal equipments for vehicle, servers and supporting hardware and software products; sales of self-manufactured products;
technical service, electronic technology consulting service, training service (excluding class training), electronic
equipment installation, design, construction and maintenance of electronic engineering and intelligent system engineering.
For details about business scope of the Company and its subsidiaries, please refer to Note (VII) 1.
The Company’s and consolidated financial reports were approved for issuance by the 12th meeting of the 5th session of the
75
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Board of Directors of the Company on August 12th 2022.
For changes in consolidation scope of the financial statements during the current reporting period, please refer to “changes
in the consolidation scope” in Note (VI).
II. Basis of preparation of financial statements
Basis of preparation of financial statements
The Company and its subsidiaries (hereinafter referred to as "the Group") have adopted the Accounting Standards for
Business Enterprises ("ASBE") and relevant provisions issued by the Ministry of Finance ("MoF"). In addition, the Group
has disclosed relevant financial information in accordance with Information Disclosure and Presentation Rules for
Companies Offering Securities to the Public No. 15－ General Provisions on Financial Reporting (revised in 2014).
Going concern
The Group has evaluated its going concern for 12 months going forward starting from June 30th 2022, and there is no
factor that may cast significant doubt on the entity's ability to continue as a going concern. Therefore, the financial
statements have been prepared on a going concern basis.
Bookkeeping base and valuation principles
The Group measures the accounting elements in accordance with the accrual accounting basis. Except certain financial
instruments are measured by fair value, these financial statements are prepared in accordance with the measurements basis
of historical costs. If the asset decreases in value, the provision for impairment of assets should be made according to
relevant regulations.
According to the historical cost measurement, the assets shall be measured as per the amount of cash or cash equivalent
paid at the time of purchase, or the fair value of consideration paid for the purchase of such assets. The liabilities shall be
measured in accordance with the amount of funds or assets actually received when undertaking current obligations, or the
contract amount when undertaking the current obligations, or the amount of cash or cash equivalents required for paying
back the debts in daily activities.
The fair value is a price received by the market participants from selling asset or transferring liability during orderly
transaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique, the
measured and disclosed fair value in the financial statement shall be determined on this basis.
76
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
When measuring non-financial assets at fair value, the assets shall be measured considering the ability of market
participants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participants
to use the assets for optimal use to generate economic benefits.
For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniques
involving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in the
valuation process in order to make the initial recognition results confirmed by valuation techniques equal to the transaction
price.
Based on the observable extent of the input value of the fair value, and the importance of such input value to the fair value
measurement, the fair value measurement is divided into three levels:
Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market acquired on
measurement date;
Level 2: The input value is the input value of relevant assets or liabilities observable directly or indirectly in addition
to level 1 input value;
Level 3: The input value is the non-observable input value of relevant assets or liabilities.
III. Significant accounting policies and accounting estimates
1. Statement for compliance with Accounting Standards for Business Enterprises (ASBE)
The financial statements of the Company have been prepared in accordance with ASBE, and present the Company's and
consolidated financial position as of June 30th 2022, the Company's and consolidated results of operations, the Company’s
and consolidated changes in shareholders' equity, and the Company’s and consolidated cash flows for the first half of 2022
truly and completely.
2. Accounting period
The Group has adopted the calendar year as its accounting year from January 1st to December 31st each year.
3. Business cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents.
The Group’s business cycle is usually 12 months.
4. Functional currency
Renminbi (“RMB”) is the currency in the primary economic environments in which the Company and its domestic
subsidiaries are operated. The Company and its domestic subsidiaries take RMB as their functional currency. Overseas
77
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
subsidiaries of the Company determine their functional currency on the basis of the primary economic environment in
which it operates. For functional currency of important overseas subsidiaries of the Company, see Note (V) 59. The Group
adopts RMB to prepare its financial statements.
5. The accounting treatment of business combinations involving enterprises under common control and business
combinations not involving enterprises under common control
Business combinations are classified into business combinations involving enterprises under common control and business
combinations not involving enterprises under common control.
5.1 Business combinations involving enterprises under common control
A business combination involving enterprises under common control is a business combination in which all of the
combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and
that control is not transitory.
Assets and liabilities obtained shall be measured at their respective carrying amounts as recorded by the combining entities
at the date of the combination. The difference between the carrying amount of the net assets obtained and the carrying
amount of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the share
premium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.
Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred.
5.2 Business combinations not involving enterprises under common control and goodwill
A business combination not involving enterprises under common control is a business combination in which all of the
combining enterprises are not ultimately controlled by the same party or parties before and after the combination.
The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred
or assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. If a business combination
not under the common control is realized step by step through multiple transactions, the cost of the combination is the sum
of the consideration paid on the purchase date and the fair value of the equity of the purchase already held before the
purchase date on the purchase date. The intermediary expenses incurred by the acquirer in respect of auditing, legal
services, valuation and consultancy services, etc. and other associated administrative expenses attributable to the business
combination are recognized in profit or loss when they are incurred.
78
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
The acquiree’s identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a business combination,
that meet the recognition criteria shall be measured at fair value at the acquisition date.
Where the cost of combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where the
cost of combination is less than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer
firstly reassesses the measurement of the fair values of the acquiree’s identifiable assets, liabilities and contingent liabilities
and measurement of the cost of combination. If after that reassessment, the cost of combination is still less than the
acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the acquirer recognizes the remaining difference
immediately into profit or loss for the current period.
Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presented
separately in the consolidated financial statements.
6. Preparation method of consolidated financial statements
6.1 Preparation method of consolidated financial statements
The scope of consolidated financial statements shall be confirmed based on the control. Control right means that an
investor may control an investee; the investor may participate in relevant activities of the investee to obtain variable
rewards and also be able to use the control rights for the investee to influence its amount of returns. The Group will re-
evaluate, if the change of the relevant facts and circumstances leading to the change of the relevant elements involved in
the above definition of control.
The merger of subsidiary starts from the Group obtaining the control power of the subsidiary, and terminates when the
Group loses the control power of the subsidiary.
As for subsidiaries disposed by the Group, operating results and cash flows prior to the disposal date (the date of losing
control right) have been properly included in the consolidated profit statement and consolidated cash flow statement.
For a subsidiary acquired through a business combination not involving enterprises under common control, the operating
results and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated income
statement and consolidated statement of cash flows.
No matter when the business combination occurs in the reporting period, subsidiaries acquired through a business
combination involving enterprises under common control are included in the Group's scope of consolidation as if they had
79
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
been included in the scope of consolidation from the date when they first came under the common control of the ultimate
controlling party. Their operating results and cash flows from the beginning of the earliest reporting period are included
in the consolidated income statement and consolidated statement of cash flows, as appropriate.
The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on the
uniform accounting policies and accounting periods set out by the Company.
All significant intra-group balances and transactions are eliminated on consolidation.
The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as
"minority equity" in the consolidated balance sheet. The portion of net profits or losses of subsidiaries for the period
attributable to minority interests is presented as "minority interests" in the consolidated income statement below the "net
profit" line item.
When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minority
shareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still allocated against
minority interests.
Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control over the
subsidiary is accounted for as equity transactions. The carrying amounts of the total owners' equity attributable to owner
of the Company and minority equity are adjusted to reflect the changes in their relative interests in the subsidiary. The
difference between the amount by which the minority interests are adjusted and the fair value of the consideration paid or
received is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference,
the excess is adjusted against retained earnings.
In the case that the equity of the acquiree is obtained through multiple deals step by step to finally form the business
combination not under the common control, the business combination shall be handled differently based on whether it is
"package deal": where it is package deal, the Company accounts each deal as a deal to obtain the control. If the deal is not
a "package deal", a deal where the control is obtained on the acquisition date will be subject to accounting. The acquiree's
equity held before the acquisition date will be remeasured based on the fair value of the equity on the acquisition date and
the difference between the fair value and book value will be included in the profit or loss in the current period. If the
acquiree's equity held before the acquisition date involves any changes in the other comprehensive income or in any other
owner's equity accounted by the equity method, such equity changes will be converted into the profit or loss in the current
period on the acquisition date.
80
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
7. Joint arrangement classification and joint operation accounting
Joint arrangements include joint operations and joint ventures. Such classification is defined based on the rights and
obligations of the joint parties in the joint arrangement, taking into account the structure and legal form of such
arrangement and also the contractual provisions. Joint operation refers to a joint arrangement where the joint venture is
entitled to assets related to this arrangement and bear liabilities related to this arrangement. Joint ventures mean that joint
venture parties are merely entitled to joint venture arrangements of net assets of such arrangements.
The Group's investment in any joint venture is accounted by the equity method. See the details in Note (III) "15.3.2 Long-
term equity investment accounted under the equity method".
The Group confirms its assets held separately according to the arrangement of joint operation and those held jointly in
proportion to the Group's share; confirms its liabilities held separately and those held jointly in proportion to the Group's
share; confirms its revenue from the sale of its share of the output arising from the joint operation; confirms its share of
the revenue from the sale of the output by the joint operation; confirms the expenses incurred by the Group alone and the
expenses incurred by the joint operation corresponding to the share of the Group therein. The assets, liabilities, revenues
and expenses related to the joint operation are accounted and confirmed by the Group in accordance with the regulations
applicable to specific assets, liabilities, revenues, and expenses.
8. Recognition criteria of cash and cash equivalents
Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group's
short-term (Generally refers to due within three months from the purchase date), highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
9. Conversion of transactions and financial statements denominated in foreign currencies.
9.1 Transactions denominated in foreign currencies
A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates the
actual spot exchange rate on the date of transaction; The exchange rate that approximates the actual spot exchange rate on
the date of transaction is calculated according to the middle price of market exchange rate at the beginning of the month
in which the transaction happened.
At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at the
balance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at the
balance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss for
81
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
the period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency that
qualifies for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.
When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary item
constituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates are
recognized as "exchange differences arising on conversion of financial statements denominated in foreign currencies" in
other comprehensive income, and in profit and loss for the period upon disposal of the foreign operation.
Foreign currency non-monetary items measured at historical cost are converted to the amounts in functional currency at
the spot exchange rates on the dates of the transactions. Foreign currency non-monetary items measured at fair value are
re-converted at the spot exchange rate on the date the fair value is determined. Difference between the re-converted
functional currency amount and the original functional currency amount is treated as changes in fair value (including
changes of exchange rate) and is recognized in profit and loss or as other comprehensive income.
9.2 Conversion of financial statements denominated in foreign currencies
For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation are
converted from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are
translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items are converted at the
spot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflecting
the distribution of profits are translated at exchange rates that approximate the actual spot exchange rates on the dates of
the transactions; The difference between the converted assets and the aggregate of liabilities and shareholders' equity items
is recognized into other comprehensive income and shareholders’ equity.
The foreign currency cash flows and cash flows of overseas subsidiaries adopt the exchange rate similar to the spot rate at
the date of cash flows for conversion. The affected amount of cash and cash equivalents due to the change of exchange
rate, as an adjustment item, shall be separately listed as "the impact of cash and cash equivalents due to the change of
exchange rate" in the cash flow statement.
The closing balances of the prior year and the actual amount of the prior year are presented at the converted amounts of
the prior year's financial statements.
On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation due to
disposal of certain interest in it or other reasons, the Group transfers the accumulated exchange differences arising on
82
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
conversion of financial statements of this foreign operation attributable to the owners' equity of the Company and presented
under shareholders' equity, to profit or loss in the period in which the disposal occurs.
In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, but only a
decrease in proportion of overseas business interests, the proportionate share of accumulated exchange differences arising
on conversion of financial statements are re-attributed to minority interests and are not recognized in profit and loss under
current period. For partial disposals of equity interests in foreign operations, which are associates or joint ventures, the
proportionate shares of the accumulated exchange differences arising on conversion of financial statements of foreign
operations are reclassified to profit or loss under current period.
10. Financial instruments
The Group recognizes a financial asset or a financial liability when it becomes a party to a contract of financial instrument.
For the purchase or sale of a financial asset in conventional manner, the asset to be received and the liability to be assumed
will be recognized on the trading day, or the asset sold will be derecognized on the trading day.
Financial assets and financial liabilities are measured by fair value upon initial recognition. For financial assets and
financial liabilities at fair value through profit and loss, the relevant trading costs will be directly charged to profit and loss
of the current period. For other types of financial assets and financial liabilities, the relevant trading costs will be booked
into the initial recognition amount. Upon initial recognition of accounts receivable which have no material financing
components or have not taken into consideration the financing components in contracts with a term not exceeding one
year according to Accounting Standards for Business Enterprise No. 14 – Revenue ("Revenue Standard"), such initial
amount is measured by the transaction price as defined under the Revenue Standard.
Effective interest rate method refers to the method of calculating the amortized cost of financial asset or financial liability
and apportioning interest income or interest expenses to each accounting period.
Effective interest rate refers to the interest rate used for discounting the estimated future cash flows of a financial asset or
a financial liability for an expected subsisting period into the balance of book value of the financial asset or the amortized
cost of the financial liability. When determining the effective interest rate, the expected cash flows are estimated on the
basis of considering all contractual terms of the financial asset or financial liability (such as early repayment, extended
term, call option or other similar option) but without considering the expected credit loss.
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For the reporting period from January 1st 2022 to June 30th 2022
The amortized cost of a financial asset or a financial liability refers to the initial recognition amount of such financial asset
or financial liability, less the repaid amount of principal, plus or minus the accrued amortized amount calculated by
amortization of the difference between the initial recognition amount and the amount on maturity by using the effective
interest rate method, and then deducts the accrued provision for losses (only applicable to financial assets).
10.1 Classification, confirmation and measurement of financial assets
After initial recognition, the Group will adopt amortized cost, fair value through other comprehensive income, or fair value
through profit and loss for subsequent measurement depending on different categories of financial assets.
The Group will classify a financial asset into a financial asset measured at amortized cost if the contractual terms of the
financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding and the financial asset is held within a business model whose objective is to hold financial assets in
order to collect contractual cash flows. Financial assets classified by the Group as financial asset measured by amortized
cost include cash and cash equivalents, notes receivables and accounts receivable, other receivables and long-term
receivables.
The Group will classify a financial asset into a financial asset measured by fair value through other comprehensive income
if the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding, and the financial asset is held within a business model whose objective
is achieved by both collecting contractual cash flows and selling the financial assets. This category of financial assets
mainly includes financial assets with a maturity of more than one year from the date of acquisition and which are presented
under other debt investments, financial assets maturing within one year (inclusive) from the balance sheet date and which
are presented under non-current assets maturing within one year, as well as the accounts receivable and notes receivable
classified as fair value at the time of acquisition and their changes are included in other comprehensive income are listed
in the receivables for financing, and for those have acquisition period within one year (including one year) are listed in
other current assets.
At the time of initial recognition, the Group may, on the basis of a single financial asset, irrevocably designate an
investment in an equity instrument held for non-trading purpose recognized or without consideration in a business merger
not under common control as a financial asset at fair value through other comprehensive income. This type of financial
assets is presented as investment in other equity instruments.
Financial assets which have satisfied one of the following conditions indicate that such financial assets are held for trading
purpose by the Group:
The purpose of acquiring the relevant financial asset is mainly for sale in recent period.
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For the reporting period from January 1st 2022 to June 30th 2022
At the time of initial recognition, the relevant financial asset is a part of an identifiable portfolio of financial
instruments under collective management, and there is objective evidence showing a recent and actual existence of
short-term profitable mode.
The relevant financial assets are derivatives, excluding derivatives which satisfy the definition under financial
guarantee contracts and derivatives which are designated as effective hedging instruments.
Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fair
value through profit and loss and financial assets designated at fair value through profit and loss:
Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized cost
or as financial assets at fair value through other comprehensive income, they will be classified as financial assets at
fair value through profit and loss.
At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Group
may irrevocably designate a financial asset as a financial asset measured at fair value with changes through profit
and loss.
Financial assets at fair value through profit and loss will be presented as held-for-trading financial assets. If such financial
assets have a maturity of more than one year from the balance sheet date (or without a fixed maturity) and which are
expected to be held for more than one year, they will be presented under other non-current financial assets.
10.1.1 Financial assets measured at amortized cost
Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurement according
to amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profit and loss of
the current period.
The Group recognizes interest income by using effective interest rate method for financial assets measured at amortized
cost. The Group determines interest income by multiplying the balance of book value of financial assets with the effective
interest rate except under the following circumstances:
For acquired or generated financial assets which incurred credit impairment already, their interest income will be
determined by using the amortized cost of such financial asset calculated with the credit adjusted effective interest
rate.
For acquired or generated financial assets which have not incurred credit impairment but incur credit impairment in
the subsequent period, the Group will determine their interest income by using the amortized cost of such financial
assets multiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have credit
impairment due to improvement in credit risk in the subsequent period, then the Group should change to multiply the
effective interest rate with the balance of book value of such financial asset instead to determine the interest income.
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For the reporting period from January 1st 2022 to June 30th 2022
10.1.2 Financial asset at fair value through other comprehensive income
The impairment loss or profit, or interest income calculated by using the effective interest rate method, relating to financial
asset at fair value through other comprehensive income should be accounted in the profit and loss of the current period,
and other changes in fair value of such financial assets will be accounted in other comprehensive income. The amount
charged by such financial asset to the profit and loss of each period is deemed to be equal to the amount which has been
measured by amortized cost and charged to the profit and loss of each period. Upon derecognition of such financial asset,
the accumulated profit or loss previously charged to other comprehensive income will be reversed from other
comprehensive income and charged to profit and loss of the current period.
For non-trading equity instrument investment designated at fair value through other comprehensive income, its changes
in fair value will be recognized in other comprehensive income. Upon derecognition of such financial asset, the
accumulated profit or loss charged to other comprehensive income will be reversed from other comprehensive income and
charged to retained earnings. During the period when such investment in equity instruments for non-trading purpose are
held by the Group, the right to receive dividends by the Group has been established, and economic benefits related to
dividends are likely to flow into the Group, and if the amount of dividends may be measured reliably, the dividend income
is recognized and accounted in the profit and loss of the current period.
10.1.3 Financial asset at fair value through profit and loss
For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value, the profit
or loss arising from changes in fair value and the dividend and interest income relating to such financial asset will be
accounted in the profit and loss of the current period.
10.2 Impairment of financial assets
For financial assets measured at amortized cost, financial assets that are classified as financial asset at fair value through
other comprehensive income, contract assets, lease receivables, and financial guarantee contracts that do not meet the
conditions for termination of recognition due to the transfer of financial assets or continue to be involved in financial
liabilities formed by the transferred financial assets, the Group will handle impairment on the basis of expected credit loss
and recognize loss provision.
The Group’s consideration of contract assets, notes receivable and accounts receivable that are generated by transactions
regulated by revenue standards and do not contain significant financing components or that do not consider financing
components in contracts that are not more than one year old, as well as those operating lease receivables formed from
transactions that are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shall
be measured based on the amount of the expected credit loss during the entire duration.
For other financial instruments, other than acquired or generated financial assets which have incurred credit impairment
already, the Group will assess on each balance sheet date the changes in credit risk of the relevant financial instruments
since initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, the
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Group will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsisting
period. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group will
calculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.
The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial asset
at fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financial
asset classified as measured at fair value through other comprehensive income, the Group will recognize its credit loss
provision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the current
period, and will not decrease the book value of such financial asset presented in the balance sheet.
The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting period
of the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, such
financial instrument is no longer under the condition of significant increase in credit risk since initial recognition, the
Group calculates the loss provision for such financial instrument on the balance sheet date of the current period according
to an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amount
will be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk of
the financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whether
the credit risk of the financial instrument has significantly increased after initial recognition. When using the financial
instrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes a
party of an irrevocable commitment is deemed as the initial recognition date.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to cause
significant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which
the debtor operates.
(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
or credit enhancement provided by third parties. Such changes are expected to reduce the debtor’s economic
motivation of repayment according to contractual term or influence the probability of default.
(8) Whether significant changes have occurred in the economic motivation which will lower the expectation of
repayment by the borrower according to the contractual term.
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For the reporting period from January 1st 2022 to June 30th 2022
(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
Whether or not the credit risks increase significantly after the foregoing assessments, if any contractual payment for any
financial instrument that overdue for over (including) 30 days, it indicates the credit risks of that financial instrument have
increased significantly.
On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumes
that the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk of
default on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in the
short term, and even if the economic situation and operating environment are adversely changed over a long period of time
but not necessarily reducing the borrower’s performance of its contractual cash obligations, the financial instrument is
considered as having a lower credit risk.
10.2.2 Financial assets which have incurred credit impairment already
When one or more events which will have adverse effect on the expected future cash flows from the financial asset of the
Group have occurred, such financial asset will become a financial asset which have incurred credit impairment already.
The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or overdue for the payment of interest or repayment of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has granted
concession to the debtor under no other circumstances;
(4) The debtor is likely to go bankrupt or carry out other financial restructuring;
(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financial
asset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence of
credit loss.
10.2.3 Confirmation of expected credit loss
The Group’s accounts receivable, other receivables, contract assets, lease receivables and long-term receivables, that are
individually significant and the debtor has serious financial difficulties, are determined on the basis of individual for its
credit loss. For the remaining accounts receivable, other receivables, contract assets, lease receivables and long-term
receivables, an impairment matrix is used to determine the credit losses of relevant financial instruments on a portfolio
basis. The Group determines credit losses by assessing the probability of breach and loss given default based on the credit
ratings on a portfolio basis of notes receivable and receivables. On the basis of common risk characteristics, the Group
places financial instruments in different groups. The common credit risk characteristics adopted by the Group include:
financial instrument type, credit risk rating, initial recognition date, remaining contract period, industry of debtor,
geographic location of debtor, and etc.
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
In respect of a financial asset, the credit loss is the present value of the difference between the contractual cash flow
that the group should receive and the cash flow that it expects to receive.
In respect of lease receivables, the credit loss is the present value of the difference between the contractual cash flow
that the group should receive and the cash flow that it expects to receive.
In respect of a financial guarantee contract (for specific accounting policies, please refer to Note (III), 10.4.1.2.1),
the credit loss is the present value of the difference between Group’s expected payment amount for the compensation
made to the contract holder due to the occurrence of credit loss and the amount expected to be received by the Group
from such contract holder, debtor or any other parties.
In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or generated
financial assets with credit impairment, the credit loss represents the difference between the balance of the book value
of such financial asset and the present value of the estimated future cash flows discounted by the original effective
interest rate.
The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:
an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;
reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economic
conditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.
10.2.4 Write-off on financial asset
When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cash
flows from the financial asset, the balance of book value of such financial asset will be written off directly. Such a write-
off constitutes a derecognition of the relevant financial asset.
10.3 Transfer of financial asset
A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rights
to receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially all the
risks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financial
asset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership
of such financial asset, yet it has not retained the control over such financial asset.
If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of such
financial asset, and has retained the control over such financial asset, then such transferred financial asset will continue to
be recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group’s continuous
involvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to the
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
following method:
If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalent
to the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained by
the Group (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortized
cost of the obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer
of the financial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profit
and loss of the current period.
If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent to
the book value of the transferred asset of continuous involvement less the fair value of the rights retained by the
Group (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value of
the obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of the
financial asset), and the fair value of the rights and obligations shall be measured at the fair value on a separate basis.
For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sum of
the book value of the transferred financial assets as at the date of derecognition and the consideration received from such
transfer and the accumulated amount of change in fair value originally included in other comprehensive income, which
corresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the current period. If
the transfer of the financial assets by the Group is designated as investment in equity instrument held for non-trading
purpose measured at fair value through other comprehensive income, the accumulated gains or losses previously included
in other comprehensive income shall be transferred out from other comprehensive income and be included in retained
earnings.
For transfer in part, which satisfies the conditions of derecognition, of the financial assets, the book value of the entire
financial assets before the transfer shall be shared between the derecognized portion and the continuous recognition portion
at their respective relative fair value on the date of transfer, and the difference between the sum of the consideration
received from derecognition and the accumulated amount of change in fair value originally included in other
comprehensive income, which corresponds to the amount in respect of derecognition, and the book value of the
derecognized portion as at the date of derecognition shall be included in the profit and loss of the current period. If the
transfer of the financial assets by the Group is designated as investment in equity instrument for non-trading purpose
measured at fair value through other comprehensive income, the accumulated gains or losses previously included in other
comprehensive income shall be transferred out from other comprehensive income and be included in retained earnings.
For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continue to
recognize the entire financial assets transferred and the consideration received as a result of the asset transfer is recognized
as a liability when received.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
10.4 Classification, confirmation and measurement of financial liabilities and equity instruments
Pursuant to the contractual terms of the issued financial instruments and the substantive economic condition as reflected,
but not in legal terms only, combined with the definitions of financial liabilities and equity instruments, the Group has
classified such financial instruments or the components thereof as financial liabilities or equity instruments upon initial
recognition.
10.4.1 Classification, confirmation and measurement of financial liabilities
Financial liabilities are classified into financial liabilities at fair value through profit and loss of the current period and
other financial liabilities upon initial recognition.
10.4.1.1 Financial liabilities at fair value through profit and loss of the current period
Financial liabilities at fair value through profit and loss of the current period comprise of financial liabilities held for
trading purpose (including derivatives of financial liabilities) and financial liabilities designated as measured at fair value
through profit and loss of the current period. Except for derivatives of financial liabilities, which are presented separately,
financial liabilities at fair value through profit and loss of the current period are presented as financial liabilities held for
trading.
Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilities for
trading purpose:
Assumption of the relevant financial liabilities is mainly for the purpose of the recent repurchases.
The relevant financial liabilities, upon initial recognition, are part of a portfolio of identifiable financial instruments
under centralized management, and available objective evidence shows the recent and actual existence of a short-
term profit-making model.
The relevant financial liabilities are derivatives, except derivatives which satisfy the definition of financial guarantee
contract and derivatives designated as effective hedging instruments.
Financial liabilities can be designated, upon initial recognition, by the Group as financial liabilities at fair value through
profit and loss of the current period, provided that they have satisfied one of the following conditions: (1) such designation
can eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performance of portfolios
of financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis and reporting internally
to key personnel of the Group on this basis in accordance with the risk management or investment strategies specified in
formal written documents of the Group; (3) hybrid contracts, with embedded derivatives, have satisfied the conditions.
Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise from changes
in fair value and the dividends or interest expenses relating to such financial liabilities are accounted in the profit and loss
of the current period.
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
For financial liabilities designated at fair value through profit and loss of the current period, changes in fair value of such
financial liabilities caused by changes in the Group’s own credit risks shall be included in other comprehensive income,
and other changes in fair value shall be included in the profit and loss of the current period. On derecognition of such
financial liabilities, the accumulated amount of changes in fair value as a result of changes in our own credit risk included
previously in other comprehensive income shall be transferred to retained earnings. Dividends or interest expenses relating
to such financial liabilities shall be included in the profit and loss of the current period. If handling the effect of changes
in credit risk of such financial liabilities according to the aforesaid method would cause or magnify the accounting
mismatches in profit and loss, the Group will include all gains or losses of those financial liabilities (including the amount
affected by changes in their own credit risk) in the profit and losses of the current period.
10.4.1.2 Other financial liabilities
Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result of
continuous involvement in transferred financial assets, as well as the financial guarantee contracts, the other financial
liabilities will be classified as financial liabilities measured at amortized cost, subsequent measurement will be based on
amortized cost, gains or losses on derecognition or amortization will be accounted in the profit and loss of the current
period.
If the Group and the counterparty have revised or renegotiated the contract, this has not resulted in the derecognition of
financial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractual
cash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or losses
shall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilities will
be determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effect
interest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract will
be reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during the
remaining period of the revised financial liabilities.
10.4.1.2.1 Financial guarantee contract
Financial guarantee contract refers to a contract that requests the issuer to provide a specific amount of compensation to
the contract holder who suffers losses when a specific debtor fails to repay the debt on due date according to the initial or
revised terms of the debt instrument. In respect of financial liabilities which are not designated at fair value through profit
and loss of the current period, or in respect of financial guarantee contract for financial liabilities arising from transfer of
financial assets not complying with derecognition conditions or continuous involvement in the transferred financial assets,
the measurement after initial recognition will be based on the amount of provision for losses, or the balance of initial
recognized amount after deducting the accumulated amortized amount confirmed in accordance with the relevant
provisions of the Revenue Standard, whichever the higher.
10.4.2 Derecognition of financial liabilities
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability or
such part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertake
new financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractual
terms between the new financial liabilities and the original financial liabilities, the Group should derecognize the original
financial liabilities while at the same time recognizes the new financial liabilities.
When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognized
portion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) will
be accounted in the profit and loss of the current period.
10.4.3 Equity instrument
Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting all
liabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments for
treatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Trading
expenses relating to equity transactions will be deducted from equity.
The Group’s distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out will
not affect the total equity of shareholders.
10.5 Derivatives and embedded derivatives
Derivatives include foreign exchange forward contract, foreign exchange option contract and interest rate swap contract,
etc. Derivatives are measured at fair value initially on the date of signing the relevant contract and will be measured at fair
value for subsequent measurement.
For a hybrid contract constituted by an embedded derivative and a master contract, if the master contract is in respect of a
financial asset, the Group will not split the embedded derivative from the hybrid contract, but will consider such hybrid
contract as a whole unit to which the accounting standards and rules for classification of financial assets are applicable.
If the master contract included in the hybrid contract is not in respect of a financial asset, and fulfills the following
conditions at the same time, the Group will split the embedded derivative from the hybrid contract to be treated as a
separate subsisting derivative:
(1) The economic characteristics and risks of the embedded derivative are not closely connected to the economic
characteristics and risks of the master contract.
(2) A separate instrument containing the same terms as the embedded derivative fits the definition of a derivative.
(3) The hybrid contract is not measured at fair value and changes in fair value are accounted through profit and loss of
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
the current period.
If an embedded derivative is split from the hybrid contract, the accounting treatment adopted by the Group for the master
contract within the hybrid contract will be in accordance with the applicable accounting standards and rules. If the Group
is unable to measure the fair value of the embedded derivative reliably according to the terms and conditions of the
embedded derivative, the fair value of such embedded derivative will be determined by the difference between the fair
value of the hybrid contract and the fair value of the master contract. After adoption of the above method, if the fair value
of such embedded derivative is still unable to be measured separately on the acquisition date or subsequent balance sheet
date, the Group will designate the entire hybrid contract as a financial instrument measured at fair value through profit and
loss of the current period.
10.6 Offsetting between financial assets and financial liabilities
When the Group has legal right to offset the recognized financial assets and financial liabilities, and such legal right is
enforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidate the financial
asset and repay the financial liability at the same time, the amount after offsetting between the financial asset and financial
liability will be presented in the balance sheet. Save as said above, the financial asset and financial liability are presented
separately in the balance sheet without offsetting each other.
11. Receivables for financing
Among the notes receivable measured at fair value through other comprehensive income, the ones with a term of less than
(including) one year since they are acquired will be listed as receivables for financing; the ones with a term of more than
(including) one year since they are acquired will be listed as other debt investment. The relevant accounting policy is
explained in Note (III), 10.1, 10.2 and 10.3.
12. Inventories
12.1 Categories of inventories
The Group's inventory mainly includes finished products, products in process and raw materials held in daily activities.
Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversion and other
expenditures incurred in bringing the inventories to their present location and condition.
12.2 Valuation method of inventories upon delivery
The actual cost of inventories upon delivery is calculated using the moving weighted average method.
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For the reporting period from January 1st 2022 to June 30th 2022
12.3 Basis for determining net realizable value of inventories
The inventory is measured according to cost and net realizable value, whichever is lower, on the date of balance sheet.
When the net realizable value is lower than cost, withdraw inventory impairment reserves.
The net realizable value refers to the amount derived by deducting the potential cost, estimated selling expense and relative
taxes to the completion date from the estimated sales price of inventory in daily activities. When determining net realizable
value of inventories, take the obtained conclusive evidence as basis and consider the purposes of holding inventories and
influence of events after the balance sheet date.
For the low-price stocks in large quantity, provision for the inventory price drops will be made based on the categories of
stocks; for the stocks that are related to the products manufactured and sold in the same region, that have identical or
similar ultimate use or purpose and that are hard to separate from other items when being measured, they are consolidated
for provision for the inventory price drops; for other stocks, the provision for the inventory price drops will be made based
on the cost of a single stock item in excess of the net realizable value.
After provision for inventory depreciation reserves is made, if the factors resulting in the write-down of inventory
impairment have disappeared and causing the net realizable value higher than its book value, such inventory impairment
provision are recovered and reversed, and the reversed amount recorded in profits and losses of the current period.
12.4 Inventory count system
The perpetual inventory system is maintained for stock system.
12.5 Amortization method for low cost and short-lived consumable items and packaging materials
Packaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.
13. Contract assets
13.1 Method and standard for determination of contract assets
Contract assets refer to the Group’s right to consideration in exchange for goods or services that the Group has transferred
to a customer when that right is conditioned on something other than the passage of time. The Group’s unconditional (i.e.,
depending on the passage of time only) right to receive consideration from the customer is separately presented as
receivables.
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13.2 Methods for determining and accounting of expected credit loss of contract assets
For details of methods for determining and accounting of expected credit loss of contract assets, please refer to Note (III)-
10.2 Impairment of financial instruments.
14. Assets held for sale
Non-current assets and disposal groups are classified as held for sale category when the Group recovers the book value
through a sale (including an exchange of non-monetary assets that has commercial substance) rather than continuing use.
Non-current assets or disposal groups classified as held for sale are required to satisfy the following conditions at the same
time: (1) the asset or disposal group is available for immediate sale in its present condition subject to terms that are usual
and customary for sales of such asset or disposal group; (2) the sale is highly probable, i.e. the Group has made a resolution
about a selling plan and obtained a confirmed purchase commitment and the sale is expected to be completed within one
year.
Non-current assets or disposal groups classified as held for sale are measured at the lower of the book value and the net
amount of the fair value less the cost of disposal. Where the carrying amount is higher than the net amount of fair value
less the cost of disposal, the carrying amount should be reduced to the net amount of fair value less the cost of disposal,
and such reduction is recognized as impairment loss of assets and included in profit or loss for the period. In the meantime,
provision for impairment of held-for-sale assets is made. When there is an increase in the net amount of fair value of non-
current assets held for sale less the cost of disposal at the subsequent balance sheet date, the original deduction should be
reversed from impairment loss of assets recognized after the classification as held for sale, and the reversed amount is
included in profit or loss for the period. The impairment loss of assets recognized before the classification as held for sale
is not reversed.
Non-current assets or non-current assets within disposal groups classified as held for sale are not depreciated or amortized,
and the interests and other costs of liabilities of disposal group classified as held for sale continue to be recognized.
All or part of equity investments in an associate or joint venture are classified as held-for-sale assets. For the part that is
classified as held for sale, it is no longer accounted through equity method since the date of the classification.
15. Long-term equity investment
15.1 Basis for determining joint control and significant influence over investee
Control is the power to govern an entity through participating in relevant activities of the investee; the investor is able to
obtain variable benefits from its activities, and at same time, to use the control rights on the investee to influence the
amount of returns. Joint control means that joint control for certain arrangement in accordance with relevant agreements;
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activities relevant to the arrangement cannot be decided until obtaining the unanimous consent of parties sharing control
right. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is
not control or joint control over those policies. When determining whether an investing enterprise is able to exercise
control or significant influence over an investee, the effect of potential voting rights of the investee, such as current
convertible debts, current executable warrants, etc., held by the investing enterprises or other parties shall be considered.
15.2 Determination of initial investment cost
For a long-term equity, investment acquired through a business combination involving enterprises under common control,
the shares of merged party's book value of owners' equity in the final controlling party consolidated financial statements
obtained on the merger date shall be considered as the initial investment cost of long-term equity investment. The
differences between the initial investment cost of long-term equity investment and the paid cash, the transferred non-cash
assets and the book value of the assumed debts are adjusted against the capital surplus; if the capital surplus is not sufficient
to be offset, the remaining balance is adjusted against retained earnings. In the case of issued equity securities treated as
consolidation consideration, share of book value of owner's equity of merged party in the final controlling party
consolidated financial statements is regarded as initial investment cost of long-term equity investments on the date of
consolidation; capital reserve shall be adjusted in accordance with taking total nominal value of issued share as capital
share, the difference between the initial investment cost of long-term equity investments and total book value of issued
shares; In case the capital reserve is not enough for writing down, the retained earnings shall be adjusted.
For a long-term equity investment acquired through business combination not involving enterprises under common control,
and the merging cost confirmed on the purchased date are regarded as the initial investment cost.
The intermediate expenses made by the combining party or purchaser for audit, legal service, assessment and other
management related expenses during the business merger should be included into the current profit and loss as it happens.
Long-term equity investment obtained by other means other than long-term equity investment formed by business
combination shall be initially measured at cost.
15.3 Subsequent measurement and recognition of profit or loss
15.3.1 Long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's financial
statements. A subsidiary is an investee that is controlled by the Group.
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The long-term equity investment accounted by the cost method shall be measured at its initial investment cost. If there are
additional investments or disinvestments, the long-term equity investment cost shall be adjusted. Income from the
investment in the current period shall be recognized in accordance with the cash dividends or profits declared and issued
by the investee.
15.3.2 Long-term equity investment accounted for using the equity method
Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, the
Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over
which the Group has significant influence and a joint venture is an entity over which the Group can only exercise joint
control along with other investors on the investee’s net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group’s share of
the fair value of the investee’s identifiable net assets at the time of acquisition, no adjustment is made to the initial
investment cost. Where the initial investment cost is less than the Group’s share of the fair value of the investee’s
identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of
the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of the
investee for the period as investment income or loss and comprehensive income for the period, meanwhile, the book value
of the long-term equity investment shall be adjusted; The Group shall accordingly reduce the book value of the long-term
equity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declared by the
invested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,
other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjusted
and be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested
entity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by the
invested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements of
the invested unit in accordance with the accounting policies and accounting periods of the Group to recognize the
investment income and other comprehensive incomes. For the transaction incurred between the group and associated
enterprises and joint ventures, invested or sold assets don't constitute a business, the part that doesn't achieve internal
transaction profit or loss or belongs to the Group calculated according to the enjoyed ratio will be offset, and the profit or
loss on investment will be confirmed on this basis. But for the unrealized loss arising from the internal transaction between
the Group and the invested unit, if such transaction loss is defined as the impairment loss of the transferred asset, they
cannot be offset.
When the Group determines the net loss of the invested unit that shall be shared, it is necessary to write-down the book
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value of the long-term equity investment and other long-term equities substantially constituting the net investment of the
invested unit to zero as a limit. Besides, if the Group is obliged to bear extra loss for the invested unit, it shall be necessary
to determine provisions and record them to current investment loss in compliance with obligations expected to be assumed.
If the invested unit realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets
its attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
15.4 Disposal of long-term equity investments
On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying
amount is recognized in profit or loss for the period.
16. Fixed assets
16.1 Recognition criteria for fixed assets
Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others,
or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized only
when it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can be
measured reliably. Fixed assets are initially measured at cost.
Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable that
economic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measured
reliably. Meanwhile the carrying amount of the replaced part is derecognized. Other subsequent expenditures are
recognized in profit or loss in the period in which they are incurred.
16.2 Depreciation of each category of fixed assets
A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one in
which it is ready for intended use. The useful life, estimated net residual value rate and annual depreciation rate of each
category of fixed assets are as follows:
Class Depreciation period Residual value rate (%) Annual depreciation rate (%)
Buildings and constructions 20 years 10 4.5
General-purpose equipment 3-5 years 10 18.0-30.0
Special-purpose equipment 3-5 years 10 18.0-30.0
Means of transportation 5 years 10 18.0
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Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposal
of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition
expected at the end of its useful life.
16.3 Other explanations
If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, the
fixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on
disposal of the asset net of the carrying amount and related taxes is recognized in profit or loss for the period.
The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied at
least once at each financial year-end, and account for any change as a change in an accounting estimate.
17. Construction in process
Construction in progress is measured at its actual costs. The actual costs include various construction expenditures during
the construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs.
Construction in progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready for
intended use.
18. Borrowing costs
Borrowing costs directly attributable to the acquisition & construction or production of assets eligible for capitalization
shall be capitalized when assets expenditure, borrowing costs and necessary construction or production for bringing assets
to expected conditions for use or marketing have taken place; when construction or production of assets ready for
capitalization reach to expected conditions for use or marketing, capitalization shall be ceased. Other borrowing expenses
are recognized as expenses in the current period.
Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interest
expense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds before
being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed
under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by
applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the
amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to
the general-purpose borrowings. During the capitalization period, exchange differences related to a specific-purpose
borrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purpose
borrowings are recognized in profit or loss in the period in which they are incurred.
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19. Intangible assets
19.1 Intangible assets valuation method, service Life and impairment test
Intangible assets include land use right, intellectual property (IP), application software, and franchise, etc.
An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, its
original cost is amortized over its estimated useful life using the straight-line method. The useful life and predicted net
residual value of various intangible assets are shown as follows:
Class Service life Salvage value rate (%)
Land use right 40 or 50 years -
IP Right 10 Years -
Application Software 5-10 years -
Franchise Franchised operating period -
The fees charged by the Group to those who acquire public products and services during the project operation period do
not constitute an unconditional right to receive cash. When the PPP project assets are ready for their intended use, the
difference between the consideration amount of the relevant PPP project assets or the amount of confirmed construction
income and the amount of cash (or other financial assets) that is entitled to receive a determinable amount will be
recognized as intangible assets.
For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of the
period, and makes adjustments when necessary.
For the impairment test of intangible assets, please refer to Note (III), 20. Long-term asset impairment.
19.2 Accounting policy for internal research and development expenditure
Expenditure during the research phase is recognized as an expense in the period in which it is incurred.
Expenditure during the development phase that meets all of the following conditions at the same time is recognized as
intangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profit
or loss for the period.
(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;
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(2) The Group has the intention to complete the intangible asset and use or sell it;
(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including the
evidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to
be used internally, the usefulness of the intangible asset;
(4) The availability of adequate technical, financial and other resources to complete the development and the ability to
use or sell the intangible asset; and
(5) The expenditure attributable to the intangible asset during its development phase can be reliably measured.
If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes all
of them in profit or loss for the period. The costs of the intangible assets generated by internal development activities only
include the total expenditure incurred from the time point when the capitalization conditions are available to the point
when the intangible assets are used for their intended purposes; for the expenditure that already becomes an expenditure
in the profit and loss statement before the capitalization conditions are available during development of the same intangible
asset, no adjustment will be made.
20. Long-term assets impairment
The Group assesses at each balance sheet date whether there is any indication that the long-term equity investment, fixed
assets, construction in process, intangible assets with a finite useful life and assets related to contract costs may be impaired.
If there is any indication that such assets may be impaired, recoverable amounts are estimated for such assets. Intangible
assets with indefinite useful life and intangible assets not yet available for use are tested for impairment annually,
irrespective of whether there is any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an
individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverable
amount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposal
expenses; or 2) the present value of the expected future cash flows of the asset or asset group.
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted as an
impairment provision and is recognized in profit or loss for the period.
In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assets
recognized in accordance with other relevant ASBEs and related to the contract; then, for assets related to contract costs
whose carrying value is higher than the difference between the following two items, the Group makes provision for
impairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration expected
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to be obtained by the Group for the transfer of goods or services related to the asset; (2) the estimated costs to be incurred
in connection with the transfer of relevant goods or services.
Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall be conducted
in accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the asset
group or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the date
of purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than book
value of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to the
book value of goodwill of the said asset group or asset portfolio, and then book value of other assets, except for goodwill,
in asset group or asset portfolio shall be abated in proportion.
Except for asset impairment losses related to contract costs, once the impairment loss of such assets is recognized, it cannot
be reversed in any subsequent period. After the provision for impairment for the asset related to contract costs is made, if
the difference between the above two items is higher than the carrying amount of the asset due to changes in the factors
of impairment in previous periods, the original provision for impairment of the asset is reversed and included in the current
profit or loss, but the carrying amount of the asset after the reversal shall not exceed the carrying amount of the asset on
the reversal date assuming no provision for impairment is made.
21. Long-term deferred expenses
Long-term deferred expenses are the expenses that are already incurred but will be shared in the current reporting period
and later periods with amortization term of more than one year, mainly for the expenses on betterment of leased fixed
assets and employee housing loan deferred interest. Long-term deferred expenses are evenly amortized in installments in
three to five years during the expected benefit period.
22. Contract liabilities
Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for consideration received
or receivable from customers. Contract assets and contract liabilities under the same contract are presented in net terms.
23. Employee compensation
23.1 Accountant arrangement method of short-term remuneration
During accounting period when the Group's employees provide services, actual short-term remuneration shall be
recognized as the liabilities and current profit and loss or relevant asset cost. The Group’s employee benefits and welfare
are included into current profit and loss or relevant asset cost according to actual amount occurred during the period. If
the employee benefits and welfare is non-monetary, it shall be measured according to its fair value.
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During the accounting period that the employees service the Group, the Group pays social insurance premiums such as
medical insurance premium, industrial injury insurance premium, maternity insurance premium and housing accumulation
fund for its employees, as well as labor union expenditure and employee education expenses calculated and withdrawn
according to the regulations, corresponding employee remuneration amount shall be calculated and determined in
accordance with specified calculation and withdrawal basis and proportion to recognize corresponding liabilities and
included into the current profit and loss or relevant asset cost.
23.2 Accountant arrangement method of post-employment benefits
All post-employment benefits shall be considered as the defined contribution plan.
In the accounting period when the employee serves for the Group, the deposited amount calculated based on defined
contribution plan shall be recognized as liabilities and included in the current profit and loss or relevant asset cost.
23.3 Accountant arrangement method of the termination benefits
Where the Group provides termination benefits, the employee remuneration liabilities caused by such termination benefits
will be determined as the following date, whichever is earlier, and will be included in the current profit and loss: 1) When
the Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation plan or
employee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring of the
paid termination benefits.
24. Provisions
Provisions are recognized when the Group has a present obligation related to a contingency such as products quality
assurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and the
amount of the obligation can be measured reliably.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at
the balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and time
value of money. Where the effect of the time value of money is material, the amount of the provision is determined by
discounting the related future cash outflows.
25. Share-based payment
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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.
25.1 Equity-settled share-based payments
Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value of the
equity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on a
straight-line basis over the vesting period, with a corresponding increase in capital reserve.
At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequent latest
information of change in the number of employees who are granted with options that may vest, etc. and revises the number
of equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with a
corresponding adjustment to capital reserve.
25.2 Accounting treatment related to implementation, modification and termination of share-based payment arrangement
In case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the equity
instruments granted, the Group will include the incremental fair value of the equity instruments granted in the measurement
of the amount recognized for services received. If the modification increases the number of the equity instruments granted,
the Group will include the fair value of additional equity instruments granted in the measurement of the amount recognized
for services received. The increase in the fair value of the equity instruments granted is the difference between fair value
of the equity instruments before and after the modification on the date of the modification. If the Group modifies the terms
or conditions of the share-based payment arrangement in a manner that reduces the total fair value of the share-based
payment arrangement, or is not otherwise beneficial to the employee, the Group will continue to account for the services
received as if that modification had not occurred, other than a cancellation of some or all the equity instruments granted.
If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for the
cancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount that
otherwise would have been recognized over the remainder of the vesting period in profit or loss for the period, with a
corresponding recognition in capital reserve. When the employee or counterparty can choose whether to meet the non-
vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equity
instruments granted.
26. Revenue
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26.1 Accounting policies applied in revenue recognition and measurement
The revenue of the Group is mainly generated from business types as follows:
(1) Revenue from sale of products
Product sales revenue is the revenue from sales of video surveillance products, smart home products, robotics products
and other products of the Group.
(2) Project construction revenue
Project construction revenue is the revenue from constructions related to intelligent security solution projects and PPP
projects provided by the Group.
(3) Cloud service and other service revenue
Revenue from cloud services and other services refers to cloud services such as storage services, video services, and
telephone services provided by the Group, maintenance services related to security projects, and other services, etc.
When (or as) a performance obligation in a contract was satisfied, i.e., when (or as) the customer obtains control of relevant
goods or services, the Group recognizes as revenue the amount of the transaction price that is allocated to that performance
obligation. A performance obligation is the Group’s commitment to transfer to a customer a good or service (or a bundle
of goods or services) that is distinct, in a contract with the customer. The transaction price is the amount of consideration
to which the Group expects to be entitled in exchange for transferring promised goods or services to a customer, excluding
amounts collected on behalf of third parties and amounts that the Group expects to refund to the customer.
Revenue is recognized over time by reference to the progress towards complete satisfaction of the relevant performance
obligation if one of the following criteria is met: (1) the customer simultaneously receives and consumes the benefits
provided by the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an asset
that the customer controls as the Group performs; or (3) the Group’s performance does not create an asset with an
alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.
Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct good or service.
The Group adopts the output method to determine the progress of performance, that is, the progress of contract
performance is determined according to the value of the goods or services that have been transferred to the customer in
the view of the customer. When the performance progress cannot be reasonably determined, and the costs incurred can be
expected to be compensated, the Group recognizes revenue based on the amount of costs incurred until the performance
progress can be reasonably determined.
If the contract contains two or more performance obligations, the Group allocates the transaction price to each single
performance obligation on the contract start date in accordance with the relative proportion of the individual selling price
of the goods or services promised by each single performance obligation. However, if there is strong evidence that the
contract discount or variable consideration is only related to one or more (but not all) performance obligations in the
contract, the Group allocates the contract discount or variable consideration to the relevant one or more performances
obligation. Individual selling price refers to the price at which the Group sells goods or services to customers separately.
Where the individual selling price cannot be directly observed, the Group comprehensively considers all relevant
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information that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individual
selling price.
If there is variable consideration in the contract, the Group determines the best estimate of variable consideration based
on the expected value or the most likely amount. The transaction price including variable consideration shall not exceed
the amount that is likely to cause no significant reversal of accumulated recognized revenue when the relevant uncertainty
is eliminated. At each balance sheet date, the Group re-estimates the amount of variable consideration that should be
included in the transaction price.
For sales with sales return terms attached, as the customer obtains ownership of related goods, the Group recognizes
revenue in accordance with the consideration (excluding expected refund amounts due to sales returns) that the Group is
expected to receive due to the transfer of goods or services to the customer, and recognizes expected liabilities in
accordance with expected refund amounts due to sales returns. The remaining amount, subsequent to deduction of expected
costs from collecting the goods (including the decrease in value of the returned goods), is recognized as an asset in
accordance with the carrying amount during the expected transfer of returned goods after deducting the costs of the above
net assets carried forward.
For sales with quality assurance clauses, if the quality assurance provides a separate service beyond the assurance to the
customer that the goods or services sold meet established standards, the quality assurance constitutes a single performance
obligation. Otherwise, the Group conducts accounting for quality assurance responsibilities in accordance with the
Accounting Standards for Business Enterprises No. 13-Contingencies.
The additional purchase option of customers includes customer reward incentives. With respect to the additional purchase
option with material rights provided to customers, the Group regards it as a single performance obligation, and recognizes
relevant revenue upon obtaining the control over relevant goods or services by the customers who exercise the purchase
option in future or upon lapse of such option. If a stand-alone selling price of the additional purchase option of customers
is not directly observable, the Group shall consider all relevant information including the difference in discount obtained
with and without the exercise of such option by customers and the possibility of exercising such option by customers
during estimation.
If there is a significant financing component in the contract, the Group determines the transaction price based on the
amount payable in cash when the customer assumes control of the goods or services. The difference between the
transaction price and the contract consideration is amortized using the effective interest rate method during the contract
period. On the contract commencement date, the Group does not consider the significant financing components in the
contract if the interval between the customer obtaining control of the goods or services and the price being paid by the
customer is not more than one year.
The Group judges whether the Group’s identity is the principal or agent when engaging in transactions based on whether
it has control over the goods or services before transferring the goods or services to customers. If the Group is able to
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control the goods or services before transferring them to customers, the Group is the principal responsible person, and
revenue is recognized based on the total amount of consideration received or receivable; otherwise, the Group is an agent
and recognizes revenue based on the amount of commissions or fees which the Group is expected to be entitled to charge.
The amount of commissions or fees is determined based on the total amount of consideration received or receivable net of
the amount payable to other parties.
When the Group collects amounts of sold goods or services in advance from the customer, the Group will firstly recognize
the amounts as a liability and then transfer to revenue until satisfying relevant performance obligations. When the advances
from customers is non-refundable and the customer may give up all or part of contract right, and the Group is expected to
be entitled to obtain amounts associated with contract rights given up by the customer, the above amounts shall be
proportionally recognized as revenue in accordance with the model of exercising contract rights by the customer; otherwise,
the Group will transfer the relevant balance of the above liability to revenue only when the probability is extremely low
for the customer to satisfy remaining performance obligations.
The Group, as a private capital, entered into a PPP project contract with the government and provided construction,
operation, maintenance and other services. The Group identifies each individual performance obligation in the contract,
and allocates the transaction price to each performance obligation based on the relative proportion of the stand-alone
selling price of each performance obligation. When providing construction services or outsourcing projects to other parties,
whether the identity of the Group is the principle or agent is determined, and then accounting for construction revenue to
confirm the contract assets is made. After the PPP project is ready for use, the Group recognizes revenue related to
operation and maintenance services.
27. Cost of contract
27.1 Cost of obtaining a contract
Incremental costs incurred by the Group to obtain a contract (that is, costs that would not have occurred without a contract)
and expected to be recovered are recognized as an asset, and amortized using the same basis as revenue recognition for
the goods or services to which the asset relates, and included in current profit or loss. If the amortization period of the
asset does not exceed one year, it is included in current profit or loss when it occurs. Other expenses incurred by the Group
in order to obtain the contract shall be included in current profit or loss when incurred, unless it is clearly borne by the
customer.
27.2 Cost of contract fulfillment
The cost of the Group’s performance of a contract that does not fall within the scope of accounting standards other than
the revenue standard and meets the following conditions is recognized as an asset: (1) The cost is directly related to a
current or anticipated contract; (2) The cost increases the Group’s resources for fulfilling performance obligations in the
future; (3) The cost is expected to be recovered. The aforesaid assets are amortized on the same basis as the recognition
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of income from goods or services related to the assets, and are included in the current profit or loss. The Group’s asset in
relation to contract costs are mainly contract performance costs, and they are included in inventories based on their current
nature.
28. Types of governmental subsidies and accounting treatment methods
Government subsidies refer to the monetary and non-monetary assets obtained by the Group from the government for free.
Government subsidies are recognized when they can meet the conditions attached to the government subsidies and can be
received.
If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable.
28.1 Judgment basis and Accountant treatment of government subsidy related to assets
The government subsidies for Chongqing Manufacture Base construction and etc. are used for constructions and forms
long-term assets, and therefore are categorized as government subsidy related to assets.
A government grant related to an asset is recognized as deferred income, and it should be evenly amortized to profit or
loss over the useful life of the related asset.
28.2 Judgment basis and accountant treatment of government subsidy related to income
The Group receives government subsidies including subsidies for core electronics, high-end generic chips and basic
software projects, subsidies for Value-Added-Tax rebate (VAT rebate), subsidies for special projects, tax refunds, and
Value-Added-Tax deductions, etc. which are used to compensate the group-related costs or losses, and therefore are
categorized as government subsidy related to income.
For a government grant related to income, such as the subsidies for core electronics, high-end generic chips and basic
software projects, if the subsidy is a compensation for related expenses or losses to be incurred in subsequent periods, it
is recognized as deferred income, and recognized in profit or loss over the periods in which the related costs or losses are
recognized; If the subsidy, such as VAT Rebate, is a compensation for related expenses or losses already incurred, it is
recognized immediately in profit or loss for the period.
For government subsidies related to the Group’s daily operations shall be booked into other income; for those not related
to the Group’s daily operations, shall be booked into non-operating income/expense.
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For the policy-backed preferential subsidized loan, if the Ministry of Finance will appropriate the subsidy amount to the
lending bank, who will grant the loan to the Group at the policy-backed preferential interest rate, the actually received
loan amount will be the entry value of the loan and the loan-related expenses will be calculated based on the loan principal
and policy-backed preferential interest rate.
29. Deferred tax assets / deferred tax liabilities
The income tax expenses include current income tax and deferred income tax.
29.1 Current income tax
At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at the
amount expected to be paid (or recovered) according to the requirements of tax laws.
29.2 Deferred tax assets and deferred tax liabilities
For temporary differences between the carrying amounts of certain assets or liabilities and their tax base, or between the
nil carrying amount of those items that are not recognized as assets or liabilities and their tax base that can be determined
according to tax laws, deferred tax assets and liabilities are recognized through the balance sheet liability method.
Deferred tax is generally recognized for all temporary differences. Deferred tax assets for deductible temporary differences
are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary
differences can be utilized. However, for temporary differences associated with the initial recognition of goodwill and the
initial recognition of an asset or liability arising from a transaction (not a business combination) that affects neither the
accounting profit nor taxable profits (or deductible losses) at the time of transaction, no deferred tax asset or liability is
recognized.
For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it is
probable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except
where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognized to the extent that it is probable that there will be taxable
profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
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On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicable
tax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance with
the tax laws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from
transactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in which case
they are recognized in other comprehensive income or in shareholders' equity; and when they arise from business
combinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable
that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Such
reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
29.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets
and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
30. Lease
Lease refers to a contract that conveys the right to use an asset for a period of time in exchange for consideration.
The Group assesses whether a contract is, or contains, a lease at the inception date. The Group does not re-assess whether
a contract contains a lease unless the terms and conditions of the contract are changed.
30.1 The Group as the lessee
30.1.1 Separating components of lease
In case the contract contains one or more lease and non-lease components, the Group separates each lease component and
non-lease component, and allocates the consideration to the lease and non-lease components based on the proportion of
relative stand-alone prices of the components.
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30.1.2 Right-of-use assets
The Group recognizes the right-of-use assets for leases on the commencement date of the lease term, except for short-term
lease and lease of low-value assets. The commencement date of the lease term refers to the date from which the lessor
makes the leased assets available for use by the Group. Right-of-use assets are initially measured at cost. The cost includes:
Initial measurement amount of lease liabilities;
Amount of lease payment made at or before the commencement date of the lease, less any lease incentives received;
Initial direct costs incurred by the Group;
An estimate of any costs to be incurred by the Group in dismantling and removing the underlying asset, or restoring
the site on which it is located, or restoring the leased assets to the conditions as agreed under the terms of the lease,
excluding costs incurred to produce inventories.
The Group calculates depreciation of the right-of-use assets in accordance with the relevant depreciation provisions of
Accounting Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use asset is depreciated over the shorter
of the lease term and the useful life of the right-of-use asset, unless there is a transfer of ownership or purchase option
which is reasonably certain to be exercised at the end of the lease term.
The Group determines whether the right-of-use assets are impaired and accounts for the identified impairment loss in
accordance with the provisions of Accounting Standards for Business Enterprises No. 8 - Impairment of Assets.
30.1.3 Lease liabilities
The Group initially measures the lease liability on the commencement date at an amount equal to the present value of the
lease payments during the lease term that are not paid at that date, except short-term lease and lease of low-value assets.
In calculating the present value of the lease payments, the Group adopts the interest rate implicit in the lease as the discount
rate. The Group uses its incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined.
Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased asset
during the lease term, including:
Fixed payments, including in-substance fixed payments, less any lease incentives receivable;
The exercise price of a purchase option, if the Group is reasonably certain to exercise that option;
Payments for terminating the lease, if the lease term reflects the lessee exercising the option to terminate the lease;
Amounts expected to be payable by the Group under residual value guarantees.
After the commencement date of the lease term, the Group calculates interest expense of lease liabilities in each period of
lease term at fixed periodic rate and recognizes in the current loss and profit or relevant asset costs.
After the commencement date of the lease term, the Group remeasures the lease liability and adjusts the corresponding
right-of-use assets under the following circumstances. If the carrying value of the right-of-use assets has been reduced to
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zero while the lease liability needs to be further reduced, the Group will recognize the difference into the current loss and
profit:
In case of any change of the lease term or any change in the valuation of the purchase option, the Group remeasures
the lease liability at the present value calculated based on the modified lease payments and the revised discount rate;
In the event of any change in the amount expected to be payable based on the residual value guarantees, the Group
remeasures the lease liability at the present value calculated based on the changed lease payments and the original
discount rate.
30.1.4 Short-term lease and lease of low-value assets
The Group has elected not to recognize the right-of-use assets and lease liabilities for short-term leases and leases of low-
value assets. Short-term lease refers to lease with a term no more than 12 months from the commencement date of lease
term and without purchase option. Lease of low-value assets refers to lease for single lease asset with low value when it
is new. The Group recognizes lease payments under short-term leases and leases of low-value assets as the current loss
and profit or the relevant asset costs on a straight-line basis over each period during the lease term.
30.1.5 Lease modification
In case of lease modification, the Group makes accounting treatment of such lease change as a separate lease if all of the
following conditions are met:
Such lease modification increases the scope of the lease by adding the right to use one or more lease assets;
The increased consideration is commensurate with the stand-alone price for the increase in scope and any appropriate
adjustments to reflect the circumstances of the particular contract.
Where accounting treatment is not made for lease modification as a separate lease, at the effective date of lease
modification, the Group reallocates the contract consideration after the modification, redetermines the lease term, and
remeasures the lease liability based on the present value calculated according to the modified lease payments and the
revised discount rate.
In the event that the lease scope is decreased or the lease term is shortened as a result of the lease modification, the Group
reduces the carrying amount of the right-of-use assets, and recognizes the relevant gains or losses relating to the partial or
full termination of the lease in the income statement; for the lease liabilities remeasured due to other lease modifications,
the Group adjusts the carrying amount of the right-of-use assets accordingly.
30.2 The Group as the lessor
30.2.1 Separating components of lease
In case the contract contains both lease and non-lease components, the Group allocates the contract consideration in
accordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue on portion of
transaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.
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30.2.2 Classification of lease
Finance lease is a lease that substantially transfers all the risks and rewards of incidental to ownership of an underlying
asset. Operating lease refers to the leases other than finance lease.
30.2.2.1 The Group records the operating lease business as the lessor
The Group recognizes the lease payments from operating leases as rental income on a straight-line basis for all periods
over the lease term. The Group's initial direct costs incurred in connection with operating leases is capitalized as incurred,
recognized in the income statement over the lease term on the same basis as the lease income.
30.2.2.2 The Group records the finance lease business as the lessor
On the commencement date of the lease term, the Group uses the net lease investment as the carrying value of the finance
lease receivables and derecognizes the finance lease assets. Net lease investment is the sum of present value of
unguaranteed residual value and lease payments receivable discounted at the interest rate implicit in lease on the
commencement date of the lease term.
Lease payments receivable, which refer to amounts receivable by the Group from the lessee for conveying the right to use
the leased assets during the lease term, include:
Fixed payment including in-substance fixed payments by the lessee, less any lease incentives payable;
The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;
Payments for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease;
Residual value guarantees provided to the Group by the lessee, a party related to the lessee, or a third party unrelated
to the lessor that is capable of discharging the obligations under the guarantee.
The Group calculates and recognizes the interest income in each period of the lease term according to the fixed periodic
interest rate.
30.2.3 Lease modification
In case of a medication of the operating lease, the Group accounts for it as a new lease as of the effective date of the
modification, any prepaid or accrued lease payments relating to the original lease are considered as payments for the new
lease .
In case of modification of finance lease, the Group accounts for the modification of a finance lease as a separate lease if
all of the following conditions are met:
The modification increases the scope of the lease by adding the right to use one or more lease assets;
The consideration for the lease increases by an amount that is commensurate with the stand-alone price for the
increase in scope, and any appropriate adjustments to that price to reflect the circumstances of the particular contract.
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If a modification of finance lease is not accounted for as a separate lease, the Group accounts for the changed lease under
the following circumstances:
If the modification becomes effective on the commencement date of the lease and the lease is classified as an
operating lease, the Group accounts for it as a new lease from the effective date of the lease modification and measures
as the net lease investment prior to the effective date of the lease modification as the carrying value of the leased
asset.
If the modification becomes effective on the commencement date of the lease and the lease is classified as a finance
lease, the Group accounts for it in accordance with the provisions of Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments regarding the modification or renegotiation of
contracts.
30.2.4 Sale and leaseback transaction
30.2.4.1 The Group as the seller-lessee
The Group assesses and determines whether the transfer of the asset in sale and leaseback transaction qualifies as a sale in
accordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue. If the transfer does
not qualify as a sale, the Group continues to recognize the transferred asset and at the same time recognize a financial
liability equal to the transfer proceeds and account for the financial liability in accordance with the provisions of
Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments. If the
transfer of the asset qualifies as a sale, the Group measures the right-of-use asset arising from the leaseback as the
proportion of the previous carrying amount of the asset that relates to the right of use retained. The gain or loss recognised
is limited to the proportion of the total gain or loss that relates to the rights transferred to the buyer-lessor.
30.2.4.2 The Group as the buyer-lessor
If the transfer of the asset in a sale and leaseback transaction does not qualify as a sale, the Group does not recognize the
transferred asset, but recognizes a financial asset equal to the transfer proceeds and account for the financial asset in
accordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement
of Financial Instruments. If the transfer of the asset qualifies as a sale, the Group accounts for the purchase of the asset in
accordance with other applicable Accounting Standards for Business Enterprises and account for the lease of the asset.
31. Important judgments while applying accounting policy, and key assumptions and uncertainty factors applied
for accounting estimate
During the process of using accounting policy described in note (III), due to the uncertainty in operation activities, the
group should judge, estimate and assume the book value of the report items which may not be metered reliably. These
judgments, estimates and assumptions are based on the historical experience of the Group's management and other related
factors. Differences may exist between the actual results and the Group’s estimate.
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For the reporting period from January 1st 2022 to June 30th 2022
The Group regularly reviews the above judgments, assumptions and estimations on the basis of continuous operation. If
the changes of accounting estimate only influence current period, the influence amount will be affirmed during the
changing period; if it influences the current period and subsequent periods, the influence amount will be recognized in the
current period and future period.
- Key assumptions and uncertainties used in accounting estimate
On balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assets and
liabilities in subsequent future periods are:
Impairment provision for inventories
Except for contract performance costs, inventories are measured at the lower of cost or net realizable value. For raw
materials, the latest or future actual purchase price is used as the basis for determining the net realizable value; For products
in progress, the actual selling price of the latest or future finished product minus the estimated costs and costs that will be
incurred when similar products are completed in the current period, the estimated selling expenses and related taxes to be
incurred, is used as the basis for determining the net realizable value; For finished products, the actual selling price of the
latest or future finished product minus the estimated selling expenses and related taxes will be incurred, is used as the basis
for determining the net realizable value. The Group will regularly conduct a comprehensive stocktaking to review the
impairment circumstances on defective, obsoleted or slow-moving inventory if any; in addition, the Group's management
will regularly review the impairment circumstance of inventory with long storage time according to the inventory aging
list. The review procedure includes the comparison between book value of defective, obsoleted or slow-moving inventories
and inventory with long storage time and its corresponding net realizable value in order to determine whether to withdraw
provisions on the defective, obsoleted or slow-moving inventory and inventory with long storage time. Based on the above
procedure, the Group's management deems that the full provision amounts have been withdrawn for inventory.
Impairment of accounts receivable
Except for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts an
impairment matrix to determine its expected credit loss provision. Based on the historical loss rate, the Group determines
the proportion of corresponding loss reserves for various types of accounts receivable with similar risk characteristics. The
impairment matrix is determined based on the historical overdue ratio and default of the Group, taking into account
reasonable and well-founded industry forward-looking information. As of June 30th 2022, the Group has reassessed the
historically observable overdue ratio and considered changes in forward-looking information.The amount of the provision
for expected credit losses will change as the estimation of the Group. The details on the provision for expected credit losses
of the accounts receivable of the Group are given in Note (V). 4.
Useful life and predicted net residual value of fixed asset
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For the reporting period from January 1st 2022 to June 30th 2022
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assets
with similar properties and functions, the estimation of predicted net residual value is the amount obtained currently by
the Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming the
conditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shall
conduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For the
current reporting period, the Group's management did not see signs either indicating a shortened or extended useful life of
the Group’s fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are costs and expenses incurred to meet the established standards of
product quality assurance obligations to customers in accordance with the product contract; the Group made such an
estimation according to the predicted repair and replacement cost of relevant products. The estimation considers the
product claim rate trend, historic defect rate, industry practice and other major estimations. The management deems that
the current estimation on accrued liabilities of product quality warranty is reasonable, however, the Group will continue
to review the conditions of product repairs, and will conduct adjustment if any sign indicating the need to make adjustments
on accounting estimates.
Deferred tax assets and deferred tax liabilities
Deferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during the
period when the relevant asset is expected to be recovered or the relevant debt is expected to be paid off. The expected
applicable income tax rate is determined according to the relevant current tax regulations and the actual situation of the
Group. If the estimated income tax rate is different from the original estimate, the management of the Group will adjust it.
The realization of deferred income tax assets mainly depends on the actual future profits and the effective tax rate of
temporary difference in the future applicable years. If the actual profit in the future is less than the estimation, or actual
tax rate is lower than the estimation, then the confirmed deferred income tax assets will be reversed and confirmed in the
income statement during the corresponding period. If the actual profit in the future is more than the estimation, or actual
tax rate is higher than the estimation, then the corresponding deferred income tax assets might be adjusted and confirmed
in the income statement during the corresponding period.
Goodwill impairment
When performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset group or
asset group portfolio included the goodwill need to be calculated, the future cash flows of relevant asset group or asset
group portfolio need to be estimated, and the proper pretax rate that fairly reflects the current market time value of money
and specific asset risk need to be determined. When the future actual result is different from the original estimation, the
goodwill impairment loss will alter.
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Fair value measurement and valuation process
Held-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group are
measured at fair value in the financial statement. When valuating the fair value of these assets, the Group preferably uses
obtainable and observable market data. If no observable data is available, the Group will organize an internal evaluation
panel or hire qualified third-party valuers to conduct valuation. The Finance Department and evaluation panel of the Group
will work closely with the hired valuers to determine appropriate valuation techniques and the input values of the valuation
model. The valuation techniques and input values used for valuating the fair value of various assets are disclosed in Note
(IX).
IV. Taxes
1. Major categories of taxes and tax rates
Category of tax Basis of tax computation Tax rate
Enterprise income tax Taxable income 25% (Note 1)
For the taxable product sales revenue or taxable labor revenue, the Company 6%, 9%, 13% and simple
VAT and its domestic subsidiaries are ordinary Value-added Tax payers; the VAT collection rate of 5%, 3%
payable is the balance of input tax after deducting the deductible output tax. (Note 3)
City maintenance and
Actual payable turnover tax 7%, 5%
construction tax
Education surcharges Actual payable turnover tax 3%
Local education
Actual payable turnover tax 2%
surcharges
Note 1: Except that this Company and subsidiaries in China are applicable to the following tax preference, this Company's
other subsidiaries in China are applicable to 25% of enterprise income tax rate, the overseas subsidiaries are applicable to
corresponding local tax rate.
(1) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on December 29th 2020, the Company was identified as the high-tech enterprise with a
valid term of 3 years, from 2020 to 2022.
In accordance with the Notice on Printing and Distributing the List of Key Software Enterprises and IC Design
Enterprises in the National Planning Layout for 2013-2014 (Fa Gai Gao Ke [2013] No. 2458), the Company was
recognized as a national key software enterprise in 2013. According to the Announcement on the Enterprise Income
Tax Policies for Promoting the High-quality Development of Integrated Circuit Industry and Software Industry
(Ministry of Finance, State Administration of Taxation, National Development and Reform Commission, Ministry of
Industry and Information Technology Announcement [2020] No. 45), the Company was approved by the tax
authorities in May 2022 to pay the 2021 annual corporate income tax at the rate of 10%.
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For the reporting period from January 1st 2022 to June 30th 2022
(2) In accordance with Finance and Taxation [2011] No. 58 Document of Ministry of Finance, State Administration of
Taxation (SAT) and General Administration of Customs, the wholly-owned subsidiaries, Chongqing Hikvision
Technology Co., Ltd. (hereinafter referred to as “Chongqing Technology”) and Chongqing Hikvision System
Technology Co., Ltd. (hereinafter referred to as “Chongqing System”) are qualified to enjoy the west development
preferential tax policy from 2011 to 2020. According to the Announcement on Continuation of the Corporate Income
Tax Policy for the Western Developmen (Ministry of Finance, State Administration of Taxation, National Development
and Reform Commission Announcement [2020] No.23), Chongqing Technology and Chongqing System will still
enjoy the preferential tax policies for the Western Development from 2021 to 2030. Therefore, the current enterprise
income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2021: 15%).
(3) In accordance with the Replies on Publishing the List of First Batch of identified High-tech Enterprises of Zhejiang
Province in 2018 (GuoKeHuoZi [2019] No. 70) issued by the leading group office of Zhejiang high-tech enterprise
identification management work on February 20th 2019, the Company’s joint venture subsidiary, Hangzhou Fuyang
Baotai Security Technology Service Co., Ltd. (hereinafter referred to as “Fuyang Baotai”), was recognized as a high-
tech enterprise and was valid for 3 years from 2018 to 2020. According to the Recording List of the First Batch of
identified High-tech Enterprises of Zhejiang Province in 2021 issued by the Leading Group Office of National High-
tech Enterprise Identification Management Work on January 24th 2022, Fuyang Baotai is still identified as a high-tech
enterprise, and the validity period of the identification is 3 years, from 2021 to 2023. Therefore, the enterprise income
tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2021: 15%).
(4) In accordance with the Replies on Publishing identified High-tech Enterprises of Zhejiang Province in 2019
(GuoKeHuoZi [2020] No. 32) issued by the Leading Group Office of National High-tech Enterprise Identification
Management Work on January 20th 2020, the Company’s wholly-owned subsidiary, Hangzhou Hikvision System
Technology Co., Ltd. (hereinafter referred to as “Hangzhou System”) and the Company’s joint venture subsidiary
Hangzhou Kuangxin Technology Co., Ltd. (hereinafter referred to as “Hangzhou Kuangxin”) were recognized as high-
tech enterprises and were valid for 3 years from 2019 to 2021. As of the approval date of this report, Hangzhou
Kuangxin is still in the 2022 high-tech enterprise qualification review and declaration stage. According to the
Announcement of the State Administration of Taxation on Issues Concerning the Implementation of the High-tech
Enterprise Income Tax Preferential Policy, the high-tech enterprise qualification will be re-identified within the year
after the expiration of the qualification period. Before passing the recertification, the corporate income tax can be
prepaid at the 15% tax rate temporarily, so the corporate income tax shall be calculated and paid on the basis of a
reduced tax rate of 15% in the current reporting period. (2021: 15%)
(5) In accordance with the Notice on Publishing the List of Third Batch of Proposed Identified High-tech Enterprises of
Shanghai in 2020 issued by Shanghai High-tech Enterprise Identification Office on November 20th 2020, the
Company’s wholly-owned subsidiary, Shanghai Goldway Intelligent Transportation System Co., Ltd. was identified
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Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
as the high-tech enterprise with a valid term of 3 years, from 2020 to 2022. Therefore, its corporate income tax is at a
reduced rate of 15% in the current reporting period. (2021: 15%)
(6) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2020 (Guo Ke Huo Zi [2020] No. 251) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on December 29th 2020, the Company’s joint-venture subsidiary, Hangzhou Hikrobot
Technology Co., Ltd. (hereinafter referred to as “HikRobot”), Hangzhou Auto Software Co., Ltd. (hereinafter referred
to as “Hangzhou Auto Software”) and Hangzhou Hikimaging Technology Co., Ltd. (hereinafter referred to as
“Hangzhou Hikimaging Technology”) were identified as the high-tech enterprises with a valid term of 3 years, from
2020 to 2022. Therefore, the enterprise income tax in the current reporting period is at a reduced rate of 15%. (2021:
15%)
(7) In accordance with the Letter of Reply on Publishing the List of Identified High-tech Enterprises of Zhejiang Province
in 2019 (Guo Ke Huo Zi [2020] No. 32) issued by the Leading Group Office of National High-tech Enterprise
Identification Management on January 20th 2020, the Company’s joint-venture subsidiary, Hangzhou Hikmicro
Sensing Technology Co., Ltd. (hereinafter referred to as “Hangzhou Hikmicro Sensing”) was identified as the high-
tech enterprise with a valid term of 3 years, from 2019 to 2021.
According to the Ministry of Industry and Information Technology of the People's Republic of China, the National
Development and Reform Commission, the Ministry of Finance and the National State Administration of Taxation
Announcement [2021] No. 9, Announcement on the Enterprise Income Tax Policy for Promoting the High-quality
Development of the Integrated Circuit Industry and Software Industry (Ministry of Finance, State Administration of
Taxation, National Development and Reform Commission, Ministry of Industry and Information Technology
Announcement [2020] No. 45), Notice on Requirements for Formulating Lists of Integrated Circuit Enterprises,
Projects and Software Enterprises enjoying Preferential Tax Policies (Fa Gai Gao Ji [2022] No. 390), Hangzhou
Hikmicro Sensing is an integrated circuit design enterprise established before December 31st 2017. The qualified
enterprise will be exempted from corporate income tax for the first year to the second year from the profitable year,
and levied half of the corporate income tax at a statutory tax rate of 25% from the third year to the fifth year. In May
2022, Hangzhou Hikmicro Sensing was identified as a key integrated circuit design enterprise. Starting from the profit-
making year, corporate income tax will be exempted from the first to fifth years, and corporate income tax will be at
a reduced rate of 10% in successive years. The year of 2022 is the second year of Hangzhou Hikmicro Sensing making
profits and is exempt from enterprise income tax.
(8) In accordance with the Announcement on Promoting the Income Tax Policies of High-quality Developed Enterprises
in the Integrated Circuit Industry and the Software Industry (Announcement [2020] No. 45 jointly by the MOF, SAT,
NDRC and MIIT), enterprises engaging in integrated circuit design, equipment, materials, packaging, testing and
software encouraged by the state are entitled to exemption from enterprise income tax in the first and second years
after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third to fifth years.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
The Company’s joint venture subsidiaries, Hangzhou EZVIZ Software Co., Ltd. (hereinafter referred to as “EZVIZ
Software”) and Hangzhou Microimage Software Co., Ltd. (hereinafter referred to as “Hangzhou Microimage
Software”) are qualified software companies and enjoy the preferential enterprise income tax at half of the 25%
statutory tax rate (2021: tax-exempted).
(9) According to the Recording List of the First Batch of identified High-tech Enterprises of Zhejiang Province in 2021
issued by the Leading Group Office of National High-tech Enterprise Identification Management Work on January
24th 2022, the Company’s joint venture subsidiaries Hangzhou Hikstorage Technology Co., Ltd. (hereinafter referred
as “Hangzhou Hikstorage”) is identified as a high-tech enterprise with a validity period of 3 years, from 2021 to 2023.
Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current
reporting period (2021: 15%).
Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]
No. 100) promulgated by the Ministry of Finance and the State Administration of Taxation, as for self-developed software
products sales of the Company, Hangzhou System, the Company’s joint-venture subsidiaries such as HikRobot, Hangzhou
Auto Software, Hangzhou EZVIZ Software, Hangzhou Hikstorage, Hangzhou Hikimaging Technology, Hangzhou Hikfire
Technology Co., Ltd. (hereinafter referred as “Hangzhou Hikfire”), Hangzhou Rayin Technology Co., Ltd., Hangzhou
Microimage Software, Henan Haikang Hua’an Baoquan Electronics Co., Ltd., Hangzhou Kuangxin and Zhejiang Hailai
Yunzhi Technology Co., Ltd., the VAT shall be calculated and paid with tax rate of 17% at first, then the portion with actual
tax bearing excess 3% shall be refunded after State Administration of Taxation reviews.
Note 3: In accordance with the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform (Joint
Announcement [2019] No. 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and the
General Administration of Customs, from April 1st 2019 to December 31st 2021, taxpayers in the production and living
services industries are allowed to deduct an additional 10% of the current deductible input tax to deduct the tax payable
(hereinafter referred as “Additional Deduction Policy”). In accordance with the Several Policies on Promoting the
Recovery and Development of Difficult Industries in the Service Industry Document (Fa Gai Cai Jin [2022] No. 271), the
service industry value-added tax deduction policy will continue. In 2022, the current deductible input tax for production
and living services taxpayers will continue to be deducted by 10% and 15% of the tax payable respectively. Some branches
of Hangzhou Hikvision Technology Co., Ltd., a wholly-owned subsidiary of the Company, Chongqing System, Hangzhou
Hikvision Security Equipment Leasing Service Co., Ltd., Anhui Hikvision City Operation Service Co., Ltd., some
branches of Hangzhou EZVIZ Network Co., Ltd., a joint venture of the Company, Hangzhou Kuangxin, Luliang Branch
of Zhejiang Haikang City Service Co., Ltd., Luoyang Branch of Henan Hua’an Baoquan Intelligent Development Co.,
Ltd., Henan Hua’an Security Service Co., Ltd. and Hangzhou Branch of Henan Haikang Hua’an Baoquan Electronics Co.,
Ltd. meet the industry requirements, and their sales in 2021 accounted for more than 50% of the total sales, are complying
with the provisions of the Additional Deduction Policy and were entitled to additional deduction preferential tax policy of
input tax since 2022.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
V. Notes to items in the consolidated financial statements
1. Cash and bank balances
Unit: RMB
Closing balance Opening balance
Item Exchange Exchange
Foreign currency Foreign currency
rate for RMB amount rate for RMB amount
amount amount
conversion conversion
Cash：
RMB - - 16,041.62 - - 16,909.86
EUR 33,153.19 7.0084 232,350.80 41,743.98 7.2197 301,379.03
INR 2,160,446.88 0.0849 183,421.94 2,288,210.50 0.0857 196,099.64
USD 23,258.87 6.7114 156,099.57 33,133.82 6.3757 211,251.31
GBP 1,763.12 8.1365 14,345.62 2,343.11 8.6064 20,165.74
Other currencies - - 118,855.54 - - 1,105,467.95
Bank balance：
RMB - - 25,680,088,227.66 - - 31,577,521,085.40
USD 146,068,774.78 6.7114 980,325,975.04 272,857,839.86 6.3757 1,739,659,729.57
EUR 88,796,485.24 7.0084 622,321,287.19 96,011,075.74 7.2197 693,171,163.55
INR 1,350,182,531.21 0.0849 114,630,496.90 1,092,845,025.79 0.0857 93,656,818.71
GBP 14,057,346.78 8.1365 114,377,602.08 17,199,784.69 8.6064 148,028,226.97
RUB 438,823,820.16 0.1285 56,388,860.89 731,254,280.94 0.0855 62,522,241.02
MXN 63,161,868.67 0.3332 21,045,534.64 75,249,325.96 0.3116 23,447,689.97
BRL 15,197,872.95 1.2923 19,640,211.21 36,644,426.85 1.1436 41,906,566.54
JPY 380,662,630.96 0.0491 18,690,535.18 392,086,869.13 0.0554 21,721,612.55
THB 94,991,295.70 0.1906 18,105,340.96 121,837,799.11 0.1912 23,295,387.19
HKD 14,723,432.25 0.8552 12,591,479.26 31,824,133.26 0.8176 26,019,411.35
CAD 2,343,519.81 5.2058 12,199,895.45 6,629,301.03 5.0046 33,176,999.93
KRW 2,062,333,332.69 0.0052 10,724,133.33 2,683,059,127.78 0.0054 14,488,519.29
AUD 2,195,329.44 4.6145 10,130,347.71 1,886,989.36 4.6220 8,721,664.84
PLN 6,021,039.57 1.5016 9,041,193.02 10,745,706.25 1.5717 16,889,026.51
AED 4,376,945.36 1.8315 8,016,375.43 5,055,058.19 1.7361 8,776,086.53
ZAR 5,826,985.17 0.4133 2,408,292.97 39,232,629.30 0.4004 15,708,744.77
Other currencies - - 27,172,001.09 - - 25,075,802.57
Other currency
funds:
RMB - - 241,622,270.63 - - 112,293,072.17
USD 5,009,849.28 6.7114 33,623,102.46 3,595,184.37 6.3757 22,921,816.99
EUR 552,894.02 7.0084 3,874,902.45 580,030.78 7.2197 4,187,648.22
Other currencies - - 9,014,373.72 - - 6,830,343.19
Total 28,026,753,554.36 34,721,870,931.36
Including:
deposited in 602,899,633.13 737,750,220.06
overseas banks
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Details of other currency funds:
Unit: RMB
Closing balance Opening balance
Foreign Exchange Foreign Exchange
Item currency rate for RMB amount currency rate for RMB amount
amount conversion amount conversion
Capitals with limitations：
Deposits for letter of
- - - - 51,980,170.28
guarantee 67,748,364.83
Deposits for letter of Credit - - - - -
33,796,675.53
Margin for foreign exchange
- - - - -
transactions 23,314,662.43
Bank acceptance bill - - - - 35,387,135.77
22,117,486.64
Other security deposit - - 2,934,040.11 - - 4,679,097.53
Other capitals with limitations - - 117,941,132.19 - - 25,880,098.58
Subtotal 267,852,361.73 117,926,502.16
Capitals without
limitations:
Deposit in Alipay, Tenpay,
- - 16,906,890.09 - - 27,469,681.96
etc.
Other currency funds in MXN 8,420,113.03 0.3332 2,805,581.66 - - -
Other currency funds in USD 84,902.67 6.7114 569,815.78 119,611.52 6.3757 762,607.17
Other currency funds in EUR - - - 10,262.10 7.2197 74,089.28
Subtotal 20,282,287.53 28,306,378.41
Total 288,134,649.26 146,232,880.57
2. Held-for-trading financial assets
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through current gain and loss 48,035,480.36 34,320,010.83
Including: derivative financial assets 48,035,480.36 34,320,010.83
Total 48,035,480.36 34,320,010.83
3. Notes receivable
3.1 Categories of notes receivable
Unit：RMB
Category Closing balance Opening balance
Bank acceptance bill 992,049,585.80 1,228,046,849.95
Commercial acceptance bill 295,964,120.47 294,714,055.35
Total 1,288,013,706.27 1,522,760,905.30
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
3.2 As of June 30th 2022, the pledged notes receivable by the Group is nil.
3.3 At the end of the current reporting period, notes receivable endorsed by the Group but not yet due at the balance sheet
day
Unit：RMB
Derecognized amount as of Amount not derecognized as
Category
June 30th 2022 of June 30th 2022
Bank acceptance bill Note (V)-30.3 - 535,994,308.24
Total - 535,994,308.24
Note: Transfer of financial assets
As of June 30th 2022, the Group gave RMB 535,994,308.24 (2021: RMB 711,238,103.83) undued bank acceptance bills
to suppliers for endorsement. Since the Group has not transferred almost all the risks and rewards of ownership of financial
assets, the Group has not terminated its confirmation. For details, please refer to Note (V) 30.3.
3.4 As of June 30th 2022, the Group transferred the defaulted notes receivable into accounts receivable.
Unit：RMB
Category Amounts transferred into accounts receivable as of June 30th 2022
Commercial Acceptance Bill 22,503,518.60
Total 22,503,518.60
3.5 The Group believes, except for bills that are transferred to accounts receivable due to the failure of the drawer to
perform the contract, the bank acceptance bills and commercial acceptance bills held by the Group do not have significant
credit risks and will not cause major losses due to the counterparty’s default. Therefore, no loss provision is made.
4. Accounts receivable
4.1 Disclosure by aging
Unit: RMB
Closing balance
Item
Accounts receivable Credit loss provision Proportion (%)
Within credit period 16,558,569,368.78 84,963,504.29 0.51
Within 1 year after exceeding credit period 11,296,462,964.63 565,361,934.32 5.00
1-2 years after exceeding credit period 1,667,138,255.97 379,640,628.26 22.77
2-3 years after exceeding credit period 793,923,938.25 382,147,443.97 48.13
3-4 years after exceeding credit period 758,393,149.40 549,210,718.55 72.42
Over 4 years after exceeding credit period 413,346,366.97 413,346,366.97 100.00
Total 31,487,834,044.00 2,374,670,596.36 7.54
4.2 Classified disclosure of credit loss provision by methods
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Closing balance
Category Carrying amount Credit loss provision Book value
Amount Proportion (%) Amount Proportion (%) Amount
Provision for credit loss on a
- - - - -
single basis
Provision for credit loss by
31,487,834,044.00 100.00 2,374,670,596.36 7.54 29,113,163,447.64
portfolios
Total 31,487,834,044.00 100.00 2,374,670,596.36 7.54 29,113,163,447.64
Opening balance
Category Carrying amount Credit loss provision Book value
Amount Proportion (%) Amount Proportion (%) Amount
Provision for credit loss on a
- - - - -
single basis
Provision for credit loss by
28,201,432,058.17 100.00 2,026,658,957.75 7.19 26,174,773,100.42
portfolios
Total 28,201,432,058.17 100.00 2,026,658,957.75 7.19 26,174,773,100.42
Provision for credit loss by portfolios for accouts receivable
Unit: RMB
Closing balance
Customer
Carrying amount Credit loss provision Proportion (%)
Portfolio A 4,735,953,889.40 104,537,054.21 2.21
Portfolio B 20,463,268,481.22 2,072,164,745.20 10.13
Portfolio C 6,288,611,673.38 197,968,796.95 3.15
Total 31,487,834,044.00 2,374,670,596.36 7.54
Description of credit loss provision by portfolios for accouts receivable:
As part of the Group's credit risk management, the Group uses the ageing of accounts receivable to assess the expected
credit losses of accounts receivable formed by domestic and overseas sales business, and divides the risk characteristics
into portfolio A, portfolio B and portfolio C, according to the business area and object. These three portfolios involve a
large number of customers with the same risk characteristics. Aging information is able to reflect the solvency of these
three types of customers when the accounts receivable are due.
125
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
As of June 30th 2022 and January 1st 2022, the credit risk and expected credit losses of accounts receivable from portfolio A are as follows:
Unit: RMB
Closing balance Opening balance
Age Estimated average Credit loss Estimated average Credit loss
Carrying value Book value Carrying value Book value
loss rate (%) provision loss rate (%) provision
Within credit period 0.04 3,535,611,410.07 1,258,952.02 3,534,352,458.05 0.04 3,095,392,524.62 1,291,742.49 3,094,100,782.13
Within 1 year after exceeding credit period 1.59 1,077,882,314.29 17,143,299.13 1,060,739,015.16 1.70 594,470,571.01 10,117,916.29 584,352,654.72
1-2 years after exceeding credit period 49.74 57,768,811.63 28,735,805.29 29,033,006.34 44.11 50,793,800.93 22,404,389.00 28,389,411.93
2-3 years after exceeding credit period 79.96 36,387,975.55 29,095,619.91 7,292,355.64 83.73 43,832,222.47 36,701,948.79 7,130,273.68
3-4 years after exceeding credit period 100.00 15,229,597.31 15,229,597.31 - 100.00 19,359,244.96 19,359,244.96 -
Over 4 years after exceeding credit period 100.00 13,073,780.55 13,073,780.55 - 100.00 2,653,390.61 2,653,390.61 -
Total 2.21 4,735,953,889.40 104,537,054.21 4,631,416,835.19 2.43 3,806,501,754.60 92,528,632.14 3,713,973,122.46
As of June 30th 2022 and January 1st 2022, the credit risk and expected credit losses of accounts receivable from portfolio B are as follows:
Unit: RMB
Closing balance Opening balance
Age Estimated average Credit loss Estimated average Credit loss
Carrying value Book value Carrying value Book value
loss rate (%) provision loss rate (%) provision
Within credit period 1.03 7,673,389,348.44 79,014,921.00 7,594,374,427.44 1.99 8,575,278,759.81 170,679,301.15 8,404,599,458.66
Within 1 year after exceeding credit period 5.38 9,455,615,229.45 509,142,752.54 8,946,472,476.91 4.63 7,167,632,732.53 331,869,605.70 6,835,763,126.83
1-2 years after exceeding credit period 20.86 1,562,447,058.63 325,856,796.45 1,236,590,262.18 19.80 1,387,932,595.51 274,788,108.40 1,113,144,487.11
2-3 years after exceeding credit period 42.16 699,285,455.83 294,801,317.19 404,484,138.64 44.75 914,771,713.21 409,398,421.89 505,373,291.32
3-4 years after exceeding credit period 70.17 701,284,556.42 492,102,125.57 209,182,430.85 83.68 347,000,938.34 290,357,481.17 56,643,457.17
Over 4 years after exceeding credit period 100.00 371,246,832.45 371,246,832.45 - 100.00 288,831,015.89 288,831,015.89 -
Total 10.13 20,463,268,481.22 2,072,164,745.20 18,391,103,736.02 9.45 18,681,447,755.29 1,765,923,934.20 16,915,523,821.09
As of June 30th 2022 and January 1st 2022, the credit risk and expected credit losses of accounts receivable from portfolio C are as follows:
126
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Closing balance Opening balance
Age Estimated average Credit loss Estimated average Credit loss
Carrying value Book value Carrying value Book value
loss rate (%) provision loss rate (%) provision
Within credit period 0.09 5,349,568,610.27 4,689,631.27 5,344,878,979.00 0.12 4,954,201,263.39 5,863,712.80 4,948,337,550.59
Within 1 year after exceeding credit period 5.12 762,965,420.89 39,075,882.65 723,889,538.24 5.08 594,136,961.30 30,172,981.24 563,963,980.06
1-2 years after exceeding credit period 53.38 46,922,385.71 25,048,026.52 21,874,359.19 52.38 69,240,541.50 36,265,915.28 32,974,626.22
2-3 years after exceeding credit period 100.00 58,250,506.87 58,250,506.87 - 100.00 46,561,027.57 46,561,027.57 -
3-4 years after exceeding credit period 100.00 41,878,995.67 41,878,995.67 - 100.00 25,802,744.58 25,802,744.58 -
Over 4 years after exceeding credit period 100.00 29,025,753.97 29,025,753.97 - 100.00 23,540,009.94 23,540,009.94 -
Total 3.15 6,288,611,673.38 197,968,796.95 6,090,642,876.43 2.94 5,713,482,548.28 168,206,391.41 5,545,276,156.87
4.3 Credit loss provision
Provision, re-collection, or reverse of the credit loss provision in the current reporting period
Unit: RMB
Credit loss provision Total
Balance on January 1st 2022 2,026,658,957.75
Provision/(reverse) during the current reporting period 348,840,630.65
Derecognition of financial assets (including direct write-downs) and transfer out (1,150,472.89)
Difference arised from foreign currency statement translation 321,480.85
Balance on June 30th 2022 2,374,670,596.36
Actual write-off of accounts receivable during the current reporting period:
In the current reporting period, the amount of actual accounts receivable write-off is RMB 2,371,127.96, and RMB 1,220,655.07 is recollected after writing-off.
127
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
4.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Relationship Book value balance Closing balance Proportion (%) of the total balance of
Name of the Party with the of accounts for credit loss accounts receivable at the end of the
Company receivable provision current reporting period
CETC’s subsidiary company A
Related Party 299,048,530.29 155,449,500.12 0.95
(Note)
Third Party A Third party 238,583,589.80 23,858,358.98 0.76
Third Party B Third party 172,027,439.69 17,202,743.97 0.55
Third Party C Third party 134,777,296.75 3,551,490.14 0.43
Third Party D Third party 134,049,787.07 5,667,221.51 0.43
Total 978,486,643.60 205,729,314.72 3.12
Note: A subsidiary of CETC is a subsidiary of China Electronics Technology Group Co., Ltd., the Company's ultimate
controller.
4.5 As of June 30th 2022, there is no termination of accounts receivable booking due to transfer of a financial asset.
4.6 As of June 30th 2022, the Group has no assets/liabilities booked due to transferred accounts receivable that the Group
still continues to be involved in.
5. Receivables for financing
5.1 Receivables for financing by catagories
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 1,299,586,224.80 1,316,035,122.06
Total- 1,299,586,224.80 1,316,035,122.06
5.2 At the end of the current reporting period, the Group had no pledged financing of receivables.
5.3 At the end of the reporting period, receivables for financing endorsed or discounted by the Group that have not yet
expired on the balance sheet date.
Unit: RMB
Derecognized amount as of June 30th Amount not derecognized as of June 30th
Item
2022 2022
Bank acceptance bill 2,199,538,914.08 -
Total- 2,199,538,914.08 -
5.4 The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there is no
significant credit risk, so no loss provision is made.
6. Prepayments
128
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
6.1 Prepayments by aging analysis
Unit: RMB
Closing balance Opening balance
Aging
Carrying amount Proportion (%) Carrying amount Proportion (%)
Within 1 year 595,092,566.13 95.45 472,051,582.19 93.33
1-2 years 13,710,432.09 2.20 16,837,633.29 3.33
2-3 years 7,621,192.39 1.22 12,180,525.79 2.41
Over 3 years 7,040,899.78 1.13 4,728,512.08 0.93
Total 623,465,090.39 100.00 505,798,253.35 100.00
6.2 Closing balances of top five prepayments parties
As of June 30th 2022, the Group’s top five balances of prepayments amounted to RMB 180,190,519.96, accounting for
28.90% of total closing balance of prepayments.
7. Other receivables
7.1 Other receivables by categories
Unit: RMB
Item Closing balance Opening balance
Dividend reveivable 60,866,875.42 -
Other receivables 640,158,249.13 359,620,445.88
Total 701,025,124.55 359,620,445.88
7.2 Dividend receivable
Unit: RMB
Investees Closing balance Opening balance
Subsidiaries of CETC 60,866,875.42 -
Total 60,866,875.42 -
129
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
7.3 Other receivables
7.3.1 Other receivables by aging
Unit: RMB
Closing balance
Item
Other receivables Bad debt provision Proportion (%)
Within contract period 548,598,575.37 2,558,579.87 0.47
Within 1 year 87,928,715.10 3,387,711.96 3.85
1-2 years 4,546,821.14 982,090.19 21.60
2-3 years 5,529,110.81 2,626,269.15 47.50
3-4 years 8,963,576.38 6,201,898.50 69.19
Over 4 years 14,221,028.56 13,873,028.56 97.55
Total 669,787,827.36 29,629,578.23 4.42
7.3.2 Other receivables by nature of the payment
Unit: RMB
Item Closing balance Opening balance
Temporary payments for receivables 174,419,053.19 113,230,687.20
Guarantee deposits 266,886,885.54 216,176,255.21
Tax rebates 114,078,131.79 762,862.50
Investment intention fund - 4,000,000.00
Others 114,403,756.84 51,019,823.13
Total 669,787,827.36 385,189,628.04
7.3.3 Provision for credit loss
130
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Amount of changes in the current reporting period Difference resulted from foreign currency
Category Opening balance Closing balance
Provision or reverse Recollect Resell or write off statements conversion
Other receivables 25,569,182.16 3,564,338.48 - (42,155.08) 538,212.67 29,629,578.23
Total 25,569,182.16 3,564,338.48 - (42,155.08) 538,212.67 29,629,578.23
Changes in credit loss provisions for other receivables
Unit: RMB
Stage 1 Stage 2 Stage 3
bed debts allowance Expected credit loss for the entire Expected credit loss for the entire
Expected credit losses in the Total
duration (credit impairment has not duration (credit impairment has
next 12 months
incurred) occurred)
Balance on January 1st 2022 2,587,782.99 3,087,217.99 19,894,181.18 25,569,182.16
The book balance of other receivables on January 1st
2022 in the current reporting period
--Transfer into stage 2 (764,676.78) 764,676.78 - -
--Transfer into stage 3 - (1,024,544.24) 1,024,544.24 -
--Provision/(reverse) in the current reporting period 197,260.99 1,542,451.62 1,824,625.87 3,564,338.48
--Derecognition of financial assets (including direct
- - (42,155.08) (42,155.08)
write-down) and transfer out
Other changes 538,212.67 - - 538,212.67
Balance on June 30th 2022 2,558,579.87 4,369,802.15 22,701,196.21 29,629,578.23
7.3.4 Actual write-off of other receivables during the current reporting period
The actual write off of other receivables during the current reporting period is RMB 42,155.08.
7.3.5 Top five debtors based on corresponding closing balance of other receivables
131
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Relationship with the Proportion of total closing balance Closing balance for credit loss
Entities Nature Closing balance Aging
Company for other receivables (%) provision
Third party E Third party Tax refund 109,630,278.27 With in the contract period 16.37 -
Third party F Third party Guarantee deposits 35,697,760.00 With in the contract period 5.33 310,570.51
Third party G Third party Guarantee deposits 6,927,179.05 Within 1 year 1.03 293,019.67
Third party H Third party Guarantee deposits 5,000,000.00 With in the contract period 0.75 43,500.00
Temporary payments
Third party I Third party 4,551,205.83 With in the contract period 0.68 39,595.49
for receivables
Total 161,806,423.15 24.16 686,685.67
7.3.6 As of June 30th 2022, the Group does not have other receivables related to government subsidies.
7.3.7 As of June 30th 2022, there is no termination of other receivables booking due to transfer of a financial asset.
7.3.8 As of June 30th 2022, the Group has no assets/liabilities booked due to any transferred other receivable that the Group continues to be involved in.
8. Inventories
8.1 Categories of inventories
Unit: RMB
Closing balance Opening balance
Provision for decline in value of Provision for decline in value of
Category
Carrying amount inventories/ Impairment provision Book value Carrying amount inventories/ Impairment provision Book value
for contract performance cost for contract performance cost
Raw materials 8,928,020,002.07 302,020,081.87 8,625,999,920.20 7,947,851,148.15 233,046,765.20 7,714,804,382.95
Work-in-progress 712,202,882.71 - 712,202,882.71 437,963,160.90 - 437,963,160.90
Finished goods 11,110,721,445.06 742,268,132.70 10,368,453,312.36 9,760,949,606.67 702,675,806.16 9,058,273,800.51
Contract performance cost 968,573,356.83 - 968,573,356.83 763,071,063.24 - 763,071,063.24
Total 21,719,517,686.67 1,044,288,214.57 20,675,229,472.10 18,909,834,978.96 935,722,571.36 17,974,112,407.60
132
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
8.2 Provision for decline in value of inventories
Unit: RMB
Decrease in the current reporting period Effect on conversion of
Increase in the current financial statements
Category Opening balance Closing balance
reporting period Reversals Write-off denominated in foreign
currencies
Raw materials 233,046,765.20 69,291,568.70 - 318,252.03 - 302,020,081.87
Finished goods 702,675,806.16 56,561,193.69 - 44,066,938.30 27,098,071.15 742,268,132.70
Subtotal 935,722,571.36 125,852,762.39 - 44,385,190.33 27,098,071.15 1,044,288,214.57
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
For contract performance cost recognized as an asset, the Group recognizes it into current profit or loss on the same basis as the revenue from goods relating to such asset, and is recognized
at the point of time when the goods are delivered to and accepted by the counterparty; there was an amount of RMB 429,970,638.05 recognized during the current reporting period.
133
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
9. Contract assets
9.1 Details of contract assets
Unit: RMB
Closing balance Opening balance
Items Provisions for Provisions for
Carrying amount Book value Carrying amount Book value
impairment impairment
Constructions 1,197,169,497.10 10,136,624.56 1,187,032,872.54 1,274,476,664.40 9,873,249.73 1,264,603,414.67
Maintainence
165,476,127.67 1,421,934.39 164,054,193.28 148,057,308.84 1,288,098.60 146,769,210.24
services
Total 1,362,645,624.77 11,558,558.95 1,351,087,065.82 1,422,533,973.24 11,161,348.33 1,411,372,624.91
9.2 The classification and disclosure of the method of provision for impairment of contract assets during the current
reporting period:
Unit: RMB
Closing balance
Carrying amount Provisions for impairment Book value
Items
Provision
Proportion
Amount Amount proportion Amount
(%)
(%)
Provision for impairment on a single item - - - - -
Provision for impairment by portfolio 1,362,645,624.77 100.00 11,558,558.95 0.85 1,351,087,065.82
Total 1,362,645,624.77 100.00 11,558,558.95 0.85 1,351,087,065.82
Provision, re-collection, or reverse in the current reporting period:
Unit: RMB
Expected credit loss during Expected credit loss during
Credit loss provision the whole duration (No the whole duration (Credit Total
credit impairment occurred) impairment occurred)
Balance on January 1st 2022 11,161,348.33 - 11,161,348.33
Provision (reverse) during the current reporting period 397,210.62 - 397,210.62
th
Balance on June 30 2022 11,558,558.95 - 11,558,558.95
Impairment provision for the current reporting period amounted to RMB 397,210.62, with no reversal, write-off or
recovery of impairment provision during the current repoting period.
Contract assets arise from the Group’s construction works business as well as maintenance services relating to security
projects. The Group provides construction works and maintenance services based on contracts with customers, and
recognizes revenue based on the performance progress during the term of the contracts. The Group’s customers make
milestone payments for the construction works and maintenance services of the Group as provided in the contracts. For
the portion where the Group has obtained an unconditional right to the payment, it will be recognized as accounts
receivable, while the remaining portion will be recognized as contract assets; where the contract price received or
receivable by the Group exceeds the performance obligation completed to date, the excess portion will be recognized as
contract liabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
10. Non-current assets due within one year
134
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year (Note (V) 12) 929,050,417.26 975,960,437.14
Total 929,050,417.26 975,960,437.14
11. Other current assets
Unit: RMB
Item Closing balance Opening balance
Deductible VAT input 869,617,109.62 671,022,973.90
Prepaid corporate income tax 104,960,062.67 146,600,985.54
Prepaid tariff 47,648,100.05 113,756,173.22
Others 128,451,799.91 91,220,245.12
Total 1,150,677,072.25 1,022,600,377.78
135
Hikvision 2022 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2022 to June 30th 2022
12. Long-term receivables
12.1 Details of long-term receivables
Unit: RMB
Closing balance Opening balance
Range of
Item Provision for Provision for
Carrying amount Book value Carrying amount Book value discount rate
credit loss credit loss
Financial leases receivables 316,735,367.97 33,740,580.64 282,994,787.33 338,676,520.11 32,408,674.53 306,267,845.58 0.54%-6.05%
Including: Unrealized income from financing 11,362,954.82 - 11,362,954.82 15,579,721.55 - 15,579,721.55 -
Installments for selling goods 859,493,647.54 105,981,961.08 753,511,686.46 881,821,037.32 87,043,902.28 794,777,135.04 4.24%-6.45%
Including: Unrealized income from financing 26,001,308.48 - 26,001,308.48 26,548,778.33 - 26,548,778.33 -
Employee housing loan 478,316,507.25 - 478,316,507.25 487,983,401.49 - 487,983,401.49 4.95%
Including: Unrealized income from financing 46,885,068.59 - 46,885,068.59 59,389,998.51 - 59,389,998.51 -
Less: Non-current assets due within one year (Note (V) 10) 1,066,603,059.35 137,552,642.09 929,050,417.26 1,093,138,859.09 117,178,421.95 975,960,437.14 -
Total 587,942,463.41 2,169,899.63 585,772,563.78 615,342,099.83 2,274,154.86 613,067,944.97 -
12.2 Credit loss provision
As part of the Group's credit risk management, in addition to employee housing loan, the Group uses the aging of long-term receivables to assess the expected credit losses of long-term
receivables formed by financial leasing and installment collection business. The customers involved in financial leasing and installment collection business are mainly government
department and state-owned enterprises. There a large number of customers and have the same risk characteristics. The aging information is able to reflect the repayment capability of
these customers when the long-term receivables are due.
As of June 30th 2022, the credit risk and expected credit losses of long-term receivables of these customers are as follows:
136
Hikvision 2022 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Closing balance
Age
Amounts Credit loss provision Estimated average loss rate (%)
Within credit period 539,069,525.94 4,699,866.58 0.87
Within 1 year after exceeding credit period 274,531,261.74 11,612,672.37 4.23
1-2 years after exceeding credit period 187,493,735.08 35,005,080.34 18.67
2-3 years after exceeding credit period 134,886,364.90 55,586,670.97 41.21
3-4 years after exceeding credit period 24,115,145.69 16,685,269.30 69.19
Over 4 years after exceeding credit period 16,132,982.16 16,132,982.16 100.00
Total 1,176,229,015.51 139,722,541.72 11.88
The changes in the Group's long-term receivables' expected credit loss provision for the current reporting period are as follows:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit losses for Expected credit losses for
Credit loss provision Expected credit losses the entire duration the entire duration Total
in the next 12 months (No credit impairment (Credit impairment has
occurred) occurred)
Balance on January 1st 2022 5,623,293.18 45,080,318.80 68,748,964.83 119,452,576.81
On January 1st 2022, the book balance of long-term accounts receivable in the current reporting period
Transfer into stage 2 (2,388,585.64) 2,388,585.64 - -
Transfer into stage 3 - (25,183,284.33) 25,183,284.33 -
Provision/(reverse) during the current reporting period 1,465,159.04 24,332,132.60 (5,527,326.73) 20,269,964.91
Balance on June 30th 2022 4,699,866.58 46,617,752.71 88,404,922.43 139,722,541.72
12.3 As of June 30th 2022, there is no termination of long-term receivables booking due to transfer of a financial asset.
12.4 As of June 30th 2022, the Group has no assets/liabilities booked due to any transferred long-term receivable that the Group continue to be involved in.
13. Long-term equity investment
137
Hikvision 2022 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Increase/Decrease in the current reporting period
Closing
balance
Opening Investment Profit Adjustment: Declaration of Closing
The invested entity Other for
Balance Additional Investment (Loss) recognized Other cash dividends Impairment Balance
Changes others impairment
Investments reduction under the equity comprehensive or profit provision provision
in equity
Method income distribution
1. Joint venture companies
Hangzhou Haikang Intelligent
Industrial Equity Investment Fund 702,369,339.95 - - 53,022,515.98 - 12,195,975.86 - - - 767,587,831.79 -
Partnership (L.P.) (Note 1)
Zhejiang City Digital Technology
12,214,320.29 - - 419,613.26 - - - - - 12,633,933.55 -
Co., Ltd.
Zhejiang Haishi Huayue Digital
11,930,512.66 - - 35,914.16 - - - - - 11,966,426.82 -
Technology Co., Ltd.
Shenzhen Haishi Urban Service
1,264,658.38 - - (899,467.27) - - - - - 365,191.11 -
Operation Co., Ltd.
Guangxi Haishi Urban Operation
4,632,200.59 8,560,000.00 - (830,963.67) - - - - - 12,361,236.92 -
Management Co., Ltd. (Note 2)
Yunnan Yinghai Parking Service
4,558,881.09 - - 297,411.14 - - - - - 4,856,292.23 -
Co., Ltd.
Xuzhou Kangbo Urban Operation
9,233,201.67 - 73,459.45 - - - - - 9,306,661.12 -
Management Service Co., Ltd.
Subtotal 746,203,114.63 8,560,000.00 - 52,118,483.05 - 12,195,975.86 - - - 819,077,573.54 -
2. Associated Companies
Wuhu Sensor Tech Intelligent
75,466,476.84 - - 8,421,002.48 - - - - - 83,887,479.32 -
Technology Co., Ltd.
138
Hikvision 2022 Half Year Report
Notes to Financial Statements ar
For the reporting period from January 1st 2022 to June 30th 2022
Increase/Decrease in the current reporting period
Closing
balance
Opening Investment Profit Adjustment: Declaration of Closing
The invested entity Other for
Balance Additional Investment (Loss) recognized Other cash dividends Impairment Balance
Changes others impairment
Investments reduction under the equity comprehensive or profit provision provision
in equity
Method income distribution
Maxio Technology (Hangzhou)
104,537,528.30 - - (11,780,767.99) - 56,274,883.70 - - - 149,031,644.01 -
Co., Ltd. (Note 1)
Zhiguang Hailian Big Data
21,285,843.27 - - (2,585,310.69) - 4,517,968.05 - - - 23,218,500.63 -
Technology Co., Ltd. (Note 1)
Sanmenxia Xiaoyun Vision
3,069,386.03 - - 326,555.71 - - - - - 3,395,941.74 -
Technology Co., Ltd.
Jiaxin Haishi JiaAn Zhicheng
21,654,742.45 - - 686,599.74 - - - - - 22,341,342.19 -
Technology Co., Ltd.
Qinghai Qingtang Big Data Co.,
9,948,454.93 - - (71,448.08) - - - - - 9,877,006.85 -
Ltd.
Zhejiang Changyun Haibao
- 3,000,000.00 - (962,497.68) - - - - - 2,037,502.32
Technology Co., Ltd. (Note 3)
Subtotal 235,962,431.82 3,000,000.00 - (5,965,866.51) - 60,792,851.75 - - - 293,789,417.06 -
Total 982,165,546.45 11,560,000.00 - 46,152,616.54 - 72,988,827.61 - - - 1,112,866,990.60 -
Note 1: Other changes in equity in the current reporting period were caused by changes in equity of the investee due to capital increase by other shareholders.
Note 2: The Group made additional investment in the investee this year, and the proportion of equity held in the investee remained unchanged.
Note 3: In 2019, the Group signed an agreement with independent third parties Zhejiang Changyun Investment Co., Ltd. and Zhongzhibao Financial Technology (Chengdu) Co., Ltd. on
the joint venture establishment of Zhejiang Changyun Haibao Technology Co., Ltd. (“Changyun Haibao”). The Group has completed the paid-in capital contribution of RMB 3 million
during the current reporting period, and the shareholding ratio obtained is 30%. The Board of Directors of Changyun Haibao consists of 7 directors, of which the Group has appointed 2
directors to exert significant influence on Changyun Haibao.
139
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
14. Other non-current financial assets
Unit: RMB
Additional Investment Changes in fair
Invested Entity Shareholding Opening investment during recovery during value during the
Closing balance
(Note 1) % balance the current the current current
reporting period reporting period reporting period
CETC Finance Co.,
3.83% 377,720,800.26 - - (33,007,052.26) 344,713,748.00
Ltd. (Note 2)
Hangzhou
Confirmware
9.52% 26,814,838.96 - - 6,558,336.48 33,373,175.44
Technology Co.,
Ltd.
Zhejiang Tuxun
Technology
- 29,000,000.00 - (29,000,000.00) - -
Co.,Ltd. (Zhejiang
Tuxun)
Zhengzhou
Guokong Smart
7.00% 700,000.00 - - - 700,000.00
City Technology
Co., Ltd.
Guangxi Jilian
Haibao Technical 10.00% 2,884,220.00 - - - 2,884,220.00
Service Co., Ltd.
Shenzhen Wanyu
Security Service
5.00% 1,000,000.00 - - - 1,000,000.00
Technology Co.,
Ltd.
Nanwang
Information
0.25% 604,313.00 - - - 604,313.00
Industry Group Co.,
Ltd.
Total 438,724,172.22 - (29,000,000.00) (26,448,715.78) 383,275,456.44
Note 1: it refers to the Group’s equity investments of private companies. The Group has no control, joint control or
significant influence over the invested company.
Note 2: It is an enterprise controlled by CETC, the ultimate controlling party of the Group. During the current reporting
period, the Company received a cash dividend of RMB 51,892,209.92 from China Electronic Technology Finance Co.,
Ltd. (2021: RMB 115,644,801.97) and recognized it as current profit and loss. Please refer to Note (V), 49 for details.
15. Fixed Assets
15.1 Details of fixed assets
Unit: RMB
Building and General-purpose Special-purpose Transportation
Items Total
construction equipment equipment vehicles
I. Total original carrying
amount
1. Opening balance 5,840,580,725.62 1,366,124,127.52 2,318,809,132.18 98,848,289.25 9,624,362,274.57
2. Increase in the current
786,366,986.75 233,774,267.55 508,452,414.36 20,181,770.82 1,548,775,439.48
reporting period
1) purchase 1,528,679.87 227,000,881.31 437,354,605.37 20,181,770.82 686,065,937.37
2) transferred from
784,838,306.88 6,773,386.24 71,097,808.99 - 862,709,502.11
construction in progress
3.Decrease in the current
9,721,937.71 19,524,932.74 29,816,387.76 2,991,564.12 62,054,822.33
reporting period
1) disposal or write-off 9,721,937.71 19,524,932.74 29,816,387.76 2,991,564.12 62,054,822.33
140
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Building and General-purpose Special-purpose Transportation
Items Total
construction equipment equipment vehicles
4. Effect on conversion of
financial statements
9,711,280.03 4,115,908.24 1,923,870.97 1,123,488.70 16,874,547.94
denominated in foreign
currencies
5.Closing balance 6,626,937,054.69 1,584,489,370.57 2,799,369,029.75 117,161,984.65 11,127,957,439.66
II. Accumulated depreciation
1. Opening balance 1,215,383,927.62 516,132,115.59 1,137,960,269.72 59,295,290.37 2,928,771,603.30
2. Increase in the current
139,779,419.22 150,005,654.56 171,864,444.73 21,825,124.18 483,474,642.69
reporting period
(1) accrual 139,779,419.22 150,005,654.56 171,864,444.73 21,825,124.18 483,474,642.69
3.Decrease in the
current reporting 3,774,674.11 14,497,071.69 22,342,203.33 2,589,817.05 43,203,766.18
period
(1) disposal or
3,774,674.11 14,497,071.69 22,342,203.33 2,589,817.05 43,203,766.18
write-off
4. Effect on conversion of
financial statements
(185,426.54) 943,011.89 782,581.96 666,121.85 2,206,289.16
denominated in foreign
currencies
5.Closing balance 1,351,203,246.19 652,583,710.35 1,288,265,093.08 79,196,719.35 3,371,248,768.97
III. Total book value
Closing balance on book
5,275,733,808.50 931,905,660.22 1,511,103,936.67 37,965,265.30 7,756,708,670.69
value
Opening balance on book
4,625,196,798.00 849,992,011.93 1,180,848,862.46 39,552,998.88 6,695,590,671.27
value
15.2 As of June 30th 2022, the Group did not have any significant idle fixed assets.
15.3 As of June 30th 2022, the Group had not rent out any fixed asset through operating leasing.
15.4 Fixed assets of which certificates of title have not been granted as of June 30th 2022 are as follows:
Unit: RMB
Item Carrying amount Reason for certificates of title not granted
Office building for branches 12,722,154.03 In the process of obtaining the real estate certificates
In the process of obtaining the real estate certificates after
Fuzhou High-tech Zone Innovation Park 93,942,384.60
transferred to fixed assets
Security Industrial Base (Tonglu) Phase II In the process of obtaining the real estate certificates after
569,670,033.10
Continued Construction Project transferred to fixed assets
Total 676,334,571.73
141
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
16. Construction in progress
16.1 Details of construction in progress
Unit: RMB
Closing balance Opening balance
Item
Carrying amount Provision Book value Carrying amount Provision Book value
Chengdu Science and Technology Park Project 1,072,579,958.05 - 1,072,579,958.05 896,287,490.09 - 896,287,490.09
Hangzhou Innovation Industrial Park 508,345,211.22 - 508,345,211.22 393,310,782.16 - 393,310,782.16
Xi’an Science and Technology Park Project 309,095,556.39 - 309,095,556.39 181,009,327.21 - 181,009,327.21
EZVIZ Smart Home Products Industrial Base Project
183,614,740.45 - 183,614,740.45 95,322,172.33 - 95,322,172.33
(Infrastructure Part)
Shijiazhuang Science and Technology Park Project 181,105,254.34 - 181,105,254.34 100,184,640.21 - 100,184,640.21
Security Industrial Base (Tonglu) Phase III Project 141,555,908.49 - 141,555,908.49 48,768,905.95 - 48,768,905.95
Wuhan Intelligence Industrial Park 128,041,076.47 - 128,041,076.47 21,605,140.49 - 21,605,140.49
Security Industrial Base (Tonglu) Phase II Continued
- - - 390,702,241.74 - 390,702,241.74
Construction Project
Others 320,871,718.17 - 320,871,718.17 196,145,398.50 - 196,145,398.50
Total 2,845,209,423.58 - 2,845,209,423.58 2,323,336,098.68 - 2,323,336,098.68
16.2 Changes in significant construction in progress during the current reporting period
142
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Effect on Amount Including:
Accumulated
Transferred to conversion of invested capitalized Capitalization
Other capitalized
Budget Increase in the fixed assets financial as Construction interest and rate for interest Source of
Reductions interest and
Item (RMB Opening balance current reporting during the statements Closing balance proportion in Progress profit/loss on in the current
(Note 1) profit/loss on funds
0,000) period current reporting denominated of budget (%) exchange for the reporting
exchange
period in foreign amount current reporting period
(Note 2)
currencies (%) period
Chengdu Science
Self-
and Technology 141,900.00 896,287,490.09 176,292,467.96 - - - 1,072,579,958.05 75.59% 75.59% - - -
financing
Park Project
Hangzhou
Special
Innovation 83,100.00 393,310,782.16 115,034,429.06 - - - 508,345,211.22 70.48% 70.48% (77,303,337.96) (6,340,007.52) 0.85%
loan
Industrial Park
Security Industrial
Base (Tonglu)
Self-
Phase II Continued 57,600.00 390,702,241.74 185,607,325.35 (576,309,567.09) - - - 100.00% 100.00% - - -
financing
Construction
Project
Xi’an Science and
Self-
Technology Park 227,800.00 181,009,327.21 128,086,229.18 - - - 309,095,556.39 13.57% 13.57% - - -
financing
project
EZVIZ Smart
Self-
Home Products
Financing
Industrial Base 75,257.00 95,322,172.33 88,292,568.12 - - - 183,614,740.45 24.24% 24.24% 1,217,859.59 1,217,859.59 3.70%
/ Special
Project
loan
(Infrastructure Part)
Shijiazhuang
Science and Self-
89,800.00 100,184,640.21 80,920,614.13 - - - 181,105,254.34 20.17% 20.17% - - -
Technology Park financing
Project
Security Industrial
Self-
Base (Tonglu) 77,000.00 48,768,905.95 92,787,002.54 - - - 141,555,908.49 18.38% 18.38% - - -
financing
Phase III Project
Zhengzhou Science
Self-
and Technology 48,500.00 42,029,452.82 17,053,989.97 - - - 59,083,442.79 12.18% 12.18% - - -
financing
Park Project
Wuhan Intelligence Self-
238,700.00 21,605,140.49 106,435,935.98 - - - 128,041,076.47 5.36% 5.36% - - -
Industrial Park financing
Self-
Others 154,115,945.68 394,797,116.47 (286,399,935.02) 924,611.22 (1,649,462.97) 261,788,275.38 - - - - -
financing
Total 1,039,657.00 2,323,336,098.68 1,385,307,678.76 (862,709,502.11) 924,611.22 (1,649,462.97) 2,845,209,423.58 - - (76,085,478.37) (5,122,147.93)
Note 1: Other reductions during the current reporting period were the completed decoration project that transferred to the long-term deferred expenses.
Note 2: This amount is calculated by interest expense for specific foreign currency borrowings, less interest income for unused borrowing fund and profit/loss on exchange rate difference.
As of June 30th 2022, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
143
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
17. Right-of-use assets
Unit: RMB
Items Houses and Buildings General Equipment Special-purpose equipment Transportation vehicles Total
I. Total original carrying amount
1. Opening balance 687,537,465.14 230,374.45 91,934,144.20 22,894,986.96 802,596,970.75
2. Increased 112,627,641.73 - - 1,435,802.53 114,063,444.26
(1) New Lease 112,627,641.73 - - 1,435,802.53 114,063,444.26
3. Decreased 34,429,744.71 - - 1,880,069.99 36,309,814.70
(1) The lease contract expires or terminates early 34,429,744.71 - - 1,880,069.99 36,309,814.70
4. Effect on conversion of financial statements denominated in foreign
10,635,569.17 - - (681,842.66) 9,953,726.51
currencies
5. Ending balance 776,370,931.33 230,374.45 91,934,144.20 21,768,876.84 890,304,326.82
II. Accumulated depreciation
1. Opening balance 160,488,138.26 144,576.92 68,096,796.36 7,473,786.46 236,203,298.00
2. Increased 102,032,755.88 40,148.46 10,554,575.56 3,972,560.69 116,600,040.59
(1) Provisons 102,032,755.88 40,148.46 10,554,575.56 3,972,560.69 116,600,040.59
3. Decreased 32,932,633.08 - - 2,282,667.15 35,215,300.23
(1) The lease contract expires or terminates early 32,932,633.08 - - 2,282,667.15 35,215,300.23
4. Effect on conversion of financial statements denominated in foreign
1,466,602.17 - - (263,666.90) 1,202,935.27
currencies
5. Ending balance 231,054,863.23 184,725.38 78,651,371.92 8,900,013.10 318,790,973.63
III. Total book value
1. Closing balance on book value 545,316,068.10 45,649.07 13,282,772.28 12,868,863.74 571,513,353.19
2. Opening balance on book value 527,049,326.88 85,797.53 23,837,347.84 15,421,200.50 566,393,672.75
Note: The Group leases a number of assets, including houses and buildings, general equipments, special-purpose equipments and transportation vehicles, for lease terms ranging from 1
to 13 years.
In the current reporting period, the short-term lease and low-value asset lease expenses that the Group included in the current profit and loss with simplified processing were RMB
35,566,397.42.
144
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
In the current reporting period, the Group's profit and loss arised from the sale-leaseback transaction is the depreciation of right-of-use assets of RMB 10,579,582.78. Please refer to
Note (X), 5 for details.
In the current reporting period, the Group's total cash outflow related to leases was RMB 137,599,374.23
As of June 30th 2022, the short-term lease portfolio committed by the Group is consistent with the short-term lease corresponding to the above lease fees.
18. Intangible assets
18.1 Details of intangible assets
Unit: RMB
Intellectual property
Item Land use right Application software Franchise Total
right
I. Total original carrying amount
1. Opening balance 1,259,213,465.26 69,966,433.88 374,982,150.82 91,933,517.61 1,796,095,567.57
2. Increased 239,798,257.72 12,002.89 14,921,787.62 5,774,839.41 260,506,887.64
(1) Purchase 239,798,257.72 12,002.89 14,921,787.62 5,774,839.41 260,506,887.64
3. Decreased - - 6,658,722.50 - 6,658,722.50
(1)Disposal or write-off - - 6,658,722.50 - 6,658,722.50
4. Effect on conversion of financial statements denominated in foreign
- (3,586.28) (450,587.47) 59,645.77 (394,527.98)
currencies
5. Closing balance 1,499,011,722.98 69,974,850.49 382,794,628.47 97,768,002.79 2,049,549,204.73
II. Total accumulated amortization
1.Opening balance 103,592,991.04 65,002,594.28 311,663,913.28 11,588,653.90 491,848,152.50
2. Increased 14,902,304.16 1,843,875.58 17,880,696.43 4,224,934.55 38,851,810.72
(1)Accrual 14,902,304.16 1,843,875.58 17,880,696.43 4,224,934.55 38,851,810.72
3. Decreased - - 5,310,245.22 - 5,310,245.22
(1)Disposal or write-off - - 5,310,245.22 - 5,310,245.22
4. Effect on conversion of financial statements denominated in foreign
- (17,355.43) (535,897.13) 23,782.33 (529,470.23)
currencies
5. Closing balance 118,495,295.20 66,829,114.43 323,698,467.36 15,837,370.78 524,860,247.77
145
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Intellectual property
Item Land use right Application software Franchise Total
right
III. Total book value
1. Closing balance on book value 1,380,516,427.78 3,145,736.06 59,096,161.11 81,930,632.01 1,524,688,956.96
2. Opening balance on book value 1,155,620,474.22 4,963,839.60 63,318,237.54 80,344,863.71 1,304,247,415.07
18.2 At the end of the current reporting period, the intangible asset of the Group that has not completed the title certificate is nill.
146
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
19. Goodwill
19.1 Goodwill book value
Unit: RMB
Increased Decreased Effect on
conversion of
The name of the investee or the matter Opening Business combination Liquidation financial
Closing balance
that forming a goodwill balance not involving enterprises & statements
under common control cancellation denominated in
foreign currencies
SISTEMAS Y SERVICIOS DE
COMUNICACIN, S.A. DE C.V. 73,308,109.05 - - 3,669,588.31 76,977,697.36
(“Syscom MX”)
HuaAn Baoquan Intelligence and its
61,322,871.63 - - - 61,322,871.63
subsidiaries
Hangzhou Kuangxin 59,060,454.06 - - - 59,060,454.06
Zhejiang Zhiyuan Fire Safety
Engineering Co., Ltd. (“Zhiyuan - 8,199,253.77 - - 8,199,253.77
Fire”) (Note 1)
BK EESTI AKTSIASELTS 4,341,956.31 - - (127,076.66) 4,214,879.65
SIA “BK Latvia” 4,335,930.90 - - (126,900.32) 4,209,030.58
Hangzhou Haikang Zhicheng
Investment and Development Co., 12,573.42 - - - 12,573.42
Ltd.
Total 202,381,895.37 8,199,253.77 - 3,415,611.33 213,996,760.47
Note 1: The Group acquired Zhiyuan Fire in February 2022, resulting in a goodwill of RMB 8,199,253.77, see Note (VI),
1.
20. Long-term deferred expenses
Unit: RMB
Difference of
Invested unit Opening balance Increased Amortized foreign currency Closing balance
translation
Improvement expenditure for leased fixed
98,617,176.50 45,482,939.76 32,878,160.40 (195,940.47) 111,026,015.39
asset
Employee housing loan deferred interest 59,389,998.40 5,301,771.61 17,806,702.17 - 46,885,067.84
Total 158,007,174.90 50,784,711.37 50,684,862.57 (195,940.47) 157,911,083.23
21. Deferred tax assets/deferred tax liabilities
21.1 Deferred tax assets that are not presented on net off basis
Unit: RMB
Closing balance Opening balance
Item Deductible Deductible
temporary Deferred tax assets temporary Deferred tax assets
differences differences
Provision for impairment losses of assets 777,034,352.38 203,092,872.25 746,689,777.87 203,337,661.26
Provision for credit loss 2,305,833,353.66 474,073,014.91 2,019,377,828.80 414,456,930.82
Payroll payables 1,021,696,707.76 156,929,402.30 1,021,696,707.76 156,929,402.30
Share-based payment 785,149,520.56 126,354,169.05 546,398,398.17 92,168,164.61
Provisions 175,671,816.05 24,916,634.30 124,817,084.93 18,515,337.61
147
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Expenditure without invoice 267,894,856.33 65,696,655.94 224,525,193.17 49,859,840.33
Unrealized profit from inter-group
2,379,669,342.29 354,993,069.58 2,025,608,612.07 303,841,291.79
transactions
Changes in the fair value of derivative
109,766,791.22 27,441,697.81 3,795,920.86 948,980.22
financial instruments
Deferred income 598,142,061.03 90,645,057.05 400,764,044.74 61,186,781.23
Total 8,420,858,801.28 1,524,142,573.19 7,113,673,568.37 1,301,244,390.17
21.2 Deferred tax liabilities that are not presented on net off basis
Unit: RMB
Closing balance Opening balance
Item Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Difference in accelerated
901,393,547.31 162,425,713.98 929,573,058.04 170,677,622.00
depreciation/amortization of assets
Changes in the fair value of derivative financial
47,632,359.91 10,950,254.19 29,037,242.51 7,259,310.63
instruments
Changes in fair value of other non-current
10,793,208.44 1,618,981.27 38,300,223.10 5,745,033.47
financial assets
Total 959,819,115.66 174,994,949.44 996,910,523.65 183,681,966.10
21.3 Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
Closing balance Opening balance
Offset amount at the Deferred tax assets or Offset amount at the Deferred tax assets or
Item
end of the reporting liabilities at the net beginning of the liabilities at the net
period amount after offset reporting period amount after offset
Deferred tax assets 98,695,072.94 1,425,447,500.25 90,366,814.93 1,210,877,575.24
Deferred tax liabilities 98,695,072.94 76,299,876.50 90,366,814.93 93,315,151.17
22. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Impairement Impairement
Carrying amount provision Book value Carrying amount Book valueI
provision
Contract assets 2,623,987,225.64 23,569,044.77 2,600,418,180.87 2,672,243,740.12 24,017,466.88 2,648,226,273.24
Prepayments for
269,600,676.00 - 269,600,676.00 269,600,676.00 - 269,600,676.00
real estate
Prepayments for
123,960,220.75 - 123,960,220.75 140,577,165.61 - 140,577,165.61
equipment
Prepayments for
acquisition of 96,479,780.24 - 96,479,780.24 278,398,706.94 - 278,398,706.94
land
Prepayments for
18,616,463.23 - 18,616,463.23 4,679,432.89 - 4,679,432.89
infrastructure
Others 1,781,123.46 - 1,781,123.46 9,044,156.95 - 9,044,156.95
Total 3,134,425,489.32 23,569,044.77 3,110,856,444.55 3,374,543,878.51 24,017,466.88 3,350,526,411.63
23. Short-term borrowings
148
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
23.1 Categories of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Fiduciary loan 4,588,003,450.26 4,074,962,469.97
Total 4,588,003,450.26 4,074,962,469.97
23.2 As of June 30th 2022, the Group did not have any overdue short-term loans that were failed to repay.
24. Held-for-trading financial liabilities
Unit: RMB
Item Closing balance Opening balance
Financial liabilities measured at fair value through
109,770,258.90 4,062,317.57
current profits and losses
Including: derivative financial liabilities 109,770,258.90 4,062,317.57
total 109,770,258.90 4,062,317.57
25. Notes payable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 777,786,052.56 1,339,998,383.34
Total 777,786,052.56 1,339,998,383.34
As of June 30th 2022, the Group did not have any unpaid matured notes payable.
26. Accounts payable
26.1 List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payments for goods 14,503,465,424.58 15,585,975,750.26
Payables on equipment 254,863,476.82 303,719,230.86
Total 14,758,328,901.40 15,889,694,981.12
26.2 As of June 30th 2022, the Group did not have any significant accounts payable with aging above one year.
27. Contract liabilities
27.1 List of contract liabilities
Unit: RMB
Item Closing balance Opening balance
Advanced receipts from sales of products 1,923,513,424.48 2,181,573,144.68
Advanced receipts for construction settlement payment 208,759,767.40 185,782,167.92
Advanced receipts from services 280,095,397.28 236,278,710.74
Subtotal 2,412,368,589.16 2,603,634,023.34
149
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Less: contract liabilities included in other non-current liabilities
27,059,322.89 22,739,796.75
(Note (V),38)
Total 2,385,309,266.27 2,580,894,226.59
27.2 Qualitative and quantitative analysis on the above contract liabilities:
Advanced receipts for product sales include prepayments for goods by customers and sales rebates provided to distributors.
Product sales revenue of the Group is recognized when the control of such product is transferred to the customers. During
the transaction, prepayments for goods by customers are recognized as a contract liability till the goods are shipped or
delivered to the customers. Sales rebates to distributors of the Group may be accumulated when they purchase products
from the Group, and are deductible for payments for goods to be purchased in the future. Such sales rebates enable
distributors to enjoy discounts in their future purchase of goods, which are not available to the same type of customers.
Therefore, the commitment to offer such discounts to distributors on their future purchase prices is a separate performance
obligation. Such commitment is recognized as a contract liability based on the transaction price allocated on the basis of
the fair value of rebates when the sales transaction takes place, and is recognized as revenue when distributors use the
sales rebates for deduction of purchase prices.
The Group provides construction works and maintenance services based on the construction works and maintenance
service contracts with customers, and recognizes revenue based on the performance progress during the term of the
contracts. The Group’s customers make milestone payments for the construction works and maintenance services of the
Group as provided in the contracts. For the portion where the Group has obtained an unconditional right to the payment,
it will be recognized as accounts receivable, while the remaining portion will be recognized as contract assets; where the
contract price received or receivable by the Group exceeds the performance obligation completed to date, the excess
portion will be recognized as contract liabilities. The Group presents contract assets and contract liabilities under the same
contract on a net basis.
The Group provides cloud services including storage service, video service, and telephone service to its customers. Such
services are performance obligations to be satisfied during a period of time, and revenue is recognized based on the
performance progress over the period in which such services are rendered. As customers have prepaid for cloud services
at the time of purchase, at the time of transaction, the Group recognizes as a contract liability for the payments that would
be received for cloud services, and recognizes revenue based on the performance progress over the period in which such
services are rendered.
27.3 As of January 1st 2022, the book value of contract liabilities amounted to RMB 2,580,894,226.59 has been recognized
as revenue in 2022, including contract liabilities of RMB 2,181,573,144.68 arising from advance receipt of product sales
payment, the contract liabilities of RMB 185,782,167.92 arising from advance receipt of project settlement payment and
contract liabilities of RMB 213,538,913.99 arising from the advance receipt of cloud service payment. As of June 30th
2022, the contract liabilities of RMB 2,385,309,266.27 are expected to be recognized as revenue in the coming year.
28. Payroll payable
28.1 Details of payroll payable
Unit: RMB
Increase in the Decrease in the
Item Opening balance current reporting current reporting Closing balance
period period
1. Short-term remuneration 4,520,802,459.92 7,162,481,397.61 8,394,929,882.84 3,288,353,974.69
2. Termination benefits – defined
74,749,613.20 540,320,181.36 530,302,186.91 84,767,607.65
contribution scheme
Total 4,595,552,073.12 7,702,801,578.97 8,925,232,069.75 3,373,121,582.34
150
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
28.2 List of short-term remuneration
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance Closing balance
reporting period reporting period
1.Wages or salaries, bonuses,
4,298,383,537.23 6,305,668,941.58 7,599,767,355.45 3,004,285,123.36
allowances and subsidies
2.Staff welfare 11,644.54 125,709,152.44 125,706,245.19 14,551.79
3.Social insurance contributions 40,347,586.71 287,849,640.67 284,490,114.70 43,707,112.68
Including:
38,502,111.67 275,426,918.21 272,254,660.83 41,674,369.05
Medical insurance
Injury insurance 1,366,064.14 9,383,202.27 9,152,116.55 1,597,149.86
Maternity insurance 479,410.90 3,039,520.19 3,083,337.32 435,593.77
4.Housing funds - 327,810,784.40 327,810,784.40 -
5.Labor union and education fund 182,059,691.44 115,442,878.52 57,155,383.10 240,347,186.86
Subtotal 4,520,802,459.92 7,162,481,397.61 8,394,929,882.84 3,288,353,974.69
28.3 Defined contribution plan
Unit: RMB
Increase in the Decrease in the
Item Opening balance Closing balance
current period current period
1.Basic pension insurance 72,541,942.78 523,892,383.17 514,245,772.86 82,188,553.09
2.Unemployment insurance 2,207,670.42 16,427,798.19 16,056,414.05 2,579,054.56
Subtotal 74,749,613.20 540,320,181.36 530,302,186.91 84,767,607.65
Note: The Group participates in pension insurance and unemployment insurance plans established by government agencies
in accordance with regulations. According to these plans, the Group pays monthly fees to these plans in proportion to the
payment base. The Group has no other material obligation for the payment of pension benefits beyond the contributions
described above, and corresponding expenses were booked into current profits and losses or corresponding assets.
29. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 660,555,855.84 927,703,038.55
Value-added tax 505,925,066.42 426,720,008.08
City construction and maintenance tax 30,089,058.06 21,622,541.71
Education surcharges 12,993,054.21 9,380,789.66
Local education surcharges 9,025,740.98 6,529,587.16
Others 141,173,816.47 69,514,064.53
Total 1,359,762,591.98 1,461,470,029.69
30. Other payables
30.1 By categories
151
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Item Closing balance Opening balance
Dividend payable 869,452,940.87 247,382,205.37
Other payables 1,738,415,973.34 1,583,244,377.66
Total 2,607,868,914.21 1,830,626,583.03
30.2 Dividends payable
Unit: RMB
Item Closing balance Opening balance
Dividends of incentive restricted shares 194,522,203.50 144,401,634.74
Dividends of common shares 674,930,737.37 102,980,570.63
Total 869,452,940.87 247,382,205.37
30.3 Other payables
30.3.1 List of other payables according to the nature of the payment
Unit: RMB
Item Closing balance Opening balance
Unexpired commercial acceptance bills that were endorsed (Note
535,994,308.24 711,238,103.83
(V)-3)
Accrued expenses 505,381,065.57 144,958,993.62
Guarantee and deposit fees 384,076,655.78 341,371,587.01
Collection and payment on behalf 216,976,732.80 261,710,850.19
Other expense payable 95,987,210.95 123,964,843.01
Total 1,738,415,973.34 1,583,244,377.66
30.3.2 As of June 30th 2022, the Group did not have any significant other payables aging over one year.
31. Non-current liabilities due within one year
Unit：RMB
Item Closing balance Opening balance
Long-term borrowings due within one year (Note (V) 33) 464,339,554.44 347,587,089.91
Lease liabilities due within one year (Note (V), 34) 205,864,684.69 248,027,043.35
Long-term payables due within one year (Note (V) 35) 2,135,513.63 1,301,227.32
Total 672,339,752.76 596,915,360.58
32. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Repurchase obligation of restricted shares 497,966,942.94 511,594,361.52
Output VAT to be transferred 366,203,136.31 405,885,561.09
Total 864,170,079.25 917,479,922.61
33. Long-term borrowings
152
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Item Closing balance Opening balance
Pledged loan (Note 1) 1,406,156,517.36 1,455,221,540.20
Fiduciary loan (Note 2) 2,016,303,283.61 1,611,886,043.22
Guaranteed loan (Note 3) 1,488,912,007.91 387,851,149.01
Mortgage loan (Note 4) 106,752,067.68 -
Other borrowing (Note 5) 177,000,000.00 177,000,000.00
Less：Long-term loans due within one year (Note (V) 31) 464,339,554.44 347,587,089.91
Total 4,730,784,322.12 3,284,371,642.52
Note 1: As of June 30th 2022, RMB 1,404,317,142.84 of the pledged loan was obtained by the Group with all the rights
and benefits under certain PPP projects pledged. The maturity date is from June 20th 2028 to March 26th 2040, and the
annual interest rate of the loan is 4.195%-4.345%.
Note 2: As of June 30th 2022, the fiduciary loan with a book value of RMB 1,037,243,200.00 was 150 million euros in
fiduciary loans, which was mainly used to return the investment and construction of the Company's Hangzhou Innovation
Industrial Park project and Xi'an Science and Technology Park project, the maturity date is November 29th 2024, and the
interest rate is 0.80%
The fiduciary loan with a book value of RMB 480,000,000.00 is mainly used for the Company to return the investment
and construction of the Hangzhou Innovation Industrial Park project and the Xi'an Science and Technology Park project.
The maturity date is December 2nd 2026, and the annual interest rate is 2.95%.
The fiduciary loan with a book value of RMB 327,970,000.00 is mainly used for the acquisition of the thermal imaging
division asset group by Hangzhou Hikmicro Sensing, a subsidiary of the Group, and the maturity dates are September 28th
2022 and September 27th 2023, respectively. The annual interest rate is 3.20%.
The fiduciary loan with a book value of RMB 170,000,000.00 is mainly used for the daily operation of Hangzhou Hikrobot
Intelligent Technology Co., Ltd. (hereinafter referred to as "Hangzhou Intelligent Technology"), a holding subsidiary of
the Group. The maturity dates are March 14th 2025 and April 18th 2025, respectively, with an annual interest rate of 3.70%.
Note 3: As of June 30th 2022, the guaranteed loan with a book value of RMB 408,679,785.69 was USD 61,035,256.00 in
guaranteed loan, which was mainly used to acquire equity of Syscom MX. and Epcom MX. The maturity date is August
30th 2024, and the annual interest rate is 2.008%.
The guaranteed loan with a book value of RMB 80,000,000.00 is mainly used for the daily operation of Hangzhou
Intelligent Technology, a holding subsidiary of the Group. The maturity dates are April 17th 2025 and April 20th 2025,
with an annual interest rate of 3.70%.
The guaranteed loan with a book value of RMB 1,000,000,000.00 is mainly used for the daily operation of the subsidiary
company - Hangzhou Technology. The maturity date is June 27th 2024, and the annual interest rate is 2.70%.
Note 4: As of June 30th 2022, Hangzhou EZVIZ Network, a holding subsidiary of the Group, used the land use right with
a book value of RMB 25,770,951.85 as collateral to obtain a loan for the development and construction of the EZVIZ
Smart Home Products Industrial Base Project. The total amount of the loan is RMB 650,000,000.00 and the loan term is
55 months, from January 13th 2022 to August 13th 2026. The annual interest rate is the 1-year LPR rate, which is adjusted
every 12 months. As of June 30th 2022, the balance of the loan was RMB 106,752,067.68.
Note 5: During 2016, the Group entered into an agreement with CDB Development Fund Ltd. (CDBDF) to jointly inject
capital into Hikvision Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capital
153
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
injection agreement, CDBDF would not participate in senior management personnel such as directors, and it would either
take part in decision-making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2%
annualized return to CDBDF through dividends or interest payments, and the Group is required to redeem the CDBDF's
equity investment by installments each year from 2021 to 2024. Therefore, the capital injection by CDBDF is treated as a
long-term loan. As of June 30th 2022, the balance of the loan is RMB 177 million (December 31st 2021: RMB 177
million).
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease liabilities 567,612,304.81 565,978,922.56
Less: Lease liabilities due within one year (Note (V), 31) 205,864,684.69 248,027,043.35
Total 361,747,620.12 317,951,879.21
35. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Purchase goods in installments 9,797,946.02 10,310,558.82
Less: Long-term payables due within one year (Note (V), 31) 2,135,513.63 1,301,227.32
Total 7,662,432.39 9,009,331.50
36. Provisions
Unit: RMB
Item Closing balance Opening balance
Product quality warranty 221,289,572.47 200,675,950.96
Total 221,289,572.47 200,675,950.96
37. Deferred income
Unit: RMB
Increase in current Decrease in current
Item Opening balance Closing balance Details
reporting period reporting period
Government Subsidies 738,586,458.05 66,509,444.82 28,420,725.53 776,675,177.34 Note
Total 738,586,458.05 66,509,444.82 28,420,725.53 776,675,177.34
As of June 30th 2022, the projects involving government subsidies were as follows:
Unit: RMB
Amounts booked into Related to
Increase in current Other
Liability Items Opening balance other income during the Closing balance assets/related to
reporting period changes
current reporting period incomes
Chongqing Manufacture Related to
40,717,681.34 - 1,209,436.08 - 39,508,245.26
Park construction assets
Related to
Other special subsidies 539,130,528.37 65,508,444.82 20,076,007.77 - 584,562,965.42
assets
Related to
Other special subsidies 158,738,248.34 1,001,000.00 7,135,281.68 - 152,603,966.66
incomes
Subtotal 738,586,458.05 66,509,444.82 28,420,725.53 - 776,675,177.34
154
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Note: Refer to government subsidies received by the Group for projects such as Chongqing Manufacture Park construction
and other special projects; actual expenses occurred in the current reporting period for other special subsidies related to
incomes were recognized in other income; and relevant assets for Chongqing Manufacture Park construction and other
special subsidies related to assets were amortized averagely in other income within the assets’ useful lives.
38. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Repurchase obligation for restricted stocks 2,806,169,050.05 511,594,361.52
Contract liabilities 27,059,322.89 22,739,796.75
Total 2,833,228,372.94 534,334,158.27
39. Share capital
Unit: RMB
Changes for the current reporting period
Opening balance New issue of Bonus Transfer from Closing balance
Others Subtotal
shares (Note) issue Capital Reserve
2022.06.30
Total shares 9,335,806,114.00 97,402,605.00 - -- - 97,402,605.00 9,433,208,719.00
Note: On January 18th 2022, according to the authorization of the Company's first extraordinary general meeting in 2022
and the resolution of the 8th meeting of the 5th session of the Board of Directors and the revised Articles of Association,
the Company was approved to issue 99,417,229 RMB common shares (97,402,605 shares after adjustments) to 9,933
incentive objects (9,738 after adjustment), with a par value of RMB 1.00 per share and an issue price of RMB 29.71 per
share. The Company completed the equity registration procedures on February 10th 2022. Therefore, the share capital was
increased by RMB 97,402,605.00 in the current reporting period, and the capital reserve was increased by RMB
2,796,428,789.55.
40. Capital reserves
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance reporting period reporting period Closing balance
(Note 1) (Note 2)
2022.06.30
Share premium 4,800,739,839.94 3,137,408,746.88 12,795,103.98 7,925,353,482.84
Other capital reserves 603,330,760.13 655,673,496.45 340,979,957.33 918,024,299.25
Total 5,404,070,600.07 3,793,082,243.33 353,775,061.31 8,843,377,782.09
Note 1: The increase in the share premium of RMB 2,796,428,789.55 in the current reporting period is due to the
completion of equity registration of the 2021 restricted shares granted. For details, please refer to Note (V), 39; RMB
340,979,957.33 was due to the exercise of equity-settled share-based payment, and other capital reserves were transferred
into share premium.
The increase in other capital reserves in the current reporting period of RMB 512,532,999.28 is due to the equity-settled
share-based payment included in the capital reserve. For details, please refer to Note (XI); RMB 70,151,669.56 was due
to the recognition of deferred income tax assets for the restricted share incentive scheme; RMB 72,988,827.61 was due
to changes in other equity of the investee in the long-term equity investment.
155
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Note 2: The decrease in share premium of RMB 12,795,103.98 in the current reporting period is the part of the equity-
settled share-based payment shared by minority shareholders.
41. Treasury shares
Unit: RMB
Increase in the current Decrease in the current
Item Opening balance reporting period reporting period Closing balance
(Note 1) (Note 2)
2022.06.30
Restricted shares incentive scheme 1,023,188,723.04 2,893,831,394.55 612,884,124.60 3,304,135,992.99
Total 1,023,188,723.04 2,893,831,394.55 612,884,124.60 3,304,135,992.99
Note 1: During the current reporting period, the increase in treasury shares is due to the issuance of 97,402,605 restricted
RMB common shares at a price of RMB 29.71 per share to 9,738 incentive objects on January 18th 2022, and the
completion of equity registration procedures was on February 10th 2022. Please refer to Note (V), 39 for details.
Note 2: During the current reporting period, the decrease in treasury shares is due to the expiration of the second unlocking
period of the Company's 2018 restricted share incentive scheme. 33,142,730 shares were unlocked and exercised, reduced
treasury shares by RMB 493,163,822.40. Due to the Company's provision of restricted stock cash dividends, treasury
shares were reduced by RMB 119,720,302.20.
42. Other comprehensive income
Unit: RMB
Amounts occurred in the current reporting period
The before-
income-tax Less: transfer to
Attributable to
amount current period Less:
Opening owner of the Attributable to
Item incurred P/L from income minority Closing balance
balance parent
during the previous other tax shareholders
current expense company (after (after tax)
comprehensive
reporting tax)
income
period
2022.06.30
Other incomes
that may be
reclassified (77,184,125.29) 52,624,946.63 - - 27,792,498.30 24,832,448.33 (49,391,626.99)
subsequently to
profit or loss
Included: Effect
on conversion of
financial
(77,184,125.29) 52,624,946.63 - - 27,792,498.30 24,832,448.33 (49,391,626.99)
statements
denominated in
foreign currencies
Other
comprehensive (77,184,125.29) 52,624,946.63 - - 27,792,498.30 24,832,448.33 (49,391,626.99)
income
43. Surplus reserves
Unit: RMB
Increase in the Decrease in the
Item Opening balance current reporting current reporting Closing balance
period period
2022.06.30
Statutory surplus reserves (Note) 4,672,505,348.00 - - 4,672,505,348.00
Total 4,672,505,348.00 - - 4,672,505,348.00
156
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Note: According to the Company Law of the People's Republic of China and the Company's Articles of Association, the
Company shall withdraw the statutory surplus reserve fund at 10% of the annual net profit, and when the accumulated
amount of the statutory surplus reserve fund reaches more than 50% of the registered capital, it may not be withdrew.
The Company has withdrawn the statutory surplus reserve of RMB 4,672,505,348.00, which has reached 50% of the
Company's share capital, so no subsequent statutory surplus reserve will be accrued in the current reporting period.
The statutory surplus reserve can be used to make up for losses or increase the share capital after approval.
44. Retained earnings
Unit: RMB
Item First half year of 2022 First half year of 2021
Retained Earnings at the close of the prior reporting period 45,148,877,451.52 35,806,523,826.37
Add: Net profit attributable to the parent company for the
5,759,254,775.26 6,481,424,653.39
current reporting period
Subtract: Dividends payable on common shares (Note) 8,489,887,847.10 7,458,057,406.90
Retained earnings at the end of the current reporting period 42,418,244,379.68 34,829,891,072.86
Note：According to the resolution of 2021 Annual General Meeting held on May 13th 2022, based upon the total capital
share of the Company on the equity distribution date, for each 10 common shares, the Company distributed cash
dividends of RMB 9 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
45. Revenue/cost of sales and services
45.1 Revenue and cost of sales and services
Unit: RMB
First half year of 2022 First half year of 2021
Item
Revenue Cost Revenue Cost
Major business 36,969,461,995.42 20,997,985,934.97 33,662,102,661.75 18,023,388,922.41
Other business 288,054,595.20 184,969,765.96 239,995,706.35 181,806,842.05
Total 37,257,516,590.62 21,182,955,700.93 33,902,098,368.10 18,205,195,764.46
45.2 Major business (by business type)
Unit: RMB
First half year of 2022
Item
Revenue Cost
Product sales 35,442,054,916.68 20,051,396,687.74
Construction contract 883,860,678.27 728,908,400.81
Provide services 643,546,400.47 217,680,846.42
Total 36,969,461,995.42 20,997,985,934.97
45.3 Major business (by the time of revenue recognition)
Unit: RMB
First half year of 2022
Item
Revenue Cost
Recognized at a point in time 35,442,054,916.68 20,051,396,687.74
Recognized over time 1,527,407,078.74 946,589,247.23
157
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Total 36,969,461,995.42 20,997,985,934.97
45.4 Major business (by product or business type)
Unit: RMB
First half year of 2022
Item
Revenue Cost
Products and services for main business (Note) 29,077,865,031.48 16,081,788,975.04
Constructions for main business 883,860,678.27 728,908,400.81
Innovative businesses 7,007,736,285.67 4,187,288,559.12
Total 36,969,461,995.42 20,997,985,934.97
Note: The main business is business other than innovative business.
Descriptions of performance obligations:
The Group sells video surveillance and other main business products, smart home products, robotic products, thermal
imaging products, auto electronics products, storage products and other innovative businesses’ products and related
services. For sales of goods to customers, the Group recognizes revenue when the control of the goods is transferred, i.e.
when the goods are delivered to the location designated by other party, or delivered to the carrier designated by other party,
or delivered to the other party for acceptance. Since the delivery of the goods to the customer represents the right to
unconditionally receive the contract consideration, and the maturity of the payment only depends on the passage of time,
the Group recognizes a receivable when the goods are delivered to the customer. When the customer prepays for the goods,
the Group recognizes the transaction amount received as a contract liability, and recognizes revenue until the goods are
delivered to the customer.
For projects constructed for customers, since the customers could control the assets under construction during the
performance of the Group, the Group recognizes revenue according to the performance progress by treating them as the
obligations within certain period, except that the performance progress cannot be reasonably determined. The Group
applies the output method to determine the performance progress, which is based on the value to the customers of the
goods or services that have been transferred to them. Where the performance progress cannot be reasonably determined,
and the costs incurred by the Group are expected to be compensated, the revenue shall be recognized according to the
amount of the costs already incurred until the performance progress can be reasonably determined. The customers of the
Group pay the Group for the construction works by milestone payments in accordance with the contract. For the portion
where the Group has obtained an unconditional right to the payment, it will be recognized as accounts receivable, while
the remaining portion will be recognized as contract assets; where the contract price received or receivable by the Group
exceeds the performance obligation completed to date, the excess portion will be recognized as contract liabilities. The
Group presents contract assets and contract liabilities under the same contract on a net basis.
The Group provides customers with operation and maintenance services. Since customers obtain and consume the
economic benefits generated by the performance of the Group at the same time when the Group performs its obligations,
the Group recognizes revenue according to the performance progress by treating them as the obligations within certain
period.
The customers of the Group pay the Group for the maintenance services by milestone payments in accordance with the
contract. For the portion where the Group has obtained an unconditional right to the payment, it will be recognized as
accounts receivable, while the remaining portion will be recognized as contract assets; where the contract price received
or receivable by the Group exceeds the performance obligation completed to date, the excess portion will be recognized
as contract liabilities. The Group presents contract assets and contract liabilities under the same contract on a net basis.
According to the project contract, the Group provides both project asset construction services and post-construction
operation services and maintenance services. The Group identifies construction services, operation services and
maintenance services as individual performance obligations, and allocates the transaction price to each performance
obligation based on the relative proportion of the stand-alone selling price of each performance obligation.
158
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
The Group provides cloud services including storage service, video service, and telephone service to its customers. Such
services are performance obligations to be satisfied during a period of time, and revenue is recognized based on the
performance progress over the period in which such services are rendered. As customers have prepaid for cloud services
at the time of purchase, the Group recognizes the payments for cloud services received at the time of transaction as a
contract liability, and recognizes revenue based on the performance progress over the period in which such services are
rendered.
Sales rebates to distributors of the Group may be accumulated when they purchase products from the Group, and are
deductible for payments for goods to be purchased in the future. Such sales rebates enable distributors to enjoy discounts
in their future purchase of goods, which are not available to the same type of customers. Therefore, the commitment to
offer such discounts to distributors on their future purchase prices is a separate performance obligation. Such commitment
is recognized as a contract liability based on the transaction price allocated on the basis of the fair value of rebates when
the sales transaction takes place, and is recognized as revenue when distributors use the sales rebates for deduction of
purchase prices.
The Group provides quality assurance for the sold video surveillance products, smart home products, robotic products and
other products and related accessories, as well as the assets constructed. The quality assurance related to the products sold
by the Group cannot be purchased separately, and is a guarantee to customers that the products sold meet the established
standards, therefore, the Group conducts accounting treatment in accordance with the Accounting Standards for Business
Enterprises No. 13 - Contingencies, please refer to Note (III), 24 and Note (V), 36 for details.
Descriptions of allocation to the remaining performance obligations:
As of June 30th 2022, all the remaining performance obligations are part of the contracts with original expected contract
term not exceeding one year. The Group expects to recognize all of them as revenue within the next year.
46. Business Taxes and Surcharges
Unit: RMB
Items First half year of 2022 First half year of 2021
City construction and maintenance tax 115,474,391.40 134,355,040.58
Education surcharges 50,676,365.58 58,455,669.70
Local education surcharges 33,784,436.59 38,968,756.10
Real estate tax 28,463,726.55 24,311,814.02
Stamp duty 27,070,763.30 21,686,242.96
Tax on use of land 3,565,327.53 2,495,394.98
Vehicle and vessel tax 86,691.53 97,409.94
Others 548,574.53 99,675.87
Total 259,670,277.01 280,470,004.15
47. Financial Expenses
Unit: RMB
Items First half year of 2022 First half year of 2021
Interest expenses 132,611,236.17 113,369,214.89
Interest expense on lease liabilities 10,337,503.94 7,517,245.71
Less: Interest income 452,305,967.35 411,998,029.35
Foreign exchange losses (gains) (499,135,620.25) 99,472,543.57
Less: Capitalized specific loan interests and foreign
(5,122,147.93) (48,573,001.14)
exchange differences on specific loan
Others 17,905,441.95 20,541,585.97
Total (785,465,257.61) (122,524,438.07)
159
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
48. Other income
Unit: RMB
Items First half year of 2022 First half year of 2021
VAT Rebates 828,593,505.82 852,085,468.02
Special subsidies 144,644,000.16 212,725,665.41
Tax relief 17,399,591.1 10,916,175.41
Value-added tax reduction 2,634,527.39 319,983.18
Total 993,271,624.47 1,076,047,292.02
49. Investment income
Unit: RMB
Items First half year of 2022 First half year of 2021
Long-term equity investment income (losses) based on equity method 46,152,616.54 (1,821,107.11)
Investment income from other non-current financial assets during the holding period 51,892,209.92 115,644,801.97
Investment income from disposal of held-for-trading financial assets 82,624,092.42 70,440,289.29
Investment income (losses) from disposal of subsidiaries and other business units 3,375,870.42 (14,952,528.43)
Investment income from disposal of other non-current financial assets 1,260,000.00 -
Total 185,304,789.30 169,311,455.72
50. Losses from changes in fair values
Unit: RMB
Sources of losses from changes in fair values First half year of 2022 First half year of 2021
Held-for-trading financial assets 13,688,362.53 9,989,549.68
Including: gains on the changes in fair value of derivative financial instruments 13,688,362.53 9,989,549.68
Losses from changes in fair value of other non-current financial assets (26,448,715.78) (23,277,319.84)
Held-for-trading financial liabilities (105,701,739.57) 3,738,240.76
Including: (losses) gains on the changes in fair value of derivative financial
(105,701,739.57) 3,738,240.76
instruments
Total (118,462,092.82) (9,549,529.40)
51. Credit impairment loss
Unit: RMB
Items First half year of 2022 First half year of 2021
Credit impairment losses of accounts receivable (348,840,630.65) (302,443,301.79)
Credit impairment (losses) reverses of other receivables (3,564,338.48) 9,417,803.41
Credit impairment losses of long-term receivables (20,269,964.91) (18,879,962.41)
Total (372,674,934.04) (311,905,460.79)
52. Impairment losses of assets
Unit: RMB
Items First half year of 2022 First half year of 2021
Losses on inventory devaluation (125,852,762.39) (252,600,965.37)
Contract assets impairment reverses (losses) 51,211.49 (5,736,007.01)
Total (125,801,550.90) (258,336,972.38)
53. Non-operating income
160
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Items The amount booked into current period
First half year of 2022 First half year of 2021
non-recurring profits and looses
Fines and confiscations 22,811,897.19 37,237,863.29 22,811,897.19
Special subsidies 413,760.04 699,538.62 413,760.04
Others 12,929,913.72 4,065,318.99 12,929,913.72
Total 36,155,570.95 42,002,720.90 36,155,570.95
54. Non-operating expenses
Unit: RMB
First half year of First half year of The amount booked into current period non-
Items
2022 2021 recurring profits and looses
Local water conservancy construction fund 1,286,929.67 532,409.04 1,286,929.67
Others 7,961,149.88 18,322,927.68 7,961,149.88
Total 9,248,079.55 18,855,336.72 9,248,079.55
55. Income tax expenses
Unit: RMB
Items First half year of 2022 First half year of 2021
Income tax for the current reporting period 1,148,346,797.29 1,069,559,057.65
Deferred income tax expenses (160,108,499.08) (67,498,385.47)
Differences in filing and payment of income tax in previous reporting years (359,818,391.72) (574,530,306.92)
Total 628,419,906.49 427,530,365.26
56. Notes to consolidated cash flow statement items
56.1 Other cash receipts relating to operating activities
Unit: RMB
Items First half year of 2022 First half year of 2021
Interest income 389,350,124.38 411,998,029.35
Government subsidies 183,059,552.14 213,276,134.62
Others 424,493,141.94 485,251,347.13
Total 996,902,818.46 1,110,525,511.10
56.2 Other cash payments relating to operating activities
Unit: RMB
Item First half year of 2022 First half year of 2021
Advertising and Selling services 677,292,677.34 639,292,692.68
Office expenses and business expenses 590,969,162.07 451,237,280.55
R&D expenses 711,626,778.29 488,010,595.94
Shipping and transportation expenses 200,108,194.48 361,571,642.21
Travelling expenses 199,375,690.87 177,869,752.82
Rental expenses 31,344,787.80 47,709,562.38
Others 402,694,197.00 744,581,855.86
Total 2,813,411,487.85 2,910,273,382.44
161
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
56.3 Other cash receipts relating to investing activities
Unit: RMB
Item First half year of 2022 First half year of 2021
Receipts of financing lease payments 21,941,152.14 6,182,818.55
Cash received by subsidiaries 182,816.96 -
Total 22,123,969.10 6,182,818.55
56.4 Other cash payments relating to financing activities
Unit: RMB
Item First half year of 2022 First half year of 2021
Repurchase of restricted shares - 122,644,057.28
Repayment of lease liabilities 106,254,586.43 84,962,915.50
Total 106,254,586.43 207,606,972.78
57. Supplementary information about cash flow statement
57.1 Supplementary information about cash flow statement
Unit: RMB
First half year of First half year of
Supplementary information
2022 2021
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 6,138,179,989.58 6,854,875,757.07
Add: Impairment of assets 125,801,550.90 258,336,972.38
Provision for credit losses 372,674,934.04 311,905,460.79
Fixed assets depreciation 483,474,642.69 360,317,976.59
Amortization of intangible assets 38,851,810.72 35,059,666.14
Right-of-use assets depreciation 116,600,040.59 78,610,219.36
Long-term deferred expenses amortization 50,684,862.57 26,104,715.70
Losses (gains) on disposal of fixed assets, intangible assets and other long-term
10,638,858.24 (3,760,896.87)
assets
Obsolescence losses of fixed assets, intangible assets and other long-term assets 674,414.12 5,565,939.04
Losses from changes in fair value 118,462,092.82 9,549,529.40
Financial expenses (11,336,256.06) 144,968,551.48
Investment income (185,304,789.30) (169,311,455.72)
Share-based payment based on equity settlement 539,601,648.97 134,108,630.01
Decrease (increase) of restricted funds (149,925,859.57) 342,602,374.34
Increase in deferred income tax assets (144,418,255.45) (64,690,864.83)
Decrease in deferred income tax liabilities (17,015,274.67) (2,807,520.64)
Increase in inventories (2,769,881,190.63) (3,866,832,886.98)
Increase in operating receivables (3,327,600,966.39) (1,752,934,304.33)
Decrease in operating payables (3,586,743,181.54) (738,665,021.37)
Increase (decrease) in deferred income 38,088,719.29 (149,069.41)
Net cash flows from operating activities (2,158,492,209.08) 1,962,853,772.15
2. Significant investing and financing activities not involving cash receipts and
payments:
162
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
First half year of First half year of
Supplementary information
2022 2021
3. Net changes in cash and cash equivalents:
Closing balance of cash 27,758,901,192.63 27,639,964,119.85
Less: Opening balance of cash 34,603,944,429.20 35,024,837,878.31
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net decrease in cash and cash equivalents (6,845,043,236.57) (7,384,873,758.46)
57.2 Constituents of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
Cash 27,758,901,192.63 34,603,944,429.20
Including: Cash on hand 721,115.09 1,851,273.53
Bank deposit for payment at any time 27,737,897,790.01 34,573,786,777.26
Other monetary capital for payment at any time 20,282,287.53 28,306,378.41
Cash equivalents - -
Closing balance of cash and cash equivalents 27,758,901,192.63 34,603,944,429.20
Among the total balance of RMB 288,134,649.26 of the other monetary fund(s) at the end of the reporting period
(December 31st 2021: RMB 146,232,880.57), RMB 267,852,361.73 are various guarantee deposits and other restricted
funds, etc. (December 31st 2021: RMB 117,926,502.16), not cash and cash equivalents.
58. Assets with restriction in ownership or use rights
Unit: RMB
Item Book value at the end of the current reporting period Cause of restriction
Monetary fund(s) 267,852,361.73 Various guarantee deposits and other restricted funds
Notes receivable 535,994,308.24 Endorsed to suppliers
Accounts receivable 279,555,212.04 Pledged for long-term borrowings
Contract assets 115,346,377.65 Pledged for long-term borrowings
Intangible assets 85,551,551.85 Pledged for long-term borrowings
Other non-current assets 1,667,505,427.25 Pledged for long-term borrowings
Right-of-use assets 13,343,562.59 Fixed assets leased through financial lease
Total 2,965,148,801.35
59. Monetary items of foreign currencies
59.1 Foreign currencies
Unit: RMB
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Items
the end of the reporting period conversion the end of the reporting period
Monetary funds
Including: USD 143,183,298.24 6.7114 960,960,387.84
EUR 78,206,400.36 7.0084 548,101,736.31
GBP 9,759,362.10 8.1365 79,407,049.72
RUB 285,533,400.62 0.1285 36,691,041.98
JPY 327,852,535.03 0.0491 16,097,559.47
163
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Balance in foreign currency at Exchange rate for Balance of RMB converted at
Items
the end of the reporting period conversion the end of the reporting period
HKD 14,239,517.57 0.8552 12,177,635.43
KRW 1,785,327,925.00 0.0052 9,283,705.21
PLN 5,637,152.35 1.5016 8,464,747.97
AED 4,128,919.48 1.8315 7,562,116.02
AUD 1,499,200.47 4.6145 6,918,060.58
SGD 1,166,614.32 4.8170 5,619,581.18
NZD 240,506.11 4.1771 1,004,618.06
ZAR 8,488.77 0.4133 3,508.41
TRY 357.96 0.4037 144.51
INR 1,661.84 0.0849 141.09
Accounts receivable
Including: EUR 289,269,831.63 7.0084 2,027,318,688.00
USD 97,016,184.82 6.7114 651,114,422.80
HKD 37,377,259.35 0.8552 31,965,032.20
Short-term borrowings
Including: EUR 58,355,007.19 7.0084 408,975,232.42
USD 33,966,195.19 6.7114 227,960,722.37
Accounts payable
Including: USD 209,629,654.96 6.7114 1,406,908,466.30
HKD 1,191,959,950.97 0.8552 1,019,364,150.07
EUR 2,902,304.13 7.0084 20,340,508.26
Long-term borrowings
Including: EUR 144,000,970.26 7.0084 1,009,216,400.00
USD 57,846,810.03 6.7114 388,233,080.82
Non-current liabilities due within
one year - long-term borrowings
Including: EUR 4,031,918.63 7.0084 28,257,298.50
USD 3,046,563.29 6.7114 20,446,704.87
59.2 Details of major overseas operational entities
Main overseas Recording
Name of overseas subsidiaries Basis of selection
operational office Currency
Hikvision International Co., Limited Hongkong China USD Selection based on local economic environment
60. Government Subsidies
60.1 By categories
Unit: RMB
Amount booked in
Category Amount Financial Report Items
current profit and loss
VAT rebate 828,593,505.82 Other Income 828,593,505.82
Special subsidies 920,436,574.11
Deferred income / Other income/
Including: Other special subsidies 880,928,328.85 143,761,396.77
Non-operating income
Chongqing Manufacture Park construction 39,508,245.26 Deferred income / Other income 1,209,436.08
subsidies
Other income/ Non-operating
Tax refund/reduction 20,121,045.84 20,121,045.84
income
Total 1,769,151,125.77 993,685,384.51
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
60.2 There was no refund of government subsidies during the current reporting period.
VI. Changes in consolidation scope
1. Business combination of enterprises not under the same control
1.1 Business combination of enterprises not under the same control
Zhejiang Zhiiyuan Fire Safety Engineering Co., Ltd. (“Zhiyuan Fire”)
On December 15th 2021, Hangzhou Hikfire, a holding subsidiary of the Company, and the original shareholders of
Zhiyuan Fire signed the Equity Acquisition Agreement on Zhejiang Zhiyuan Fire Safety Engineering Co., Ltd.,
agreed to acquire 100% equity of Zhiyuan Fire held by the original shareholder for RMB 15.75 million. The
acquisition has completed the change of industrial and commercial registration on February 28th 2022. As of June
30th 2022, the Company has paid RMB 4 million for the equity transfer.
Unit: RMB
Equity Income of Net profit (loss)
Time of acquisition Equity Basis for acquiree from of acquiree from
Name of the Equity Date of
equity ratio acquisition determining the acquisition data acquisition data
acquiree acquisition cost acquisition
acquisition method acquisition date to the end of the to the end of the
(%)
reporting period reporting period
Equity delivery date
Zhiyuan February Cash February for obtaining control
15,750,000.00 100.00 86,343,857.93 1,791,722.63
Fire 2022 Payments 28th 2022 of the purchased
party
1.2 Cost of business combination and goodwill
Unit: RMB
Cost of business combination Zhiyuan Fire
- Other receivables 4,000,000.00
- Other payables 11,750,000.00
Total cost of business combination 15,750,000.00
Less: The fair value of identifiable net assets obtained 7,550,746.23
Goodwill 8,199,253.77
1.3 Acquiree’s book value of assets and liabilities at the date of acquisition
Unit: RMB
Zhiyuan Fire
Book value on the date of acquisition Fair value on the date of acquisition
Assets:
Cash and bank balances 182,816.96 182,816.96
Notes receivable 990,821.94 990,821.94
Accounts receivable 9,894,353.90 9,894,353.90
Prepayments 753,476.00 753,476.00
Other receivables 1,684,461.20 1,684,461.20
Inventories 84,186,707.41 84,186,707.41
Contract assets 1,562,030.46 1,562,030.46
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Zhiyuan Fire
Book value on the date of acquisition Fair value on the date of acquisition
Other current assets 31,662.38 31,662.38
Liabilities:
Accounts payable 10,731,655.87 10,731,655.87
Contract liabilities 71,900,823.14 71,900,823.14
Tax payable 378,277.85 378,277.85
Other payables 7,734,005.22 7,734,005.22
Short-term borrowings 990,821.94 990,821.94
Net assets acquired 7,550,746.23 7,550,746.23
1.4 The Group uses the asset-based valuation method and the income method to evaluate the fair value, and finally
confirms the evaluation value on the basis of comparing the two evaluation methods.
1.5 The Group has no contingent liabilities of the purchased party that need to be assumed in this merger.
2. Changes of consolidation scope due to other causes
The subsidiaries newly established and incorporated in the consolidation scope during the current reporting period as
follows:
Time of Amount of contribution of Ratio of
Company name Registered capital
establishment the Group contribution (%)
Shijiazhuang Sensor Tech Intelligent Technology
February 2022 RMB 10 thousand RMB 10 thousand 100.00
Co., Ltd. (“Shijiazhuang Sensor Tech”) (Note 1)
Hikvision Adriatic doo Beograd (“Subsidiary in
February 2022 RSD 13 million RSD 13 million 100.00
Serbia”) (Note 2)
HIKVISION TECHNOLOGY PTE. LTD.
March 2022 USD 300 thousand USD 300 thousand 100.00
(“Operating sunsidiary in Singapore”) (Note 2)
Hikrobot Korea Limited (“HikRobot’s South
June 2022 KRW 485 million KRW 485 million 60.00
Korea subsidiary”) (Note 2)
Note 1: As of June 30th 2022, the paid-in capital of Shijiazhuang Sensor Tech was RMB 10,000.00, which was fully
contributed by the Group.
Note 2: As of June 30th 2022, the subsidiary in Serbia, operating subsidiary in Singapore, and the HikRobot’s South Korea
subsidiary have not yet completed the paid-in capital contribution, so there is no paid-in capital.
166
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
VII. Interest in other entities
1. Equity in subsidiaries
Composition of major subsidiaries of the Group
Name Location of operation Place of registration Nature of business Acquisition method
Hangzhou Hikvision System Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang System integration, Technology development Establishment
Hangzhou Hikvision Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Manufacture Establishment
Hangzhou EZVIZ Network Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou EZVIZ Software Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou Hikrobot Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou Hikrobot Intelligent Technology Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hikvision International Co., Limited Hongkong, China Hongkong, China Sales Establishment
2. During the current reporting period, the Group did not have any transactions in which the share of owners' equity in subsidiaries changed and still controlled the
subsidiaries.
3. Equity in joint ventures or associates
3.1 Aggregated financial information of insignificant joint-ventures and associates
Unit：RMB
Closing balance / Amount for the first half of 2022 Opening balance / Amount for the first half of 2021
Associates：
The aggregate carrying amount of investments in associates 293,789,417.06 235,962,431.82
The aggregate amount of the following items calculated based on the Company’s equity share percentage
of the associates
- Net income (loss) (5,965,866.51) 14,318,506.40
- Other comprehensive income - -
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Closing balance / Amount for the first half of 2022 Opening balance / Amount for the first half of 2021
- Net income (loss) and total comprehensive income (loss) (5,965,866.51) 14,318,506.40
Joint Ventures:
Total investment book value 819,077,573.54 746,203,114.63
The sum of the following items calculated according to the shareholding ratio
- Net income (loss) 52,118,483.05 (16,139,613.51)
- Other comprehensive income - -
- Net income (loss) and total comprehensive income (loss) 52,118,483.05 (16,139,613.51)
The Group uses the equity method to account for the aforementioned associates and joint ventures.
3.2 Unrecognized commitments related to investment in joint ventures
Unit：000 RMB
Joint venture Capital commitment (Note)
Zhejiang City Digital Technology Co., Ltd. 11,500.00
Shenzhen Hikvision Urban Service Operation Co., Ltd. 12,000.00
Guangxi Haishi Urban Operation Management Co., Ltd. 2,440.00
Note: The above capital commitments are the capital amounts that the Group has subscribed but not paid in to the above joint ventures.
168
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
VIII. Risks associated with financial instrument
The Group's principal financial instruments include cash and bank balances, other non-current financial assets, notes
receivable, accounts receivable, receivables for financing, other receivables, long-term receivables, borrowings, notes
payable, accounts payable, other payables, other non-current liabilities (except for contract liabilities), part of the other
current liabilities, lease liabilities, long-term payables, derivative financial instruments, etc. Details of these financial
instruments are set out in Note (V). Below are the risks associated with such financial instruments and the risk management
policies adopted by the Group to mitigate such risks. The management of the Group manages and monitors such risk
exposures to ensure such risks are contained within a prescribed scope.
1. Classification of financial instruments
Unit: RMB
Closing balance of the current Ending balance of the prior year
Items
reporting period (on December 31st 2021)
Financial assets：
Measured at fair value through current profit and loss
Held –for-trading financial assets 48,035,480.36 34,320,010.83
Other non-current financial assets 383,275,456.44 438,724,172.22
Measured at fair value through other comprehensive income
Receivables for financing 1,299,586,224.80 1,316,035,122.06
Measured at amortized cost
Cash and bank balances 28,026,753,554.36 34,721,870,931.36
Notes receivable 1,288,013,706.27 1,522,760,905.30
Accounts receivable 29,113,163,447.64 26,174,773,100.42
Other receivables 701,025,124.55 359,620,445.88
Long-term receivables 585,772,563.78 613,067,944.97
Non-current assets due within one year 929,050,417.26 975,960,437.14
Unit: RMB
Closing balance of the current Ending balance of the prior year
Items
reporting period (on December 31st 2021)
Financial liabilities
Measured at fair value through current profit and loss
Held-for-trading financial liabilities 109,770,258.90 4,062,317.57
Measured at amortized cost
Short-term borrowings 4,588,003,450.26 4,074,962,469.97
Notes payable 777,786,052.56 1,339,998,383.34
Accounts payable 14,758,328,901.40 15,889,694,981.12
Other payables 2,607,868,914.21 1,830,626,583.03
Non-current liabilities due within one year 672,339,752.76 596,915,360.58
Other current liabilities 497,966,942.94 511,611,642.53
Long-term borrowings 4,730,784,322.12 3,284,371,642.52
Lease liabilities 361,747,620.12 317,951,879.21
Long-term payables 7,662,432.39 9,009,331.50
Other non-current liabilities (except for contract liabilities) 2,806,169,050.05 511,594,361.52
The Group adopts sensitivity analysis techniques to analyze the possible effects of rational and probable changes in risk
169
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on a stand-
alone basis, while the correlation between variables may have significant influence to the ultimate amount of change
effected by the change in a single risk variable, the analysis below is based on the assumption that the changes in each
variable occurred separately.
2. Objectives and policies of risk management
The Group engages in risk management with the aim of achieving an appropriate balance between risk and return, where
the negative effects of risks against the Group’s operating results are minimized, in order to maximize the benefits of
shareholders and other stakeholders. Based on such objective in risk management, the underlying strategy of the Group’s
risk management is to ascertain and analyze all types of risks exposures of the Group, establish appropriate risk tolerance
thresholds, carry out risk management procedures and perform risk monitoring on all kinds of risks in a timely and reliable
manner, thus containing risk exposures within a prescribed scope.
2.1 Market risks
2.1.1 Foreign exchange risks
Foreign exchange risks refer to the risk that losses will occur because of changes in foreign exchange rates. The Company
is primarily exposed to risks relating to the currencies such as EUR, USD and etc. The Group’s subsidiaries in the mainland
of China whose procurement, sales and financing are denominated in RMB, EUR and USD, 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 EUR, USD, GBP, INR and etc.
As of June 30th 2022, except for monetary items of foreign currencies set out in Note (V) 59, the Group mainly adopted
the functional currency of each of its subsidiary to present the balance of its assets and liabilities. The foreign exchange
risks arising from assets and liabilities denominated in EUR and USD (which has been converted into RMB) as follows
may generate significant impact on the operating results of the Group.
Unit: RMB
Assets Liabilities
Currencies
Closing balance Opening balance Closing balance Opening balance
EUR 789,142,813.42 2,510,521,255.35 388,063,491.72 1,521,742,991.23
USD 1,445,898,165.87 2,310,527,721.21 482,869,270.08 1,993,012,472.17
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks of
the Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts, foreign
exchange options, interest rate swap contracts and etc., to mitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
With other variables unchanged, the exchange rate might float within a reasonable range, and has the following before-
tax effect on profit or loss and shareholders’ equity for the current period:
Unit: RMB
First half year of 2022 First half year of 2021
Change in foreign exchange rates Effect on shareholders’ Effect on shareholders’
Effect on profit Effect on profit
equity equity
5% appreciation of EUR against RMB 20,053,966.09 20,053,966.09 (23,333,499.25) (23,333,499.25)
5% depreciation of EUR against RMB (20,053,966.09) (20,053,966.09) 23,333,499.25 23,333,499.25
5% appreciation of USD against RMB 48,151,444.79 48,151,444.79 16,055,339.60 16,055,339.60
5% depreciation of USD against RMB (48,151,444.79) (48,151,444.79) (16,055,339.60) (16,055,339.60)
2.1.2. Interest rate risk
The risk of changes in cash flow of financial instruments due to changes in interest rates exposed to the Group are primarily
related to bank borrowings bearing floating interest rate and bank deposits bearing floating interest rate.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
At the end of the current reporting period, the amount of borrowings of the Group bearing floating interest rate is not
significant, and the risk of changes in cash flow of financial instruments due to changes in interest rates is expected to be
insignificant.
The Group expects that the risk exposure of cash flow generated from bank deposits bearing floating interest rate is
insignificant.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based on
the prevailing market environment. The Group’s interest-bearing debts bearing floating interest rates were mainly RMB-
denominated PPP pledged long-term borrowing contracts with an amount of RMB 1,406,016,842.09 (Note (V), 33)
(December 31st 2021: RMB-denominated PPP pledged long-term borrowings with an amount of RMB 1,455,221,540.20
(Note (V), 33)).
The headquarter finance department of the Group continuously monitors the level of interest rate of the Group. Rising
interest rates will increase the cost of newly incurred interest-bearing debts and the Group’s interest expenses on
outstanding interest-bearing debts with floating interest rates, and have a significant adverse impact on the financial
performance of the Group. The management team would make adjustments on a timely basis based on the latest market
conditions, including arrangements for interest rate swaps to reduce interest rate risk.
2.1.3. Other price risks
The Group’s price risk mainly arises from investments in held-for-trading equity instruments and derivative financial
instruments. Held-for-trading equity instrument investments are all investments in unlisted held-for-trading equity
instruments.
The Group is exposed to price risk due to the holding of financial assets measured at fair value. The fair value of certain
financial instruments is determined by the general pricing model based on discounted future cash flow method or other
valuation techniques, while the valuation techniques are based on certain valuation assumptions. Therefore, the valuation
results are highly sensitive to valuation assumptions. However, at the end of the current reporting period, the amount of
investment in held-for-trading equity instruments and derivative financial instruments is not significant, and the risk
exposure due to changes in price of financial instruments as a result of change in valuation assumptions is low, accordingly,
no sensitivity analysis is conducted.
2.2 Credit Risk
As of June 30th 2022, the largest credit risk exposure that may result in financial losses of the Group is mainly due to the
loss of the Group’s financial assets arising from the failure of the counterparty to perform its obligations, including: cash
and bank balance (Note (V). 1), notes receivable (Note (V). 3), accounts receivable (Note (V). 4), receivables for financing
(Note (V). 5), other receivables (Note (V). 7), non-current assets due within one year (Note (V). 10), long-term receivables
(Note (V). 12), etc., and derivative financial assets that are not included in the scope of impairment assessment and are
measured at fair value through current profit or loss (Note (V). 2). As of the balance sheet date, the book value of the
Group’s financial assets represents its maximum credit risk exposure.
In order to reduce credit risk, the Group has formed a team to determine the credit limit, conduct credit approval, and
implement other monitoring procedures to ensure that necessary measures are taken to recover over-due debt. In addition,
the Group reviews the recovery of financial assets on each balance sheet date to ensure that sufficient credit loss provisions
are made for relevant financial assets. Therefore, the management of the Group believes that the credit risk exposure of
the Group has been reduced significantly.
The credit risk on cash and bank balances of the Group is low as they are deposited with banks with high credit ratings.
For accounts receivable, contract assets and long-term receivables, the Group has put in place relevant policies to control
credit risk exposure. The Group assesses credit quality of customers and sets corresponding credit period based on the
customer’s financial status, the possibility of obtaining guarantees from third parties, credit history and other factors such
as current market conditions. The Group will regularly monitor the credit history of its customers. For customers with
poor credit history, the Group takes various measures, such as written payment reminders, shorten or cancel the credit
171
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
period, to ensure that the overall credit risk of the Group is maintained in a controllable range. For accounts receivable
and contract assets, the Group uses a simplified method, that is, to measure the loss provision based on the amount
equivalent to the expected credit loss for the entire duration. For details of the relevant expected credit loss measurement,
see (Note (V). 4 & Note (V)-9). For long-term receivables, the Group calculates the expected credit losses based on the
expected credit loss rate in the next 12 months or the entire duration based on the default risk exposure. For details of the
related expected credit loss measurement, see (Note (V). 12).
The Group’s notes receivable and receivables for financing are mainly bank acceptance notes and commercial acceptance
notes with high credit ratings of the counterparties, which the Group does not consider to be subject to significant credit
risk and will not incur any material loss due to default by the counterparties.
For other receivables, the Group regularly monitors the debtor’s credit history. For debtors with poor credit history, the
Group takes various measures such as written payment reminders to ensure that the Group’s overall credit risk is
maintained in a controllable range. For other receivables, the Group calculates the expected credit loss based on the
expected credit loss ratio in the next 12 months or the entire duration based on the default risk exposure. For details of the
relevant expected credit loss measurement, see (Note (V). 7).
The Group’s risk exposure is distributed among multiple contractors and multiple customers, so the Group has no
significant credit concentration risk.
2.3. Liquidity risk
The Group maintains and monitors a level of cash and cash equivalents deemed adequate by the management to meet the
operation needs of the Group and to reduce the effect of cash flow movements when managing liquidity risk. The
management of the Group monitors the usage of bank borrowings, and ensures compliance with borrowing agreements.
According to the term to maturity of non-discounted and remaining contract obligations, the financial liabilities held by
the Group are analyzed as below:
Unit：RMB
June 30th 2022
Within one year 1-5 years More than five years Total
Non-derivative financial liabilities
Short-term borrowings 4,645,576,755.76 - - 4,645,576,755.76
Notes payable 777,786,052.56 - - 777,786,052.56
Accounts payable 14,758,328,901.40 - - 14,758,328,901.40
Other payables 2,607,868,914.21 - - 2,607,868,914.21
Other current liabilities 497,966,942.94 - - 497,966,942.94
Other non-current liabilities - 2,806,169,050.05 - 2,806,169,050.05
Long-term borrowings (including those due
591,437,171.98 4,129,070,088.99 1,037,456,775.03 5,757,964,036.00
within one year)
Lease liabilities (including those due within
223,421,646.52 336,099,984.27 50,844,888.76 610,366,519.55
one year)
Long-term payables (including those due
2,504,985.42 8,219,433.66 - 10,724,419.08
within one year)
Derivative financial instruments
Forward foreign exchange contracts,
foreign exchange option contracts and
interest rate swap contracts- settled in the
gross amount
- Cash inflow 1,983,227,934.64 - - 1,983,227,934.64
- Cash outflow 2,054,541,020.30 - - 2,054,541,020.30
- Net cash inflow (71,313,085.66) - - (71,313,085.66)
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
IX. Fair value disclosure
1. The financial assets and financial liabilities measured at fair value at the end of the reporting period
Unit：RMB
Closing fair value
Items
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement - 1,237,851,446.26 383,275,456.44 1,621,126,902.70
(I) Financial assets measured at fair value
- 48,035,480.36 383,275,456.44 431,310,936.80
through profit and loss
1. Held-for-trading Financial Assets - 48,035,480.36 - 48,035,480.36
-- Derivative financial assets - 48,035,480.36 - 48,035,480.36
2. Other non-current financial assets - - 383,275,456.44 383,275,456.44
(II) Receivables for financing - 1,299,586,224.80 - 1,299,586,224.80
Total assets measured continuously at fair
- 1,347,621,705.16 383,275,456.44 1,730,897,161.60
value
(III) Financial liabilities measured at fair
- 109,770,258.90 - 109,770,258.90
value through profit and loss
1. Held-for-trading Financial Liabilities - 109,770,258.90 - 109,770,258.90
-- Derivative financial liabilities - 109,770,258.90 - 109,770,258.90
Total liabilities measured continuously at
- 109,770,258.90 - 109,770,258.90
fair value
2. The valuation techniques and important parameters used for the Level 2 fair value measurement item
Unit: RMB
Fair value at
Estimation technique Inputs
June 30th 2022
Forward foreign exchange contracts, Exchange rate or interest rate
Discounted cash flow
foreign exchange option contracts and 48,035,480.36 Discounted rate that reflects the
approach
interest rate swap contracts (Assets) credit risk of counterparty
Forward exchange rate
Forward foreign exchange contracts Discounted cash flow
(109,770,258.90) Discounted rate that reflects the
(Liabilities) approach
credit risk of counterparty
Discounted cash flow Discounted rate that reflects the
Receivables for financing 1,299,586,224.80
approach credit risk of counterparty
3. The valuation techniques and important parameters used for the Level 3 fair value measurement item
Unit: RMB
Fair value at
Items Valuation techniques Inputs
June 30th 2022
Comparable public companies’ PB
Other non-current financial assets--
Market approach/Income (price/book value) ratio within the
Investment in equity instruments of private 383,275,456.44
approach same industry/Future cash flows,
companies
Discount rate
4. The adjustment information between the opening and closing book value of the Level 3 fair value measurement
item
Unit: RMB
Other non-current financial assets Amount
Book value on January 1st 2022 438,724,172.22
Increase in the current reporting period -
Decrease in the current reporting period (29,000,000.00)
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Other non-current financial assets Amount
Changes in fair value booked into profit and loss during the current reporting period (26,448,715.78)
Book value on June 30th 2022 383,275,456.44
The total amount included in profit or loss in the first half of 2022 includes unrealized losses of RMB 26,448,715.78 (June
30th 2021: RMB 23,277,319.84) related to financial assets measured at fair value at the end of the current reporting period,
and such gains or losses are included in the gains or losses from changes in fair value; The realized gains of financial assets
measured at fair value at the end of the current reporting period which were included in investment income was RMB
51,892,209.92 (June 30th 2021: RMB 115,644,801.97).
5. Items measured at continuous fair value. There were no transfers between levels for the current reporting
period. There was no estimation technique change for the current reporting period
6. Fair values of financial assets and financial liabilities that not measured at fair value
The Group’s management team believes that financial assets and financial liabilities measured at amortized cost mainly
include monetary fund, notes receivable, accounts receivable, other receivables, non-current assets due within one year,
long-term receivables, short-term borrowings, notes payable, accounts payable, other payables, other current liabilities
(other than Output VAT To-be-Transferred), non-current liabilities due within one year, long-term borrowings, long-term
payables and other non-current liabilities, etc., carrying value of which approximates to its fair value.
X. Related party relationships and transactions
1. Information on parent company of the Company
Shareholding ratio of Percentage of voting
Place of Nature of
Name Registered capital parent company in the rights of parent company
registration business
Company (%) to the Company (%)
China Electronics Technology
Hangzhou, Industrial
HIK Group Co., Ltd. RMB 660 million 36.08 36.08
Zhejiang investment
(CETHIK)
The ultimate controlling party of the Company is China Electronics Technology Group Co., Ltd. ("CETC").
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
Joint ventures and associates that had related party transactions with the Group in the current reporting period, or in the
prior periods and formed balances are as follows:
Name of the associates or joint ventures Relationship with the Company
Wuhu Sensor-Tech Intelligent Technology Co., Ltd. (Wuhu Sensor Tech) and its
Associated company
subsidiaries
Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Maxio Technology) and its
Associated company
subsidiaries
Zhiguang Hailian Big Data Technology Co., Ltd. (Zhiguang Hailian) and its subsidiaries Associated company
Jiaxin Haishi JiaAn Zhicheng Technology Co., Ltd. Associated company
Qinghai Qingtang Big Data Co., Ltd. (Qingtang Big Data) Associated company
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Name of the associates or joint ventures Relationship with the Company
Sanmenxia Xiaoyun Vision Technology Co., Ltd. Associated company
Zhejiang Hailai Yunzhi Technology Co., Ltd. (Zhejiang Hailai) (Note)
Guangxi Haishi City Operation Management Co., Ltd. (hereinafter referred to as Guangxi
Joint venture
Haishi) and its subsidiaries
Shenzhen Haishi City Service Operation Co., Ltd. (hereinafter referred to as Shenzhen
Joint venture
City Service) and its subsidiaries
Xuzhou Kangbo City Operation Management Service Co., Ltd. (Xuzhou Kangbo) Joint venture
Yunnan Yinghai Parking Service Co., Ltd. (Yunnan Yinghai) Joint venture
Zhejiang City Digital Technology Co., Ltd. (Zhejiang City Digital Technology) Joint venture
Zhejiang Haishi Huayue Digital Technology Co., Ltd. (Haishi Huayue) Joint venture
Note: During the period from January 1st 2021 to June 30th 2021, Zhejiang Hailai is a joint venture of the Company. On
June 30th 2021, the Company included Zhejiang Hailai in the scope of the consolidated financial statements.
4. Information on other related parties
Other related parties that have related party transactions with the Group in the current period, or related party
transactions with the Group in the previous period and formed a balance are as follows:
Name Relationship
Major shareholder of the Company that holds more than 5% of
Gong Hongjia
the share of the Company, fomer director of the Company
Shanghai Fullhan Microelectronics Co., Ltd. (Shanghai Fullhan
Gong Hongjia or his relative(s) serve(s) as the director(s)
Micro) and its subsidiaries
Shenzhen Wanyu Security Service Technology Co., Ltd. (Shenzhen The Group’s senior management serve(s) as director(s) of this
Wanyu Security Service) and its subsidiaries company
Confirmware Technology(Hangzhou) Co., Ltd. (Hangzhou The Group’s senior management serve(s) as director(s) of this
Confirmware) company (Note 1)
Zhejiang Fast Line data fusion Information Technology Co., Ltd.. The Group’s senior management serve(s) as director(s) of this
(Zhejiang Fast Line data fusion) and its subsidiaries company
Chengdu Guoshengtianfeng Network Technology Co., Ltd. (Chengdu The Group’s senior management serve(s) as director(s) of this
Guoshengtianfeng) and its subsidiaries company
Ruihua Innovation Management Research Institute (Hangzhou) Co., The Group’s independent director(s) serve(s) as director(s) of
Ltd. (Ruihua Innovation) this company
INESA (Group) Co., Ltd. (INESA) and its subsidiaries The Group’s supervisor(s) serve(s) as director(s) of this company
The Group’s former independent director(s) serve(s) as
Aurotek Corporation. (Aurotek) and its subsidiaries
director(s) of this company (Note 1)
Under common control of the ultimate controlling party of the
Subsidiaries of CETC (Note 2)
Company
Note 1: Due to the departure of the independent director of the Group in 2021, from January to March 2022 is in the range
of the first year of him/her departure, therefore, Aurotek Corporation was still recognized as a related party of the Group.
Note 2: Subsidiaries of CETC, excluding Hikvision and its subsidiaries.
5. Related party transactions
5.1 Related party transactions regarding sales and purchases of goods, provision of services and receiving services
Purchase of commodities / receiving of services:
Unit: RMB
Amount occurred in the Amount occurred in the first
Related party Transaction type
first half of 2022 half of 2021
Purchase of materials and
Subsidiaries of CETC 1,053,890,910.70 954,049,928.17
receiving of services
175
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Amount occurred in the Amount occurred in the first
Related party Transaction type
first half of 2022 half of 2021
Purchase of materials and
Joint ventures 337,281.30 31,026.60
receiving of services
Purchase of materials and
Associated companies 229,107,731.02 146,409,502.03
receiving of services
Enterprises with directors, supervisors, senior
Purchase of materials and
executives and related natural persons of the 916,297,997.14 435,028,505.73
receiving of services
Company serving as directors
Total 2,199,633,920.16 1,535,518,962.53
Sales of commodities / rendering of services:
Unit: RMB
Amount occurred in the Amount occurred in the first
Related party Transaction content
first half of 2022 half of 2021
Sales of products and 168,042,187.48
Subsidiaries of CETC 235,766,661.73
rendering of services
Sales of products and 33,132,355.91
Joint ventures 48,534,656.74
rendering of services
Sales of products and 39,739,875.36
Associated companies 32,275,505.15
rendering of services
Enterprises with directors, supervisors, senior
Sales of products and 4,016,002.60
executives and related natural persons of the -
rendering of services
Company serving as directors
Total 244,930,421.35 316,576,823.62
Statement of capital deposits:
Unit: RMB
Related Party Balance at the end
Content of related Amount occurred in Amount occurred in
of the current Opening balance
(Note) party transaction the first half of 2022 the first half of 2021
reporting period
Deposits into
Subsidiaries of CETC (499,974,692.98) 32,041.22 120.57 500,006,734.20
current deposits
Deposit into fixed
Subsidiaries of CETC - 4,000,000,000.00 - 4,000,000,000.00
deposits
Total (499,974,692.98) 4,000,032,041.22 120.57 4,500,006,734.20
Note: For the deposits that the Group deposited into China Electronic Technology Finance Co., Ltd., the deposite interest
income was RMB 4,025,307.02.
The above transactions are executed at market prices.
5.2 Guaranteed by the related party
As required by the project owner, China Electronics Technology Group Co., Ltd. has provided a joint guarantee to
responsibility and duties of construction projects of “Safe Chongqing, Emergency Control System Digital Construction
Project”, including 41 districts and counties, signed by the Group’s subsidiary Chongqing Hikvision System Technology
Ltd. (Chongqing System) Meanwhile, the Company, Hikvision, provides a counter guarantee to China Electronics
Technology Group Co., Ltd.
5.3 Other related party transactions
Sale-leaseback
Pursuant to resolution of the Company’s 7th meeting of the 4th session of the Board of Directors held on December 3rd
2018, the Group’s subsidiary Hangzhou Hikmicro Sensing signed a financial leasing contract with a subordinate company
of CETC, Hangzhou Hikmicro Sensing will carry out sale-leaseback business of part of its self-owned equipment with the
CETC’s subordinate company. The new financing amount in 2019 was RMB 70 million, with lease term of 48 months,
176
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
and the annual lease rate is 3.8%. On June 30th 2022, Hangzhou Hikmicro Sensing confirmed right-of-use assets of RMB
13,343,562.59 and lease liabilities (including non-current liabilities due within one year) of RMB 12,875,762.58. In first
half of 2022, the interest on lease liabilities is RMB 638,844.47.
6. Receivables from related parties and payables to related parties
6.1 Receivables from related parties
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Accounts
Subsidiaries of CETC 711,074,933.70 268,085,771.39 756,888,051.10 209,305,306.47
receivable
Accounts
Joint ventures 32,503,571.84 629,307.07 19,862,199.08 592,300.61
receivable
Accounts
Associated companies 93,182,085.63 6,130,909.78 87,093,118.68 3,627,594.53
receivable
Enterprises with directors,
supervisors, senior executives
Accounts
and related natural persons of 2,403,742.58 47,105.41 4,352,261.48 80,947.45
receivable
the Company serving as
directors
Total 839,164,333.75 274,893,093.65 868,195,630.34 213,606,149.06
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Notes
Subsidiaries of CETC 119,257,859.89 - 78,858,666.10 -
receivable
Notes
Joint ventures 360,000.00 - 1,444,385.00 -
receivable
Notes
Associated companies - - 5,000,000.00 -
receivable
Enterprises with directors,
supervisors, senior executives
Notes
and related natural persons of 211,000.00 - - -
receivable
the Company serving as
directors
Total 119,828,859.89 - 85,303,051.10 -
Note 1: Among them, the RMB 12,182,780.30 (2021: RMB 17,267,512.00) notes receivable are the acceptance bills of
which the drawer is the related party, and the former endorsers are unrelated third parties.
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Other receivables
(include dividends Subsidiaries of CETC 61,424,875.42 206,722.60 645,000.00 99,483.50
recelvable)
Other receivables
(include dividends Joint ventures 146,076.20 1,270.86 244,182.74 2,124.39
recelvable)
Other receivables
(include dividends Associated companies - - 10,485.27 91.22
recelvable)
Total 61,570,951.62 207,993.46 899,668.01 101,699.11
177
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Long-term
receivables Subsidiaries of CETC 36,911,200.01 5,996,013.56 38,579,578.71 2,451,642.33
(including those due
within one year)
Long-term
receivables
Joint ventures 44,179,515.57 537,604.37 37,660,831.90 431,834.19
(including those due
within one year)
Total 81,090,715.58 6,533,617.93 76,240,410.61 2,883,476.52
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Prepayments Subsidiaries of CETC 2,769,107.38 - 2,705,210.05 -
Prepayments Associated companies - - 49,300,000.00 -
Total 2,769,107.38 - 52,005,210.05 -
6.2 Payables to related parties
Unit: RMB
Item Related Party Closing balance Opening balance
Accounts payable Subsidiaries of CETC 464,910,352.38 570,856,498.41
Accounts payable Associated companies 58,951,221.46 77,275,644.97
Enterprises with directors, supervisors, senior
Accounts payable executives and related natural persons of the 577,783,821.01 409,333,802.57
Company serving as directors
Total 1,101,645,394.85 1,057,465,945.95
Unit: RMB
Item Related Party Closing balance Opening balance
Notes Payable Subsidiaries of CETC 2,322,752.43 40,579,368.55
Enterprises with directors, supervisors, senior
Notes Payable executives and related natural persons of the 49,423,378.88 24,314,184.13
Company serving as directors
Total 51,746,131.31 64,893,552.68
Unit: RMB
Item Related Party Closing balance Opening balance
Contract liabilities Subsidiaries of CETC 1,311,023.57 3,446,311.89
Contract liabilities Joint ventures 5,641,102.80 -
Contract liabilities Associated companies 72,000.00 195,416.40
Enterprises with directors, supervisors, senior
Contract liabilities executives and related natural persons of the 687.00 961,369.66
Company serving as directors
Total 7,024,813.37 4,603,097.95
178
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit: RMB
Item Related Party Closing balance Opening balance
Other payables Subsidiaries of CETC 55,801,171.73 56,252,811.73
Other payables Joint ventures 370,000.00 10,000.00
Other payables Associated companies 9,430,650.00 9,397,150.00
Enterprises with directors, supervisors, senior
Other payables executives and related natural persons of the 250,000.00 250,000.00
Company serving as directors
Total 65,851,821.73 65,909,961.73
Unit: RMB
Item Related Party Closing balance Opening balance
Lease liabilities (including
Subsidiaries of CETC 12,875,762.58 22,591,498.84
those due within one year)
Lease liabilities (including
Joint ventures 542,918.78 1,074,683.57
those due within one year)
Total 13,418,681.36 23,666,182.41
XI. Share-based payments
1. Overview of share-based payments
Restrictive Share Incentive Sheme
According to the Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital
Technology Co., Ltd. (关于杭州海康威视数字技术股份有限公司实施限制性股票激励计划的批复) (Guo Zi Fen Pei
[2012] No. 426) issued by the State-owned Assets Supervision and Administration Commission of the State Council and
the Opinion the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital Technology Co., Ltd. (关于杭州海康
威视数字技术股份有限公司限制性股票激励计划的意见) (Shang Shi Bu Han [2012] No. 353) issued by China
Securities Regulatory Commission, the Company convened the ninth meeting of the second session of the Board of
Directors on July 25th 2012 and the first extraordinary general meeting for 2012 on August 13th 2012, whereat the Proposal
Relating to the Restrictive Share Scheme (Amendments to the Draft) of the Company and Highlights was reviewed and
passed. The purpose of the Share Incentive Scheme is to: further improve the Company’s governance structure to establish
a good and balanced value allocation system; establish a profit-sharing and restriction mechanism among shareholders,
the Company and its employees, so as to provide shareholders with sustainable return; fully mobilize the positivity of core
employees to support the Company in realizing its strategies and long-term sustainable development; attract and retain
core employees to ensure the Company’s long-term development.
The Scheme shall be effective for a term of 10 years commencing from the date of approval by general meeting of the
Company, during which the Company may grant restricted shares to grantees under the Scheme. In principle, each grant
should be at an interval of two years. After the expiry of the Scheme, no restricted shares could be granted to grantees
under the Scheme. However, all the provisions of the Scheme remain valid to the restricted shares granted under the
Scheme.
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 revenue growth rate), and by grantees’ individual performance criteria
simultaneously. Where, during 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. The cancelled restricted shares will be repurchased by
the Company at the agreed price in the agreement.
179
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
On December 23rd 2016, after consideration and approval by the general meeting, the Company granted 52,326,858
restricted shares to grantees at a grant price of RMB 12.63 per share (“2016 Share Incentive Scheme”). The Lock-up
Period of the Subject Shares shall last for a period of 24 months commencing on the grant date, during which the Subject
Shares granted to grantees under the scheme shall be subject to lock-up and shall not be transferable. The Unlocking Period
shall be the 24 to 60 months following the grant of restricted shares (including Lock-up Period), during which grantees
may, subject to unlocking conditions stipulated by the scheme being satisfied, apply for unlocking in 3 tranches: the first
unlocking period shall be the 24 to 36 months following the grant date and the number of shares to be unlocked shall be
40% of the aggregate number of the Subject Shares granted; the second unlocking period shall be the 36 to 48 months
following the grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject
Shares granted; the third unlocking period shall be the 48 to 60 months following the grant date and the number of shares
to be unlocked shall be 30% of the aggregate number of the Subject Shares granted. As of December 31st 2021, all restricted
shares awarded in 2016 have been closed.
On December 20th 2018, authorized by the 2nd extraordinary general meeting of 2018 and reviewed by the Board of
Directors, the Company granted 121,195,458 restricted shares to grantees at a grant price of RMB 16.98 per share (“2018
Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months commencing on
the grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to lock-up and are
not transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares (including
Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being satisfied,
apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date and the
number of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second unlocking
period shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be 30% of the
aggregate number of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months following the
grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject Shares granted.
The Company has completed the equity registration work in January 2019.
On January 18th 2022, authorized by the 1st extraordinary general meeting of 2022, and reviewed and approved by the
Board of Directors, the Company granted 97,402,605 restricted shares to grantees at a grant price of RMB 29.71 per share
(“2021 Share Incentive Scheme”). The Lock-up Period of the Subject Shares shall last for a period of 24 months
commencing on the grant date, during which the Subject Shares granted to grantees under the scheme shall be subject to
lock-up and are not transferable. The Unlocking Period shall be the 24 to 60 months following the grant of restricted shares
(including Lock-up Period), during which grantees may, subject to unlocking conditions stipulated by the scheme being
satisfied, apply for unlocking in 3 tranches: the first unlocking period shall be the 24 to 36 months following the grant date
and the number of shares to be unlocked shall be 40% of the aggregate number of the Subject Shares granted; the second
unlocking period shall be the 36 to 48 months following the grant date and the number of shares to be unlocked shall be
30% of the aggregate number of the Subject Shares granted; the third unlocking period shall be the 48 to 60 months
following the grant date and the number of shares to be unlocked shall be 30% of the aggregate number of the Subject
Shares granted. The company will complete the equity registration work in February 2022.
Unit: share
2018 Share Incentive Scheme First half year of 2022 2021
Total of equity instruments outstanding at the beginning of the
68,762,683 68,762,683
reporting period
Total of equity instruments granted (share dividend) during the current
- -
reporting period
Total of equity instruments vested during the current reporting period 33,142,730 -
Total of equity instruments forfeited during the current reporting
- -
period
Total of equity instruments outstanding at the end of the reporting
35,619,953 68,762,683
period
The exercise price (ex-rights) of the outstanding Share-based payments
of the Company at the end of the reporting period and the remaining RMB 16.98/share & 18 months RMB 16.98/share & 24 months
period of the contract
180
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
2021 Share Incentive Scheme First half year of 2022 2021
Total of equity instruments outstanding at the beginning of the
- -
reporting period
Total of equity instruments granted (share dividend) during the current
97,402,605 -
reporting period
Total of equity instruments vested during the current reporting period - -
Total of equity instruments forfeited during the current reporting
- -
period
Total of equity instruments outstanding at the end of the reporting
97,402,605 -
period
The exercise price (ex-rights) of the outstanding Share-based payments
of the Company at the end of the reporting period and the remaining RMB 29.71/share & 60 months n/a
period of the contract
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22nd 2015, Hikvision considered and approved Management Measures for Core Staff Co-Investment in
Innovative Businesses (Draft) (hereafter referred to as “Management Measures”) at the 2nd extraordinary general meeting.
On March 7th 2016, representative congress of labor union of Hikvision passed Implementation Provisions for
Management Measures for Core Staff Investment in Innovative Businesses (hereafter referred to as “Provisions”), to initiate
and implement the incentive mechanism of staff co-investment (hereafter referred to as “Staff Co-Investment Plan”) in
innovative business subsidiaries. Staff who participate in the Staff Co-Investment Plan (hereafter referred to as “Co-
Investment Staff”) signed an Entrusted Investment Agreement with the labor union committee of Hikvision (hereafter
referred to as “Hikvision Labor Union”), to entrust Hikvision Labor Union to make investments. Hikvision Labor Union,
as a principal, shall cooperate with a trust company, which shall be a limited partner (LP) of a partnership enterprise, to
establish a trust plan, and to invest trust funds into innovative business subsidiaries. (Investment form described above is
referred to as “Co-Investment Platform”).
Staff Investment Plan is classified as plan A and plan B according to applicable grantees. Grantees of plan A are comprised
of medium-and-senior level management personnel and core competent staff from Hikvision, its wholly-owned
subsidiaries, and innovative business subsidiaries, and are able to invest in various innovative businesses. Grantees of plan
B are comprised of core and full-time staff from innovative business subsidiaries, and could participate in investment on
innovative business subsidiaries where they serve. In principle, the Co-Investment Platform will increase capitals annually,
the corresponding increased equity of which will be distributed to core staff who meets investment conditions pursuant to
particular rules. The lock-up period shall be five years after equity of Co-Investment Platform is held by the staff, which
will be unlocked in one-off manner when due. Within the lock-up period, if the labor relationship between the grantees
and the Company or its subsidiaries is released or terminated, equity of Co-Investment Platform held by the grantees shall
be refunded and settled by the labor union at an agreed price pursuant to the Provisions.
On December 25th 2020, Hikvision held the 20th meeting of the 4th session of the Board of Directors and reviewed and
approved the Proposal on Amending the Management Measures for Core Staff Co-Investment in Innovative Businesses.
The new version of the Management Measures for Core Staff Co-Investment in Innovative Business (hereinafter referred
to as the "new version of the Management Measures") added the confirmation of the shares held by employees in the co-
investment plan and the rights and interests indirectly held by employees in innovative business subsidiaries, clarified the
approach of the co-investment shares after the employees lost or cancelled the co-investment qualification, and added the
Management Committee and other systems.
On December 31st 2020, the Executive Management Committee of the Co-investment Plan adopted the Implementation
Rules for the Management Measures for Core Staff Co-Investment in Innovative Businesses (hereinafter referred to as the
"new version of the Rules"). According to the new version of the Management Measures and the new version of the Rules,
for the confirmed shares of plan A, the lock-up period is the fifth anniversary of the employee's work in the Company or
its subsidiaries. For the confirmed shares of plan B, the lock-up period is the fifth anniversary of the employee's work in
the innovative business subsidiary or its subordinate subsidiary company corresponding to the Plan B.
In principle, the Co-Investment Platform grants Co-Investment Staff additional equity annually. The Group determines
whether share-based payment shall be constituted based on the fair value of equity instruments newly obtained by the
Group’s staff in Co-Investment Platform on each granting date. During the current reporting period, the Group recognized
share-based payment of RMB 140,616,564.95 in aggregate based on the fair value of services obtained by the Group.
181
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
2. Information of the share-based payment through equity settlements
Restrictive Share Incentive Sheme
Unit: RMB
2018 Share Incentive Scheme 2021 Share Incentive Scheme
Determined based on stock price at the Determined based on stock price at the
Method of determine the fair value of equity
grant date and the costs of restricted grant date and the costs of restricted
instruments at the grant date shares during Lock-up Period shares during Lock-up Period
Recognition basis of the number of the equity Determined based on the results Determined based on the results
instruments qualified for vesting estimation of each vesting period estimation of each vesting period
Reasons of the significant difference between the
estimates of the current reporting period with that of None None
the prior year
Accumulative amount of share-based payment
through equity settlement and further included in the 1,079,693,030.03 319,906,680.80
capital reserve
Total amount of the expenses recognized according to
share-based payment through equity settlement in the 79,078,403.22 319,906,680.80
current reporting period
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
Unit：RMB
Share Incentive Scheme of Staff Co-Investment in
Innovative Businesses
Evaluated and determined based on income method at the
Method of determining the fair value of equity instruments at the grant date
grant date
Recognition basis of the number of the equity instruments qualified for Estimated and determined based on the performance result
vesting conditions of each vesting period
Accumulative amount of share-based payment through equity settlement and
430,026,982.45
further included in the capital reserve
Total amount of the expenses recognized according to share-based payment
140,616,564.95
through equity settlement in the current reporting period
Among total amount of the expenses recognized according to share-based payment through equity settlement during the
current reporting period, amount of RMB 27,068,649.69 was due to share distributions to minority shareholders; As of
June 30th 2022, accumulative amount of share-based payment through equity settlement of RMB 84,305,851.54 was
included in the equity of minority shareholders.
3. There is no share-based payment through cash settlements
4. There is no modification or termination of share-based payment during the current reporting period.
XII. Commitments and contingencies
1. Significant commitments
1.1 Capital commitments
Unit: 000 RMB
Closing balance Opening balance
Contracted but not yet recognized in financial statements
- Commitment on construction of long-term assets 16,628,887 11,659,026
- Commitment on external investments 25,940 34,500
Total 16,654,827 11,693,526
182
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
1.2 As of June 30th 2022, the Group had no other important commitments that need to be disclosed.
2. Contingencies
The Group has no significant contingencies to be disclosed.
XIII. Events after the balance sheet date
1. Significant unadjusted events
Spin-off HikRobot, a subsidiary of the Company, and listing on the SZSE ChiNext Market
On December 30th 2021, the 7th meeting of the fifth session of the Board of Directors of the Company deliberated on and
approved the Proposal on Authorizing Company Management to Begin Preparatory Work for the Spin-off and Domestic
Listing of Subsidiary Hangzhou Hikrobot Technology Co., Ltd., which authorized the management of the Company to
begin preparatory work for the Spin-off and domestic listing of subsidiary Hangzhou Hikrobot Technology Co., Ltd.. On
June 10th 2022, the 11th meeting of the 5th session of the Board of Directors and the 11th meeting of the 5th session of the
Board of Supervisors reviewed and approved the relevant proposals including Proposal on the Initial Public Offering of
Shares by Hangzhou Hikrobot Technology Co., Ltd., a Subsidiary of the Company, and Listing on the SZSE ChiNext
Market, and Plan on Spin-off of Hangzhou Hikrobot Technology Co., Ltd., a Subsidiary of the Company, and Listing on
SZSE ChiNext Market. Approved the initial public offering of RMB ordinary shares (A shares) and listing on the SZSE
ChiNext Market by the subsidiary HikRobot after completing the joint-stock system reform. On July 20th 2022, the 5th
meeting of the 5th session of the Strategy Committee in 2022 reviewed and approved the Proposal on the Change of the
Hangzhou Hikrobot Technology Co., Ltd., a Holding Subsidiary of the Company, to a Limited-Liability Company by
Shares. On July 21st 2022, HikRobot was established as a limited-liability company by shares as a whole.
XIV. Other significant events
1. Segment information
1.1 Report segment determining and accounting policy
According to the Group's internal organization structure, management requirements and internal report principles, the
Group has only one operating segment, which is the research and development, production and sales of AIoT products
and services.
1.2 Segment financial reporting
External revenue by geographical area & non-current assets by geographical location
Unit: RMB
Item First half year of 2022 First half year of 2021
External revenue generated in domestic area 25,544,764,018.60 24,434,618,189.74
External revenue generated in overseas area 11,712,752,572.02 9,467,480,178.36
Total 37,257,516,590.62 33,902,098,368.10
Unit: RMB
183
Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Item (Note) On June 30th 2022 On January 1st 2022
Non-current assets in domestic area 15,391,158,000.24 13,823,326,864.88
Non-current assets in overseas area 789,726,692.43 777,156,474.79
Total 16,180,884,692.67 14,600,483,339.67
Note: the non-current assets above did not include other non-current financial assets, long-term receivables, long-term
equity investment, and deferred tax assets.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
XV. Notes to major items of financial statements of the parent company
1. Accounts receivable
1.1 Disclosure by age
Unit: RMB
Closing balance
Aging
Accounts receivable Credit loss provision Proportion (%)
Within credit period 8,430,671,757.95 14,950,641.18 0.18
Within 1 year after exceeding credit period 19,397,891,428.78 105,326,091.10 0.54
1-2 years after exceeding credit period 521,120,075.23 106,571,796.75 20.45
2-3 years after exceeding credit period 285,543,133.75 118,560,945.06 41.52
3-4 years after exceeding credit period 123,174,483.36 86,389,549.87 70.14
Over 4 years after exceeding credit period 126,155,113.45 126,155,113.45 100.00
Subtotal 28,884,555,992.52 557,954,137.41 1.93
1.2 Classification and disclosure of by credit loss provision methods
Unit: RMB
Closing balance Opening balance
Carrying balance Credit loss provision Book value Carrying balance Credit loss provision Book value
Category
Percentage Percentage Percentage Percentage
Amount Amount Amount Amount Amount Amount
(%) (%) (%) (%)
Provision for credit
- - - - - - - - - -
loss on a single basis
Provision for credit
28,884,555,992.52 100.00 557,954,137.41 1.93 28,326,601,855.11 24,366,746,971.10 100.00 488,628,899.68 2.01 23,878,118,071.42
loss by portfolios
Total 28,884,555,992.52 100.00 557,954,137.41 1.93 28,326,601,855.11 24,366,746,971.10 100.00 488,628,899.68 2.01 23,878,118,071.42
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Accounts receivable provision for credit loss by portfolios
Unit: RMB
Closing balance
Customer
Carrying balance Credit loss provision Proportion (%)
Subsidiaries’ customers 24,865,503,432.61 - -
Portfolio A 1,631,202.41 222,357.89 13.63
Portfolio B 4,017,209,861.15 557,520,283.17 13.88
Portfolio C 211,496.35 211,496.35 100.00
Total 28,884,555,992.52 557,954,137.41 1.93
Description of accounts receivable for credit loss provision by portfolios:
As part of the Company's credit risk management, the Company uses the ageing of accounts receivable to assess the expected credit losses of accounts receivable
formed by domestic and overseas sales businesses, and the risk characteristics are divided according to different business area and target into portfolio A, portfolio B
and portfolio C. For the accounts receivable generated by the Group’s related parties, because the payment time is arranged by the Group according to the cash flow of
the companies in the Group, the Company believes that the credit risk is low and no provision for credit loss is required. The aging information can reflect the solvency
of these three types of customers when the accounts receivable are due.
1.3 Credit loss provision
The provision for credit loss in the current reporting period is RMB 69,151,601.67.
The actual write-off of accounts receivable for the current reporting period is nil. The write-off of accounts receivable in previous years was recollected in the current
period of RMB 173,636.06.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
1.4 Top five debtors based on corresponding closing balance of accounts receivable
Unit: RMB
Proportion (%) of the total balance
Book value balance of accounts Closing balance for credit loss
Name of the Party Relationship with the Company of accounts receivable at the end of
receivable provision
the current reporting period
Subsidiary A Subsidiary 24,783,594,545.60 - 85.80
Third party J Third party 115,387,204.15 3,349,753.66 0.40
CETC’s subsidiary company
Related party 104,071,036.35 27,344,153.27 0.36
A
Third party K Third party 83,018,098.09 3,511,665.55 0.29
Third party L Third party 45,115,167.31 900,434.47 0.16
Total 25,131,186,051.50 35,106,006.95 87.01
1.5 As of June 30th 2022, there is no termination of accounts receivable booking due to transfer of a financial asset.
1.6 As of June 30th 2022, the Company has no assets/liabilities booked due to transferred accounts receivable that the Company still continue to be involved in.
2. Other receivables
2.1 By categories
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Unit：RMB
Category Closing balance Opening balance
Dividends receivable 60,866,875.42 22,910,404.14
Other receivables 1,681,452,081.14 1,491,231,959.91
Total 1,742,318,956.56 1,514,142,364.05
2.2 Dividends receivable
Unit：RMB
Investees Closing balance Opening balance
Subsidiaries of CETC 60,866,875.42 -
Subsidiaries of Hikvision - 22,910,404.14
Total 60,866,875.42 22,910,404.14
2.3 Other receivables
2.3.1 Other receivables by aging
Unit: RMB
Closing balance
Item
Other receivables Credit loss provision Proportion (%)
Within contract period 1,663,842,543.37 1,391,113.81 0.08
Within 1 year 18,297,864.39 774,093.15 4.23
1-2 years 1,270,244.25 237,154.60 18.67
2-3 years 420,902.10 173,453.76 41.21
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
3-4 years 637,268.27 440,925.92 69.19
Over 4 years 1,139,443.96 1,139,443.96 100.00
Subtotal 1,685,608,266.34 4,156,185.20 0.25
2.3.2 Other receivables by nature of the payment
Unit: RMB
Nature Closing balance Opening balance
Payments by related parties within the Group 1,495,775,623.41 1,365,117,094.96
Temporary payments for receivables 105,454,653.84 61,128,645.72
Guarantee deposit 62,094,518.18 60,966,840.82
Others 22,283,470.91 7,274,266.75
Total 1,685,608,266.34 1,494,486,848.25
2.3.3 Provision for credit losses
The amount of credit loss provision in the current period was RMB 901,296.86.
2.3.4 The actual write-off of other receivables in the current reporting period was nil.
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
2.3.5 Top 5 debtors of other receivables in terms of closing balance
Unit：RMB
Relationship with the Percentage to total other Closing balance for
The name of entity Nature Closing balance Aging
Company receivables (%) credit loss provision
Within contract
Subsidiary B Subsidiary Internal Payment 310,682,432.22 18.43 -
period
Within contract
Subsidiary C Subsidiary Internal Payment 290,083,271.99 17.21 -
period
Within contract
Subsidiary D Subsidiary Internal Payment 125,461,004.17 7.44 -
period
Within contract
Subsidiary E Subsidiary Internal Payment 125,105,415.71 7.42 -
period
Within contract
Subsidiary F Subsidiary Internal Payment 107,730,158.54 6.39 -
period
Total 959,062,282.63 56.89 -
2.3.6 At the end of the current reporting period, the Company had no other receivables involving government subsidies.
2.3.7 At the end of the current reporting period, there were no other receivables derecognized due to the transfer of financial assets.
2.3.8 At the end of the current reporting period, there were no assets or liabilities formed by continuing involvement in transferred other receivables
3. Long-term equity investment
Unit: RMB
Closing balance Opening balance
Item
Carrying Balance Provisions Book Value Carrying Balance Provisions Book Value
Investment in subsidiaries 6,619,938,503.32 - 6,619,938,503.32 6,870,285,292.68 - 6,870,285,292.68
Inestments in associated enterprises and joint ventures 1,026,312,712.28 - 1,026,312,712.28 915,631,339.20 - 915,631,339.20
Total 7,646,251,215.60 - 7,646,251,215.60 7,785,916,631.88 - 7,785,916,631.88
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
On June 30th 2022, the ability of the investee of the long-term equity investment held by the Company to transfer funds to the Company was not restricted.
3.1 Investment in subsidiaries
Unit：RMB
Write-off of Balance of
Increase during Decrease during impairment impairment loss
Name of investee Opening balance the current the current Closing balance provision during the provision at the end
reporting period reporting period current reporting of the current
period reporting period
Hangzhou Hikvision System Technology Co., Ltd. 860,512,480.17 23,824,671.57 - 884,337,151.74 - -
Hangzhou Hikvision Technology Co., Ltd. 1,074,046,955.60 21,790,363.25 - 1,095,837,318.85
Hangzhou EZVIZ Network Co., Ltd. 63,243,651.86 951,370.10 - 64,195,021.96 - -
Hangzhou EZVIZ Software Co., Ltd. 40,105,053.11 2,695,938.95 - 42,800,992.06
Hangzhou Hikrobot Technology Co., Ltd. 142,392,287.50 2,106,023.31 - 144,498,310.81 - -
Hangzhou Haikang Intelligence Technology Co., Ltd. 10,200,142.51 1,154,162.91 - 11,354,305.42
Hikvision International Co.,Limited 79,423.52 - - 79,423.52
3.2 Investments in associated enterprises and joint ventures
Unit：RMB
Increase/Decrease during the current reporting period Balance of
Investment Other Declared cash impairment loss
Name of investee Opening balance Provision Closing balance provision at the end
Additional Reduced income (losses) comprehensive dividends or
for Others of the current
Investments Investments recognized under income profit
impairment reporting period
the equity method adjustment distribution
1.Joint Ventures
Hangzhou Haikang
Intelligent Industrial 702,369,339.95 - - 53,022,515.98 - - - 12,195,975.86 767,587,831.79 -
Equity Investment Fund
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Partnership (Limited
Partnership)
Haishi Huayue 11,930,512.66 - - 35,914.16 - - - - 11,966,426.82 -
Xuzhou Kangbo 9,233,201.67 - - 73,459.45 - - - - 9,306,661.12 -
Shenzhen City Service 1,264,658.38 - - (899,467.27) - - - - 365,191.11 -
Yunnan Yinghai 4,558,881.09 - - 297,411.14 - - - - 4,856,292.23 -
Zhejiang City Digital -
12,214,320.29 - - 419,613.26 - - - - 12,633,933.55
Technology
Guangxi Haishi 4,632,200.59 8,560,000.00 - (830,963.67) - - - - 12,361,236.92 -
Subtotal 746,203,114.63 8,560,000.00 - 52,118,483.05 - - - 12,195,975.86 819,077,573.54 -
Wuhu Sensor Tech 75,466,476.84 - - 8,421,002.48 - - - - 83,887,479.32 -
Maxio Technology 62,727,449.53 - - (6,241,687.00) - - - 33,766,389.41 90,252,151.94 -
Zhiguang Hailian 21,285,843.27 - - (2,585,310.69) - - - 4,517,968.05 23,218,500.63 -
Qingtang Big Data 9,948,454.93 - - (71,448.08) - - - - 9,877,006.85 -
Subtotal 169,428,224.57 - - (477,443.29) - - - 38,284,357.46 207,235,138.74 -
Total 915,631,339.20 8,560,000.00 - 51,641,039.76 - - - 50,480,333.32 1,026,312,712.28 -
3.3 As of June 30th 2022, 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 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
4. Revenue and cost of sales and services
Unit：RMB
First half year of 2022 First half year of 2021
Item
Revenue Cost Revenue Cost
Major business 10,333,485,585.25 2,123,002,343.03 11,407,122,363.03 2,425,620,927.40
Other business 1,430,584,072.30 58,524,277.39 1,510,604,022.70 83,678,648.34
Total 11,764,069,657.55 2,181,526,620.42 12,917,726,385.73 2,509,299,575.74
5. Investment income
Details of investment income
Unit：RMB
Item First half year of 2022 First half year of 2021
Investment income of other non-current financial assets during the
51,892,209.92 115,644,801.97
holding period
Long-term equity investment income measured by equity method 51,641,039.76 (3,799,685.50)
Long-term equity investment income calculated by cost method 22,171,425.49 3,500,000.00
Investment income from disposal of other non-current financial assets 1,260,000.00 -
Investment losses from disposal of held-for-trading financial assets (474,053.30) -
Investment losses from disposal of long-term equity investments - (3,387,647.37)
Total 126,490,621.87 111,957,469.10
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 (11,313,272.36) /
The government subsidies included in the current profits and
losses (excluding the government subsidy closely related to
regular course of business of the Company and government 161,588,740.80 /
subsidy based on standard quota or quantitative continuous
enjoyment according to the state industrial policy)
Investment income from disposal of subsidiaries, other business
4,635,870.42 /
units and other non-current financial assets
In addition to the Company's normal business related to the
effective hedging business, gains and losses on changes in fair
value arising from holding derivative financial assets, derivative
(35,838,000.40) /
financial liabilities, other non-current financial assets, and
investment gains from the disposal of the above-mentioned
financial assets/financial liabilities and receivables financing
Other non-operating income and expense except the items
28,455,075.15 /
mentioned above
Impact of income tax (16,882,070.40) /
The impact of minority equity (17,250,585.46) /
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Hikvision 2022 Half Year Report
Notes to Financial Statements
For the reporting period from January 1st 2022 to June 30th 2022
Item Amount Description
Total 113,395,757.75 /
2. Return on net assets and earnings per share
The return on net assets and earnings per share have been prepared by Hangzhou Hikvision Digital Technology Co.,
Ltd. in accordance with the Information Disclosure and Presentation Rules for Companies Making Public Offering
of Securities No. 9 – Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revised in 2010)
issued by China Securities Regulatory Commission.
Unit：RMB
Weighted Earnings per share
Profit for the reporting period average return on Basic earnings per Diluted earnings per
net assets (%) share share
Net profit attributable to ordinary shareholders of the
8.81% 0.608 0.608
Company
Net profit excluding non-recurring items of profit or loss
8.64% 0.596 0.596
attributable to ordinary shareholders of the Company
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Hikvision 2022 Half Year Report
Section XI Documents Available for Reference
1. The financial report was signed by the Company's legal representative.
2. The financial report was signed and sealed by the person in charge of the Company, the person in
charge of accounting work and person in charge of accounting organization.
3. Original copy of all the Company's documents and announcements were published on the
newspapers designated by CSRC within the reporting period.
The above documents are completely placed at the Company's Board of Directors’ office.
Hangzhou Hikvision Digital Technology Co., Ltd.
Chairman: Chen Zongnian
August 13th 2022
195
