Hangzhou Hikvision Digital Technology Co., Ltd.
2023 Half Year Report
January to June 2023
August 19, 2023
Hikvision 2023 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 2023 Half Year Report (“2023 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2023 Half Year Report may be obtained at www.cninfo.com.cn.
1
Hikvision 2023 Half Year Report
Please read the full half year report and pay particular attention to the following risk factors:
(1) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and
the operating environment in certain regions has deteriorated. The Company will adjust its marketing
resources based on business opportunities, but if the geopolitical environment get worse, the Company's
operations in certain countries and regions may be adversely affected.
(2) Global economic downside risk: The economic growth of some overseas countries slows down, the
potential risks such as economic fluctuation and debt default in various regions are difficult to eliminate.
At the same time, the domestic economy is switching to a new development mode and its pace of recovery
needs to be further observed. The Company disperses the operation risk of a single region with a wide
business layout. But the Company's business will also be impacted if there is a global economic recession.
(3) Supply chain risk: The global supply system is being undermined by politics. The Company has been
making efforts to build a diversified supply chain and optimize inventory adjustment and control.
However, if systemic risks arise in the global supply chain, the Company's operating capabilities may be
affected
(4) Technology upgrading risk: AI, big data, cloud computing, edge computing and other technologies
develop rapidly, and the iteration speed of science and technology application is fast. If the update and
change of cutting-edge technology cannot be closely tracked and the innovative development of business
cannot be realized quickly, the uncertainty of the Company's future development will increase.
(5) 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. The Company constantly strengthens the construction of legal compliance system since
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.
(6) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions,
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 affect the profitability level
of the Company.
2
Hikvision 2023 Half Year Report
(7) Financial risk caused by the decline of 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 its stable business operation, and the financing cost is low. If the overall liquidity
risk of the market increases, it will adversely affect the Company's account receivables due to the payment
collection speed of the Company may slow down.
(8) 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. The Company's sustainable development will face certain risks if the management level
fails to proportionally address the Company's business expansion.
(9) Risk of cybersecurity: The Company has always attached great importance and taken active measures
to enhance cybersecurity performance of our products and systems. But there is still a possibility of
deliberate attempts, including computer viruses, malicious software, hacker and others to intentionally
attack our systems or products, causing cybersecurity issues.
(10) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of
R&D investment, and produces considerable technical milestones. At the same time, the Company
implements well-organized intellectual property right (IPR) protection measures. However, the risk of
intellectual property disputes and the risk of intellectual property rights violations still exist.
The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential
investment risks.
3
Hikvision 2023 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 ...................................................................................... 31
Section VI Significant Events ........................................................................................................................... 32
Section VII Changes in Shares and Information about Shareholders ......................................................... 48
Section VIII Information of Preferred Shares ............................................................................................... 61
Section IX Bonds ............................................................................................................................................... 62
Section X Financial Report .............................................................................................................................. 63
Section XI Documents Available for Reference ........................................................................................... 199
4
Hikvision 2023 Half Year Report
Definitions
Term Definition
Reporting Period From January 1, 2023 to June 30, 2023
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 Technology Co., Ltd. (According to the context, also refers to the
corresponding business)
HikAuto, Auto electronics Hangzhou Hikauto Technology Ltd. (According to the context, also refers to the corresponding
business business)
HikMicro, Micro Sensing, Hangzhou Hikmicro Sensing Technology Ltd. (According to the context, also refers to the
Thermal imaging business corresponding business)
HikSemi Wuhan Hikstorage Technology Ltd. (According to the context, also refers to the corresponding
business)
HikImaging Hangzhou Hikimaging Technology Ltd. (According to the context, also refers to the
corresponding business)
HikFire Hangzhou Hikfire Technology Ltd. (According to the context, also refers to the corresponding
business)
HikRayin, Rayin, Hangzhou Rayin Technology Ltd. (According to the context, also refers to the corresponding
HikSecurityCheck business)
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.
Wuhan Intelligence Industrial Located in Wuhan, Hubei Province, the planned use is for production plants, warehouses and
Park supporting facilities.
EZVIZ Smart Home Product Located in Hangzhou, Zhejiang Province, is planned to be used for R&D, office space and
Industrial Park supporting facilities of Hangzhou EZVIZ Network Co., Ltd.
EZVIZ Intelligent Manufacturing Located in Chongqing City, the planned use is for production factories, warehouses, logistic
(Chongqing) Base centers and supporting facilities of Hangzhou EZVIZ Network Co., Ltd.
Located in Hangzhou, Zhejiang Province, the planned use is for production factories, warehouses,
Security Industrial Base (Tonglu)
logistic centers and supporting facilities.
Shijiazhuang Science and Located in Shijiazhuang, Hebei Province, the planned use is R&D, office space and supporting
5
Hikvision 2023 Half Year Report
Term Definition
Technology Park facilities.
Chongqing Science and
Located in Chongqing City, the planned use is R&D, office space and supporting facilities, etc.
Technology Park
Hefei Science and Technology Located in Hefei, Anhui Province, the planned use is R&D, office space and supporting facilities,
Park etc.
Zhengzhou Science and Located in Zhengzhou, Henan Province, the planned use is R&D, office space and supporting
Technology Park facilities, etc.
Nanchang Science and Located in Nanchang, Anhui Province, the planned use is R&D, office space and supporting
Technology Park facilities, etc.
Nanjing Science and Technology Located in Nanjing, Jiangsu Province, the planned use is R&D, office space and supporting
Park facilities, etc.
Hikvision Global Warehousing Located in Hangzhou, Zhejiang Province, the planned use is warehousing and logistics buildings
Logistics Center and supporting buildings.
Infrared Thermal Imaging
Located in Hangzhou, Zhejiang Province, is planned to be used for R&D, office space and
Complete Machine Products
supporting facilities of Hangzhou Hikimaging Technology Co., Ltd.
Industrial Park
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.
6
Hikvision 2023 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 2022 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
7
Hikvision 2023 Half Year Report
The media website and the securities exchange website for the disclosure of the Company Half Year report, and
the place where the Half Year Report is available for inspection remained unchanged during the reporting period.
For details, please refer to the 2022 Annual Report.
3. Other relevant information
Whether other relevant information has changed during the current reporting period
□ Applicable √ Inapplicable
IV. Key accounting data and financial indicators
Whether the Company performed a retrospective adjustment or restatement of previous accounting data
√ Yes □ No
Reasons for retroactive adjustment or restatement of the previous accounting data
√Changes in accounting policies
First half year of 2022 YoY Change (%)
First half year of
2023 Before the After the After the
adjustment adjustment adjustment
Revenue (RMB) 37,570,786,397.89 37,257,516,590.62 37,257,516,590.62 0.84%
Net profit attributable to shareholders
5,337,868,016.88 5,759,254,775.26 5,758,668,046.56 -7.31%
of the Company (RMB)
Net profit attributable to shareholders
of the Company excluding non- 5,036,128,632.96 5,645,859,017.51 5,645,272,288.81 -10.79%
recurring gains and losses (RMB)
Net cash flows from operating activities
1,026,390,862.80 -2,158,492,209.08 -2,158,492,209.08 147.55%
(RMB)
Basic earnings per share (RMB/share) 0.568 0.608 0.608 -6.58%
Diluted earnings per share (RMB/share) 0.568 0.608 0.608 -6.58%
Weighted average ROE 7.60% 8.81% 8.81% -1.21%
Change(%) between
On December 31, 2022 December 31, 2022
On June 30, 2023 and June 30, 2023
Before the After the After the
adjustment adjustment adjustment
Total assets (RMB) 118,917,248,075.44 119,233,282,761.47 119,234,602,968.11 -0.27%
Net assets attributable to shareholders
67,732,333,636.44 68,389,154,548.76 68,388,671,139.78 -0.96%
of the Company (RMB)
Reasons for changes in accounting policies and situations of correction of accounting errors
Note:
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business Enterprises (the
"Interpretation No. 16") on November 30, 2022. The scope of the initial recognition exemption for deferred income
tax in the Accounting Standards for Business Enterprises No. 18-Income Tax was revised. Making it clear that the
provisions on exemption of initial recognition of deferred income tax liabilities and deferred income tax assets in
8
Hikvision 2023 Half Year Report
Accounting Standards for Business Enterprises No. 18-Income Taxes shall not be applied if a single transaction is
not a business combination, that affects neither accounting profit nor taxable income (or deductible loss) when the
transaction occurs, and that initially recognized assets and liabilities result in equal taxable temporary differences
and deductible temporary differences. This provision is effective as of January 1, 2023 and may be implemented in
advance. The Group implemented this requirement from January 1, 2023, and accounted for individual transactions
between the beginning of the earliest period in which the financial statements are presented and December 31, 2022
using the retrospective adjustment method, and restated the financial statements for the comparative period.
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) 9,330,600,931
Fully diluted earnings per share (RMB/share) calculated with the latest share capital 0.572
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
-3,226,747.72
provision of assets)
The government subsidies included in the current profits and losses (excluding the government
245,104,357.89
subsidy closely related to regular course of business of the Company and government subsidy based
9
Hikvision 2023 Half Year Report
Item Amount
on standard quota or quantitative continuous application according to the state industrial policy.)
Profits and losses attributed to change in fair value for held-for-trading financial assets and held-for-
trading financial liabilities; and investment income from disposal of held for-trading financial assets,
-16,837,465.82
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.
The profit and loss of business combination under different control realized in stages by multiple
116,433,610.45
transactions
Other non-operating income and expenditures except the items mentioned above 50,494,516.61
Less: Impact of income tax 29,677,695.82
Impact of the minority interests (after tax) 60,551,191.67
Total 301,739,383.92
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.
10
Hikvision 2023 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 2022 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 2022 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 2023, the global economy fluctuated continuously and the trading environment changed
constantly, bringing continuous challenges to the Company's operation. The domestic economy and the market
demand is still gradually recovering. Hikvision maintains its strength in a complex and changeable environment,
adhere to the business philosophy of "professionalism, honesty, and integrity" and responded to the uncertainties in
a proactive and prudent manner. To promote robust development, the Company has firmed its confidence and has
always focused on the growth of its own capabilities.
During the reporting period, the Company achieved revenue of RMB37.57 billion, with year over year growth of
0.84%; the net profits attributable to shareholders of the Company was RMB5.34 billion, a decrease of 7.31% over
the same period of the previous year.
(1) Maintain inputs in R&D and build differentiated advantages
During the reporting period, the Company focused on the main business channel, guided by strategy, continuously
strengthened its technical reserves, and consolidated its overall strength and foundation for long-term sustainable
development. In the first half year of 2023, the Company invested RMB5.29 billion in R&D, with year over year
11
Hikvision 2023 Half Year Report
growth of 13.06%. The Company will continue to maintain investment in R&D, maintain its ability advantages in
technology productization and product commercialization. The Company will also continue to build and enhance
its differentiation advantages, and maintain its leading position in products and solutions, so as to promote the
Company's steady development in the field of AIoT.
(2) Make effective growth and optimize resource investment
During the reporting period, the domestic economy gradually recovered. The Company made great efforts to
consolidate its business foundation, pay attention to the quality of revenue and strive for effective growth. To well
adjust to the economic development and geopolitical environment in different regions of overseas markets, the
Company timely adjusted its resources and optimized its business layout to ensure the steady progress of its business.
(3) Optimize and improve internal management to improve operational efficiency
During the reporting period, the Company continued to promote business process reform, promote the integration
and mutual improvement of organizational systems, activate the innovation ability of the organization, orderly
promote various changes of the organization and talents, and improve the ability and efficiency of the organization.
The Company also continue to improve the construction of the compliance system, effectively control risks and
adhere to compliance operations.
(4) Rapidly develop innovative businesses and make development more resilient
During the reporting period, the revenue of innovative businesses reached RMB8.19 billion, with year over year
growth of 16.85%, accounting for 21.80% of the total revenue. The good development of innovative business has
become a strong engine for the long-term sustainable development of the company. As the first subsidiary of
Hikvision to be successfully spin-off and listed, EZVIZ was listed on Shanghai Stock Exchange's Science and
Technology Innovation Board on December 28, 2022. HikRobot's spin-off and listing plan has been accepted by
the Shenzhen Stock Exchange, and the spin-off of innovative business subsidiaries were progressing steadily and
orderly. The main business and innovative business of the Company have formed a relatively resilient business
portfolio, laying a solid foundation for the long-term sustainable development of the Company.
12
Hikvision 2023 Half Year Report
YoY changes in key financial data
Unit: RMB
First half year of First half year of
YoY (%) Note of Change
2023 2022
Revenue 37,570,786,397.89 37,257,516,590.62 0.84% No significant change
Total operating costs 20,594,523,514.10 21,182,955,700.93 -2.78% No significant change
Continue to increase investment in domestic
Selling expenses 4,887,451,798.48 4,536,589,939.10 7.73%
and overseas marketing networks
Due to the expansion of the Company's
Administrative expenses 1,274,582,030.17 1,200,010,815.48 6.21% business scale and increased number of
employees
Affected by fluctuation in foreign exchange
Financial expenses -567,373,249.81 -785,465,257.61 27.77% rate, decrease in foreign currency exchange
gains
Income Tax Expenses 490,214,292.26 628,993,865.94 -22.06% Decrease in profit before tax
R&D investments 5,285,435,437.59 4,675,061,688.81 13.06% Continue to increase R&D investment
Net cash flows from
1,026,390,862.80 -2,158,492,209.08 147.55% Increase in cash collection
Operating Activities
Net cash flows from Increase in long-term asset investment
-2,084,866,544.28 -1,697,236,516.09 -22.84%
Investment Activities expenditures
Net cash flows from 2021 restricted stock subscription money
-4,394,856,598.02 -3,061,978,055.06 -43.53%
Financing Activities was received at the same period of last year
Net decrease in cash and Impacted by the increase in cash flow
-5,292,793,327.44 -6,845,043,236.57 22.68%
cash equivalents generated by operating activities
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.
Revenue structure
Unit：RMB
First half year of 2023 First half year of 2022
YoY Change
Proportion to total Proportion to total
Amount Amount (%)
revenue revenue
Total revenue 37,570,786,397.89 100.00% 37,257,516,590.62 100.00% 0.84%
Classified by industry
AIoT products and services 37,570,786,397.89 100.00% 37,257,516,590.62 100.00% 0.84%
13
Hikvision 2023 Half Year Report
First half year of 2023 First half year of 2022
YoY Change
Proportion to total Proportion to total
Amount Amount (%)
revenue revenue
Classified by product/business
Products and services for
28,634,288,679.38 76.21% 29,365,919,626.68 78.82% -2.49%
main business1
Constructions for main
748,219,037.49 1.99% 883,860,678.27 2.37% -15.35%
business
Subtotal 29,382,507,716.87 78.20% 30,249,780,304.95 81.19% -2.87%
Robotic business 2,278,447,297.18 6.06% 1,766,179,532.22 4.74% 29.00%
Smart home business 2,183,062,932.81 5.81% 1,959,836,601.63 5.26% 11.39%
Thermal imaging business 1,475,222,288.91 3.93% 1,360,474,051.98 3.65% 8.43%
Auto electronics business 1,001,472,278.41 2.67% 823,757,230.56 2.21% 21.57%
Storage business 792,630,227.93 2.11% 728,160,403.93 1.95% 8.85%
Other innovative businesses2 457,443,655.78 1.22% 369,328,465.35 1.00% 23.86%
Subtotal 8,188,278,681.02 21.80% 7,007,736,285.67 18.81% 16.85%
Classified by region
Domestic 25,503,419,211.78 67.88% 25,544,764,018.60 68.56% -0.16%
Overseas 12,067,367,186.11 32.12% 11,712,752,572.02 31.44% 3.03%
Revenue structure3
Unit: RMB 100mn
First half year of First half year of YoY Change
2023 2022 (%)
PBG 62.73 69.75 -10.06%
Domestic main EBG 69.96 68.31 2.42%
business SMBG 57.52 62.86 -8.50%
Other products and services for main business 4.53 4.72 -4.03%
Overseas main
Products and services for main business 99.09 96.86 2.30%
business
Innovative businesses4 81.88 70.08 16.85%
Total 375.71 372.58 0.84%
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.
4 Innovative businesses’ revenue includes its domestic and overseas revenue.
14
Hikvision 2023 Half Year Report
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
Gross YoY Change (%)
Revenue Operating costs (%) of (%) of gross
margin of operating costs
revenue margin
Classified by industry
AIoT products and
37,570,786,397.89 20,594,523,514.10 45.18% 0.84% -2.78% 2.04%
services
Classified by product/business
Products and services
28,634,288,679.38 15,155,184,539.95 47.07% -2.49% -6.83% 2.46%
for main business
Constructions for
748,219,037.49 565,835,111.46 24.38% -15.35% -22.37% 6.85%
main business
Innovative businesses 8,188,278,681.02 4,873,503,862.69 40.48% 16.85% 16.39% 0.23%
Subtotal 37,570,786,397.89 20,594,523,514.10 45.18% 0.84% -2.78% 2.04%
Classified by region
Domestic 25,503,419,211.78 13,940,702,523.40 45.34% -0.16% -4.78% 2.65%
Overseas 12,067,367,186.11 6,653,820,990.70 44.86% 3.03% 1.69% 0.72%
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
Total operating costs structure
Classified by industry
Unit: RMB
First half year of 2023 First half year of 2022
Proportion to Proportion to YoY
Industry Item
Amount operating Amount operating Change (%)
costs costs
AIoT products and
Operating costs 20,594,523,514.10 100.00% 21,182,955,700.93 100.00% -2.78%
services
Classified by product/business
15
Hikvision 2023 Half Year Report
Unit: RMB
First half year of 2023 First half year of 2022
Proportion to Proportion to YoY
Product/business Item
Amount operating Amount operating Change (%)
costs costs
Products and Services Operating costs
15,155,184,539.95 73.59% 16,266,758,741.00 76.79% -6.83%
for main business
Constructions for main Operating costs
565,835,111.46 2.75% 728,908,400.81 3.44% -22.37%
business
Innovative businesses Operating costs 4,873,503,862.69 23.66% 4,187,288,559.12 19.77% 16.39%
Subtotal Operating costs 20,594,523,514.10 100.00% 21,182,955,700.93 100.00% -2.78%
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
Unit：RMB
June 30, 2023 December 31, 2022 Change between
Percentage Percentage December 31,
Note of significant change
Amount to total Amount to total 2022 and June
assets assets 30, 2023
Cash dividend distributions
Cash and bank
34,670,255,152.86 29.15% 40,011,863,999.94 33.56% -4.41% lead to a decrease in cash and
balances
bank balances
Accounts
31,626,699,148.70 26.60% 29,906,294,410.40 25.08% 1.52% Due to the increase in revenue
receivable
Contract assets 1,872,717,726.22 1.57% 2,118,223,370.98 1.78% -0.21% No significant change
Inventories 19,597,538,003.71 16.48% 18,998,222,978.81 15.93% 0.55% No significant change
16
Hikvision 2023 Half Year Report
June 30, 2023 December 31, 2022 Change between
Percentage Percentage December 31,
Note of significant change
Amount to total Amount to total 2022 and June
assets assets 30, 2023
Long-term
equity 1,120,713,426.25 0.94% 1,252,033,513.41 1.05% -0.11% No significant change
investment
Chengdu Science and
Fixed assets 9,885,673,844.45 8.31% 8,539,842,630.68 7.16% 1.15% Technology Park project
transferred to fixed assets
Construction in
3,807,474,388.06 3.20% 3,770,803,300.80 3.16% 0.04% No significant change
process
Right-of-use
585,503,726.85 0.49% 574,478,326.31 0.48% 0.01%
assets No significant change
Lease liabilities 300,219,397.39 0.25% 277,255,924.83 0.23% 0.02%
Short-term
3,150,804,135.09 2.65% 3,343,071,972.89 2.80% -0.15% No significant change
borrowings
Contract
2,770,165,430.62 2.33% 2,644,496,508.36 2.22% 0.11% No significant change
liabilities
Long-term
9,698,069,194.58 8.16% 7,522,315,341.60 6.31% 1.85%
borrowings
Increase in demands for long-
term working capital
Non-current
liabilities due 2,148,355,742.78 1.81% 868,197,272.46 0.73% 1.08%
within one year
2. Main overseas assets
□ Applicable √ Inapplicable
17
Hikvision 2023 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 during the current during the
period
reporting period in foreign currency reporting period period
Financial assets
Derivative financial assets 12,807,438.36 -1,858,710.03 10,948,728.33
Other non-current financial assets 423,893,239.94 30,092,421.70 20,837,425.00 474,823,086.64
Receivables for financing 1,484,218,258.74 18,688,719.47 1,502,906,978.21
Subtotal of financial assets 1,920,918,937.04 28,233,711.67 39,526,144.47 1,988,678,793.18
Financial Liabilities 68,299,685.57 18,355,299.29 4,593.42 49,948,979.70
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 147,657,965.73 Various cash deposits and other restricted funds
Notes receivable 1,044,866,654.87 Endorsed to suppliers, discounted to the bank
Accounts receivable 335,127,298.72 Pledge for long-term borrowings
Contract assets 235,324,648.36 Pledge for long-term borrowings
18
Hikvision 2023 Half Year Report
Item Closing book value (RMB) Reasons for being restricted
Fixed assets 137,654,210.43 Fixed assets leased by operating leases
Intangible assets 38,344,908.58 Pledge and collateral for long-term borrowings
Other non-current assets 1,542,940,336.45 Pledge for long-term borrowings
Total 3,481,916,023.14 -
VI. Analysis of investments
1. Overview
√Applicable □ Inapplicable
Investment during the first half year of 2023 (RMB) Investment during the first half year of 2022 (RMB) YoY (%)
1,920,765,797.38 2,343,440,503.77 -18.04%
2. Significant equity investment during the current reporting period
□Applicable √ Inapplicable
3. Significant non-equity investment during the current reporting period
√ Applicable □ Inapplicable
19
Hikvision 2023 Half Year Report
Unit: RMB
Cumulative Reasons for not
Fixed
Investment during amount of reaching planned Disclosure
Invest assets Project Project Disclosure Index (if
Project name the current investment by the Source of funds progress and Date (if
method investme industry schedule applicable)
reporting period end of the current expected benefits applicable)
nt or not
reporting period
Announcement on
AIoT
Investment and Construction
Chengdu Science and Self- products September
YES 4,687,853.06 1,429,368,089.70 Self-fund 100.00% None of Chengdu Science and
Technology Park Project built and 23, 2017
Technology Park Project in
services
Chengdu (No. 2017-033)
Announcement on
AIoT
Investment and Construction
Xi'an Science and Self- products September
YES 195,528,421.92 705,669,450.47 Self-fund 41.27% None of Xi'an Science and
Technology Park Project built and 23, 2017
Technology Park in Xi'an
services
(No. 2017-031)
Announcement on
AIoT
Investment and Construction
Wuhan Intelligence Self- products September
YES 195,908,696.98 558,403,968.14 Self-fund 49.33% None of Wuhan Intelligence
Industrial Park Project built and 23, 2017
Industrial Park in Wuhan
services
(No. 2017-036)
AIoT
EZVIZ Smart Home Product Self-fund
Self- products
Industrial Base Project YES 156,065,215.88 438,190,505.80 /specific loan/ 58.19% None - -
built and
(Infrastructure Part) raised fund
services
EZVIZ Intelligent Announcement on
Self- Smart Self-fund / August 11,
Manufacturing Chongqing YES 358,404,151.18 430,577,169.38 36.80% None Investment and Construction
built home raised fund 2021
Base Project(Infrastructure of EZVIZ Intelligent
20
Hikvision 2023 Half Year Report
Cumulative Reasons for not
Fixed
Investment during amount of reaching planned Disclosure
Invest assets Project Project Disclosure Index (if
Project name the current investment by the Source of funds progress and Date (if
method investme industry schedule applicable)
reporting period end of the current expected benefits applicable)
nt or not
reporting period
Part) Manufacturing Chongqing
Base by the holding
subsidiary (No. 2021-052)
AIoT
Security Industrial Base Self- products
YES 119,474,927.11 375,876,041.10 Self-fund 60.48% None - -
(Tonglu) Phase III built and
services
Announcement on
AIoT Investment and Construction
Shijiazhuang Science and Self- products March 22, of Shijiazhuang Science and
YES 89,995,352.55 330,982,988.46 Self-fund 45.75% None
Technology Park Project built and 2018 Technology Park in
services Shijiazhuang (No. 2018-
016)
AIoT
Chongqing Science and
Self- products
Technology Park Project YES 51,309,925.44 140,147,442.65 Self-fund 38.03% None - -
built and
Phase III
services
AIoT
Hefei Science and Self- products
YES 41,257,495.99 137,581,753.67 Self-fund 29.13% None - -
Technology Park Project built and
services
Zhengzhou Science and Self- AIoT
YES 38,145,501.95 132,040,277.94 Self-fund 34.30% None - -
Technology Park Project built products
21
Hikvision 2023 Half Year Report
Cumulative Reasons for not
Fixed
Investment during amount of reaching planned Disclosure
Invest assets Project Project Disclosure Index (if
Project name the current investment by the Source of funds progress and Date (if
method investme industry schedule applicable)
reporting period end of the current expected benefits applicable)
nt or not
reporting period
and
services
AIoT
Nanchang Science and Self- products
YES 26,125,787.16 81,425,062.83 Self-fund 21.93% None -
Technology Park Project built and
services
AIoT
Nanjing Science and Self- products
YES 19,165,549.88 78,496,222.18 Self-fund 17.15% None -
Technology Park Project built and
services
Announcement on
AIoT
Hikvision Global Investment and Construction
Self- products January 19,
Warehousing Logistics YES 52,260,379.51 74,098,726.64 Self-fund 56.94% None of Hikvision Global
built and 2022
Center Phase I Warehousing Logistics
services
Center (No. 2022-010)
Announcement on
Investment and Construction
AIoT
Infrared Thermal Imaging of Infrared Thermal Imaging
Self- products January 19,
Complete Machine Products YES 62,301,460.63 62,670,995.69 Self-fund 6.98% None Complete Machine Products
built and 2022
Industrial Base Industrial Base by the
services
holding subsidiary (No.
2022-008)
Total -- -- -- 1,410,630,719.24 4,975,528,694.65 -- -- -- -- --
22
Hikvision 2023 Half Year Report
Note 1: In accordance with the Company's Authorization Management System, EZVIZ Smart Home Product Industrial Base Project, Security Industrial Base (Tonglu)
Phase III Project, Hefei Science and Technology Park Project, Zhengzhou Science and Technology Park Project, Nanchang Science and Technology Park Project and
Nanjing Science and Technology Park Project were approved by the chairman of the Board of Directors.
Note 2: Chongqing Science and Technology Park Project Phase III was 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 September September
No No exchange 235,153.63 235,153.63 285,536.90 216,225.72 3.19% -6,342.65
bank 28, 2022 8, 2023
contract
Total 235,153.63 -- -- 235,153.63 285,536.90 216,225.72 3.19% -6,342.65
Capital source of derivatives investment Company's own fund
Prosecution (if applicable) Inapplicable
Announcement date for approvals of April 15, 2023
23
Hikvision 2023 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,
2023 (NO. 2023-016) dated April 15, 2023.
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, the Company
period; specific methods, related recognised and measured a total of RMB16.50 million as profit from changes in the fair value of derivatives. The fair value is determined according
assumptions and parameter setting of the to the exchange rate and interest rate provided by banks and other pricing service institutions, and the fair value is measured and recognised on a
derivatives' fair value analysis should be 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 approval for conducting foreign exchange hedging business, and formulated the Foreign Exchange Hedging Management System. The relevant
derivatives investments and risk control internal control procedures have been improved, and the targeted risk control measures adopted by the Company are feasible and effective. The
from independent directors Company has issued a feasibility analysis report on the proposed foreign exchange hedging business, and it is reasonable and feasible for the
Company to carry out hedging business based on avoiding foreign exchange market risks. Under the premise of ensuring normal production and
operation, the Company conducts foreign exchange hedging business, which enables the Company to avoid and prevent sharp exchange rate
24
Hikvision 2023 Half Year Report
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, especially minority shareholders.
5. Use of raised funds
□ Applicable √ Inapplicable
During the reporting period, there was no use of raised fund
The details of the use of funds raised by EZVIZ Network, the Company's holding subsidiary, was disclosed on August 5, 2023 in Half Year Report of Hangzhou
EZVIZ Network Co., Ltd Section VI (12) - Progress of the Use of Funds Raised on the website of Shanghai Stock Exchange ( www.sse.com.cn).
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
25
Hikvision 2023 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
Wuhu Sensortech Intelligent Technology Ltd and its
Transfer of equity in cash Business development
subsidiaries
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) Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and the
operating environment in certain regions has deteriorated. The Company will adjust its marketing resources
based on business opportunities, but if the geopolitical environment get worse, the Company's operations in
certain countries and regions may be adversely affected.
(2) Global economic downside risk: The economic growth of some overseas countries slows down, the potential
risks such as economic fluctuation and debt default in various regions are difficult to eliminate. At the same
time, the domestic economy is switching to a new development mode and its pace of recovery needs to be
further observed. The Company disperses the operation risk of a single region with a wide business layout. But
the Company's business will also be impacted if there is a global economic recession.
(3) Supply chain risk: The global supply system is being undermined by politics. The Company has been making
efforts to build a diversified supply chain and optimize inventory adjustment and control. However, if systemic
26
Hikvision 2023 Half Year Report
risks arise in the global supply chain, the Company's operating capabilities may be affected
(4) Technology upgrading risk: AI, big data, cloud computing, edge computing and other technologies develop
rapidly, and the iteration speed of science and technology application is fast. If the update and change of
cutting-edge technology cannot be closely tracked and the innovative development of business cannot be
realized quickly, the uncertainty of the Company's future development will increase.
(5) 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. The
Company constantly strengthens the construction of legal compliance system since 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.
(6) Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions,
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 affect the profitability level of
the Company.
(7) Financial risk caused by the decline of 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 its stable business operation, and the financing cost is low. If the overall liquidity risk of the
market increases, it will adversely affect the Company's account receivables due to the payment collection
speed of the Company may slow down.
(8) 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. The Company's
sustainable development will face certain risks if the management level fails to proportionally address the
Company's business expansion.
(9) Risk of cybersecurity: The Company has always attached great importance and taken active measures to
enhance cybersecurity performance of our products and systems. But there is still a possibility of deliberate
attempts, including computer viruses, malicious software, hacker and others to intentionally attack our systems
27
Hikvision 2023 Half Year Report
or products, causing cybersecurity issues.
(10) Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of R&D
investment, and produces considerable technical milestones. At the same time, the Company implements well-
organized intellectual property right (IPR) protection measures. However, the risk of intellectual property
disputes and the risk of intellectual property rights violations still exist.
28
Hikvision 2023 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
14 proposals including the 2022
Annual Report and Summary were
2022 Annual Annual General
67.0703 % May 9, 2023 May 10, 2023 reviewed and voted. For details,
General Meeting Meeting
please refer to the Company's
announcement: No. 2023-025
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 2022 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 2023.
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 reviewed and approved The Proposal of Unlocking Conditions for the
29
Hikvision 2023 Half Year Report
Third Unlocking Period of the 2018 Restricted Stock Plan were not Meet and The Proposal of the Repurchase of
Restricted Shares that have been Granted but not yet Unlocked.
On April 13, 2023 and May 9, 2023, the 17th meeting of the 5th session of the Board of Directors, the 15th meeting
of the 5th session of the Board of Supervisors and 2022 Annual General Meeting reviewed and approved the
Proposal of Unlocking Conditions for the Third Unlocking Period of the 2018 Restricted Plan were not Meet and
the Proposal of the Repurchase of Restricted Shares that have been Granted but not yet Unlocked. As the Company
performance did not meet the unlocking conditions for the third unlocking period of the 2018 Restricted Stock Plan
(Revised Draft), 33,331,858 restricted shares granted but not unlocked in the current period for all grantees of the
2018 Restricted Stock Plan were repurchased and cancelled. And the Company had completed the cancellation
procedures for the above shares at the Shenzhen branch of China Securities Depository and Clearing Ltd. on July 5,
2023.
For details, please refer to The Proposal of Unlocking Conditions for the Third Unlocking Period of the 2018
Restricted Plan were not Meet and The Proposal of the Repurchase of Restricted Shares that have been Granted but
not yet Unlocked (2023-021) published by the Company on www.cninfo.com.cn on April 15, 2023 and The Proposal
of the Completed Cancellation of the Restricted Shares that have been Granted but not yet Unlocked for the Third
Uncloking Period of the 2018 Restricted Plan (2023-028) published by the Company on www.cninfo.com.cn on
July 7, 2023.
As of the end of the current reporting period, the Company has a total of 130,734,463 granted but unvested shares,
accounting for 1.40% of the Company's total share capital at the end of the reporting period.
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 2021 restricted share incentive scheme is amortized during the
vesting period.
During the reporting period, the amortization cost of the Company's 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.
30
Hikvision 2023 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.
31
Hikvision 2023 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
32
Hikvision 2023 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
33
Hikvision 2023 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 97,591.20 4.96% 350,000 No
Company's actual delivery
CETC
controller.
Joint ventures in which
Payment on Announcement
Joint ventures the Company holds Procurement 75.60 0.00% 2,100 No
delivery on the forecast
shares Reference
Procurement of daily related-
Associated companies market price; April 15,
, receiving Payment on party
Associated companies in which the Company Procurement Agreed on 9,858.60 0.50% 73,000 No 2023
services delivery transactions in
holds shares price
2023 (No. 2023-
Enterprises with Enterprises with
015)
directors, supervisors, directors, supervisors,
senior executives and senior executives and Payment on
Procurement 60,230.75 3.06% 220,050 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 11,761.77 0.31% 70,000 No
Company's actual delivery of daily related-
CETC selling market price; April 15,
controller. party
products, Agreed on 2023
Joint ventures in which transactions in
commercial price Payment on
Joint ventures the Company holds Sales 1,962.54 0.05% 14,600 No 2023 (No. 2023-
goods delivery
shares 015)
34
Hikvision 2023 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 2,786.26 0.07% 20,450 No
delivery
holds shares
Enterprises with Enterprises with
directors, supervisors, directors, supervisors,
senior executives and senior executives and Payment on
Sales 611.91 0.02% 8,700 No
related natural persons related natural persons delivery
of the Company of the Company serving
serving as directors as directors
Announcement
on the forecast
Under the common Renting Reference
Subsidiaries or of daily related-
control of the house from market price Based on April 15,
research institutes of Lease 107.65 0.86% 500 No party
Company's actual related agreed by both contract 2023
CETC transactions in
controller. parties parties
2023 (No. 2023-
015)
Total 184,986.28 759,400
Details on significant sales return None
The above trading quotas include newly increased forecast quota amount of RMB5,000,000 for procurement and receiving services
from associated companies, amount of RMB2,000,000 for selling products, commercial goods, and providing services from
Total amount of related transactions projected based on
associated companies, and amount of RMB47,000,000 for selling products, commercial goods, and providing services from
different categories, and the actual performance during the
enterprises with directors, supervisors, senior executives and related natural persons of the Company serving as directors. Those
current reporting period (if any)
forecast quota amount has been approved by the Chairman of the Company according to related regulations and the Company's
Management System of Related Transaction.
35
Hikvision 2023 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
Reasons on significant difference between trading price and
Not applicable
market referencing price (if applicable)
36
Hikvision 2023 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
√ Applicable □ Inapplicable
Deposit business
Amount incurred
Maximum daily Deposit Total deposit Total amount
Related Opening balance Closing 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 0.25%-
Finance 1,459,403.08 400,003.35 426.87 416.60 400,013.62
of the Company's 2.0%
Co., Ltd.
ultimate controller
Credit or other financial services
Total amount Actual amount incurred
Related party Relationship Business type
(0,000 RMB) (0,000 RMB)
Under the common control of Other
CETC Finance Co., Ltd. the Company's ultimate financial 600,000.00 141,000.00
controller services
Note: The above occurred amount is the amount of issued entrusted loan to subsidiaries through CETC Finance Co., Ltd. during the
reporting period.
37
Hikvision 2023 Half Year Report
6. Transactions between the financial company controlled by the Company and related parties
□ Applicable √ Inapplicable
7. Other significant related party transactions
□ Applicable √ Inapplicable
No such case in the reporting period.
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
No such case in the reporting period.
38
Hikvision 2023 Half Year Report
2. Significant guarantees
√Applicable □ Inapplicable
Unit: 0,000 RMB
Guarantees provided by the Company to its subsidiaries
Guarantee
Disclosure date of Actual for a
Guarantee Actual guaranteed Type of Fulfilled
Guaranteed party announcement of the occurrence Term of guarantee related
cap amount guarantee or not
guarantee cap date party or
not
Hangzhou Hikvision Technology December 1,
April 15, 2023 1,250,000 649,150.78 Joint guarantee 2019.12.01-2025.09.25 No No
Ltd. 2019
Luopu HaiShi Ding Xin Electronic March 26,
April 15, 2023 29,000 21,000.00 Joint guarantee 2019.03.26-2035.03.26 No No
Technology Ltd. 2019
Piahan HaiShi Yong An Electronic March 26,
April 15, 2023 28,000 20,178.00 Joint guarantee 2019.03.26-2040.03.26 No No
Technology Ltd. 2019
Urumqi HaiShi Xin'An Electronic March 26,
April 15, 2023 37,000 19,280.29 Joint guarantee 2019.03.26-2028.06.20 No No
Technology Ltd 2019
Moyu HaiShi Electronic March 26,
April 15, 2023 24,000 16,620.00 Joint guarantee 2019.03.26-2035.03.26 No No
Technology Ltd. 2019
Hangzhou Hikvision System March 23,
April 15, 2023 80,000 11,830.88 Joint guarantee 2021.03.23-2024.04.12 No No
Technology Ltd. 2021
Yu Tian HaiShi Mei Tian March 26,
April 15, 2023 30,000 9,480.00 Joint guarantee 2019.03.26-2034.03.26 No No
Electronic Technology Ltd. 2019
Xi'an Hikvision Digital September
April 15, 2023 24,000 4,421.14 Joint guarantee 2022.09.29-2024.02.23 No No
Technology Ltd 29, 2022
Chongqing Hikvision Technology April 15, 2023 27,000 March 23, 4,131.14 Joint guarantee 2021.03.23-2024.03.30
39
Hikvision 2023 Half Year Report
Ltd. 2021
Nanjing Hikvision Digital June 30,
April 15, 2023 12,000 3,853.70 Joint guarantee 2022.06.28-2025.06.30 No No
Technology Ltd. 2022
Hangzhou Hikvision Electronics October 12,
April 15, 2023 45,000 701.26 Joint guarantee 2022.10.12-2024.03.30 No No
Ltd. 2022
Chongqing Hikvision System March 30,
April 15, 2023 6,000 561.85 Joint guarantee 2023.03.30-2024.07.24 No No
Technology Ltd. 2023
Hikvision International Co., Ltd. April 15, 2023 151,200 Not happened during the reporting period
Wuhan Haorong Technology Ltd. April 15, 2023 30,000 Not happened during the reporting period
Hikvision Technology Singapore
April 15, 2023 25,000 Not happened during the reporting period
Pte. Ltd.
Shijiazhuang Hikvision
April 15, 2023 12,000 Not happened during the reporting period
Technology Ltd.
Prama Hikvision India Private
April 15, 2023 9,000 Not happened during the reporting period
Limited
Zhengzhou Hikvision Digital
April 15, 2023 8,500 Not happened during the reporting period
Technology Ltd.
Chengdu Hikvision Digital
April 15, 2023 6,000 Not happened during the reporting period
Technology Ltd.
Hefei Hikvision Digital
April 15, 2023 3,500 Not happened during the reporting period
Technology Ltd.
Hikvision Digital Technology
April 15, 2023 3,000 Not happened during the reporting period
(Shanghai) Ltd.
Fuzhou Hikvision Digital
April 15, 2023 2,500 Not happened during the reporting period
Technology Ltd.
Hikvision UK Limited April 15, 2023 2,000 Not happened during the reporting period
40
Hikvision 2023 Half Year Report
Nanchang Hikvision Digital
April 15, 2023 2,000 Not happened during the reporting period
Technology Ltd.
Wuhan Hikvision Technique Ltd April 15, 2023 1,000 Not happened during the reporting period
Total guarantee cap for subsidiaries approved during the Total actual guarantee amount for
1,847,700.00 subsidiaries during the reporting period 982,288.18
reporting period (B1) (B2)
Total actual guarantee balance for
Total approved guarantee cap for subsidiaries at the end of
1,847,700.00 subsidiaries at the end of the reporting 761,209.04
the reporting period (B3)
period (B4)
Guarantees provided by subsidiaries of the Company to their subsidiaries
Guarantee
Disclosure date of Actual
Guarantee Actual guaranteed Type of Fulfilled for a
Guaranteed party announcement of the occurrence Term of guarantee
cap amount guarantee or not related
guarantee cap date
party or not
Hangzhou Haikang Intelligent March 14, 2022.03.14-
April 15, 2023 80,000 19,835.77 Joint guarantee No No
Technology Ltd. 2022 2024.03.01
Wuhu Sensortech Intelligent September Joint guarantee 2022.09.27-
April 15, 2023 6,500 4,777.60 No No
Technology Ltd. 27, 2022 2024.01.16
Hangzhou Hikmicro Intelligent November Joint guarantee
April 15, 2023 92,000 4,327.06 2022.11.02-2024.04.12 No No
Technology Ltd. 2, 2022
July 28, Joint guarantee 2022.07.28-
Sensortech Hebei Technology Ltd. April 15, 2023 12,000 11,000.00 No No
2022 2023.12.12
August 18, Joint guarantee 2022.08.18-
Chongqing EZVIZ Electronic Ltd. April 15, 2023 30,000 800.00 No No
2022 2023.08.18
Hangzhou Hikrobot Intelligence June 13, Joint guarantee 2023.06.13-
April 15, 2023 80,000 600.00 No No
Ltd. 2023 2024.04.12
Hangzhou Hikmicro Software Ltd. April 15, 2023 10,000 Not happened during the reporting period
41
Hikvision 2023 Half Year Report
Hangzhou Hikstorage Technology
April 15, 2023 10,000 Not happened during the reporting period
Ltd.
Wuhan Hikfire Technology Ltd April 15, 2023 3,000 Not happened during the reporting period
Zhejiang Hikfire Technology Ltd April 15, 2023 3,000 Not happened during the reporting period
Total actual guarantee amount for
Total guarantee cap for subsidiaries approved during the
326,500.00 subsidiaries during the reporting period 52,044.79
reporting period (C1)
(C2)
Total actual guarantee balance for
Total approved guarantee cap for subsidiaries at the end of
326,500.00 subsidiaries at the end of the reporting 41,340.43
the reporting period (C3）
period (C4)
The total amount of Company's guarantees (that is, the total of the first three items)
Total guarantee cap approved during the reporting period Total actual guarantee amount during
2,174,200.00 1,034,332.97
（A1+B1+C1） the reporting period（A2+B2+C2）
Total actual guarantee balance at the
Total approved guarantee cap at the end of reporting period
2,174,200.00 end of the reporting period 802,549.47
（A3+B3+C3）
（A4+B4+C4）
Portion of the total actual guarantee (A4+B4+C4) amount
11.85%
in net assets of the Company
Of which:
The balance of guarantee for shareholders, actual
0
controllers and their affiliates. (D)
Amount of debt guarantees provided directly or indirectly
765,545.59
for 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
765,545.59
guarantees (D+E+F)
42
Hikvision 2023 Half Year Report
In the case of unexpired guarantee contracts, a description
of the circumstances in which the guarantee liability
Inapplicable
occurred or there was evidence that possible joint and
several liability during the reporting period (if any)
An explanation of the external provision of guarantees in
Inapplicable
violation of prescribed procedures (if any)
43
Hikvision 2023 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
1. Repurchase of the Company's Public Shares
On September 15, 2022 and October 10, 2022, the Company held the 13th meeting of the 5th session of the Board of
Directors and the second extraordinary general meeting of shareholders in 2022 respectively, deliberated and
approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approved the Company
using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by
means of centralized bidding through the trading system of the SZSE, the aggregate amount of repurchase funds
shall not exceed RMB2.5 billion (inclusive) and not less than RMB2 billion (inclusive), the repurchase price shall
not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months
from the date of the general meeting of shareholders of the Company at which the proposal on the plan of repurchase
part of the Company's public shares is reviewed and approved, and the Company will make repurchase decisions
and implement them based on market conditions during the repurchase period. The shares repurchased by the
Company will be cancelled for reducing the registered capital according to law. For details, please refer to the
Announcement on Resolutions of 13th Meeting of the 5th Session of the Board of Directors (Announcement No.:
2022-049), the Announcement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.:
2022-050), the Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in
2022 (Announcement No.: 2022-056), the Report on the Plan of Repurchase Part of the Company's Public Shares
(Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on September
16, 2022 and October 11, 2022. On October 11, 2022, the Company first repurchased 6,820,968 shares of the
Company by means of centralized bidding through a dedicated securities account for the repurchase, accounting for
44
Hikvision 2023 Half Year Report
0.0723% of the Company's total share capital at that time. The highest transaction price was RMB29.65 per share,
the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67
(excluding transaction fees). For details, please refer to the Announcement on the Initial Repurchase of the
Company's Shares (Announcement No.: 2022-059) published by the Company on cninfo website
(www.cninfo.com.cn) on October 12, 2022. During the repurchase period, the Company disclosed the progress of
repurchase as of the end of last month within the first three trading days each month based on the regulation. For
details, please refer to the Announcement on the Progress of Repurchase (Announcement No.: 2022-063)
(Announcement No.: 2022-066) published by the Company on cninfo website (www.cninfo.com.cn) on November
2, 2022, December 3, 2022, respectively. As of December 30, 2022, the repurchase of shares had been completed,
and the actual repurchase date was between October 11, 2022 and December 30, 2022, meet the requirement on
implementation period of repurchase in repurchase plan. As of December 30, 2022, the Company used the dedicated
securities account for share repurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares
by means of centralized bidding, accounting for 0.7103% of the Company's total share capital at that time
(9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction price was
RMB26.83 per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). The
source of share-repurchase funding was from the Company's own fund, and the price of repurchase did not exceed
the upper limit of the price (RMB40 per share) specified in the repurchase plan. The repurchase complies with
relevant laws, regulations and rules from the disclosed repurchase plan. For details, please refer to the
Announcement on the Progress and Result of Repurchase of the Company's Shares and Changes in Shares
(Announcement No.: 2023-001) published by the Company on cninfo website (www.cninfo.com.cn) on January 4,
2023. On January 13, 2023, the Company had completed the cancellation procedures for the above shares at the
Shenzhen branch of China Securities Depository and Clearing Corporation Ltd., with the total amount of 66,987,835
shares, accounting for 0.7103% of the Company's total share capital before the cancellation (9,430,920,624 shares),
and the number of cancelled shares is equal to the number of actual repurchased shares. After the completion of the
repurchase and cancellation of shares, the Company's total share capital changes from 9,430,920,624 shares to
9,363,932,789 shares. For details, please refer to the Announcement on the Completion of the Cancellation of the
Company's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published by the Company
on cninfo website (www.cninfo.com.cn) on January 17, 2023.
45
Hikvision 2023 Half Year Report
2. Matters Relating to Capital Increase and Introduction of Strategic Investors for Wholly-Owned Subsidiary
Shijiazhuang Sensortech
On February 15, 2023, the Company held the 16th meeting of the 5th session of the Board of Directors, reviewed
and approved the Proposal on Capital Increase and Introduction of Strategic Investors for Wholly-Owned
Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (hereinafter referred to as "Shijiazhuang
Sensortech") and agreed to increase the registered capital of Shijiazhuang Sensortech by RMB2,398,000,000.
Hikvision intended to increase the registered capital of Shijiazhuang Sensortech by RMB1,345,200,000 to hold no
less than 56.0969% equity in the subsidiary. Meanwhile, Shijiazhuang Sensortech planned to introduce one or more
strategic investors via public listing with a total investment of RMB1,052,800,000 to obtain no more than 43.9031%
equity. The final amount of capital increase and shareholding ratios will be subject to the results of the listing
subscription. For details, please refer to the Announcement on Capital Increase and Introduction of Strategic
Investors for Wholly-Owned Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (Announcement
No.: 2023-005) published by the Company on cninfo website (www.cninfo.com.cn) on February 16, 2023.
On February 24, 2023, the capital increase of Shijiazhuang Sensortech was listed on the China Beijing Equity
Exchange. Two potential investors were identified for the Shijiazhuang Sensortech Capital Increase Project at the
end of the announcement period. They were Hangzhou Qianmo Qinghe Equity Investment Partnership (Limited
Partnership) (hereinafter referred to as "Qianmo Qinghe") and a consortium of two investors: Qin Yi (a natural
person) and Wuhu Sensi Yingwo Investment Center (Limited Partnership) (hereinafter referred to as "Sensi
Yingwo"). The Company signed the Capital Increase Agreement (hereinafter referred to as "The Agreement") with
Qianmo Qinghe, Sensi Yingwo and Qin Yi on March 28, 2023. Hikvision intended to use equity to subscribe a
capital increase of RMB1,345,200,000 and hold 56.0969% equity in Shijiazhuang Sensortech through an agreement.
The strategic investors participated in the capital increase through public delisting on the China Beijing Equity
Exchange. They subscribed a capital increase of RMB1,052,800,000 to hold 43.9031% equity in Shijiazhuang
Sensortech. Upon completion of the capital increase, the registered capital of Shijiazhuang Sensortech will increase
from RMB10,000 to RMB2,398,010,000. Hikvision will hold 56.0969% equity, maintaining a controlling interest
in Shijiazhuang Sensortech and shall consolidate the financial statements of this subsidiary. For details, please refer
to the Announcement on Progress of Capital Increase and Introduction of Strategic Investors for Wholly-Owned
Subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd. (Announcement No.: 2023-009) published by
the Company on cninfo website (www.cninfo.com.cn) on March 29, 2023.
46
Hikvision 2023 Half Year Report
XIV. Significant events of the Company's subsidiaries
√Applicable □ Inapplicable
Matters Relating to Steady Promotion of the Spin-off of HikRobot to be Listed on the SZSE ChiNext Market
On March 7, 2023, Hangzhou Hikrobot Co., Ltd. (hereinafter referred to as "HikRobot") received Notice on
Accepting the Application Documents for the Initial Public Offering of Shares and Listing on the SZSE ChiNext
Market of Hangzhou Hikrobot Co., Ltd. (SZSE Listing Review [2023] No. 252) issued by Shenzhen Stock Exchange,
and SZSE considered that application documents were completed and decided to accept. For details, please refer to
the Announcement on the Application for the Initial Public Offering of Shares and Listing on the SZSE ChiNext
Market of Hangzhou Hikrobot Co., Ltd., a Subsidiary of the Company, is Accepted by the SZSE (Announcement
No.: 2023-008) published by the Company on cninfo website (www.cninfo.com.cn) on March 8, 2023. Shenzhen
Stock Exchange issed the Inquiry Letter on the Review of Application Documents for the Initial Public Share
Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. (Inquiry Letter (2023)
No. 010121) on March 30, 2023, and HikRobot has submitted the Reply to the Inquiry Letter on the Review of
Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market of
Hangzhou Hikrobot Co., Ltd. on May 17, 2023. Shenzhen Stock Exchange issed the Second Inquiry Letter on the
Review of Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext
Market of Hangzhou Hikrobot Co., Ltd. (Inquiry Letter (2023) No. 010218) on June 30, 2023, and HikRobot has
submitted the Reply to the Second Inquiry Letter on the Review of Application Documents for the Initial Public
Share Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. on July 27, 2023.
47
Hikvision 2023 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) 255,248,506 2.71% 251,025 251,025 255,499,531 2.73%
1)State holdings
2)Shares held by State-owned corporate
3) Other domestic shares 255,055,236 2.70% 251,025 251,025 255,306,261 2.73%
Including: held by domestic corporates
held by domestic natural person 255,055,236 2.70% 251,025 251,025 255,306,261 2.73%
4) Foreign shares 193,270 0.00% 193,270 0.00%
Including: held by overseas corporates
held by overseas natural person 193,270 0.00% 193,270 0.00%
2. Shares without restriction 9,175,672,118 97.29% -67,238,860 -67,238,860 9,108,433,258 97.27%
1) RMB common shares 9,175,672,118 97.29% -67,238,860 -67,238,860 9,108,433,258 97.27%
48
Hikvision 2023 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 9,430,920,624 100.00% -66,987,835 -66,987,835 9,363,932,789 100.00%
Reason for the changes in share capital
√Applicable □ Inapplicable
The Completion of Repurchase of the Company's Public Shares
On December 30, 2022, the Company had completed the repurchase of parts of the Company's public shares. The Company used the dedicated securities account for
share repurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares by means of centralized bidding, accounting for 0.7103% of the
Company's total share capital at that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest transaction price was RMB26.83
per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees).
On January 13, 2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository and Clearing
Corporation Limited, with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capital before the cancellation (9,430,920,624
shares), and the number of cancelled shares is equal to the number of actual repurchased shares. After the completion of the repurchase and cancellation of shares, the
Company's total share capital changes from 9,430,920,624 shares to 9,363,932,789 shares.
Approval for changes in share capital
√Applicable □ Inapplicable
On September 15, 2022 and October 10, 2022, the Company held the 13th meeting of the 5th session of the Board of Directors and the second extraordinary general
49
Hikvision 2023 Half Year Report
meeting of shareholders in 2022 respectively, deliberated and approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approved the
Company using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized bidding through
the trading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion (inclusive) and not less than RMB2 billion (inclusive),
the repurchase price shall not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months from the date of the
general meeting of shareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares is reviewed and approved, and
the Company will make repurchase decisions and implement them based on market conditions during the repurchase period. The shares repurchased by the Company
will be cancelled for reducing the registered capital according to law. For details, please refer to the Announcement on Resolutions of 13th Meeting of the 5th Session
of the Board of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.:
2022-050), the Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on
the Plan of Repurchase Part of the Company's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on
September 16, 2022 and October 11, 2022.
Transfer for changes in share capital
√Applicable □ Inapplicable
On January 13, 2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch of China Securities Depository and
Clearing Corporation Limited, with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share capital before the cancellation
(9,430,920,624 shares), and the number of cancelled shares is equal to the number of actual repurchased shares. After the completion of the repurchase and
cancellation of shares, the Company's total share capital changes from 9,430,920,624 shares to 9,363,932,789 shares.
Information about the implementation of share repurchase
√Applicable □ Inapplicable
On September 15, 2022 and October 10, 2022, the Company held the 13th meeting of the 5th session of the Board of Directors and the second extraordinary general
meeting of shareholders in 2022 respectively, deliberated and approved the Proposal on the Plan of Repurchase Part of the Company's Public Shares, approved the
Company using its own fund to repurchase part of its RMB common shares (A shares) that have been issued domestically by means of centralized bidding through
the trading system of the SZSE, the aggregate amount of repurchase funds shall not exceed RMB2.5 billion (inclusive) and not less than RMB2 billion (inclusive),
the repurchase price shall not exceed RMB40 per share (inclusive), the implementation period of the repurchase shall not exceed 12 months from the date of the
general meeting of shareholders of the Company at which the proposal on the plan of repurchase part of the Company's public shares is reviewed and approved, and
the Company will make repurchase decisions and implement them based on market conditions during the repurchase period. The shares repurchased by the Company
50
Hikvision 2023 Half Year Report
will be cancelled for reducing the registered capital according to law. For details, please refer to the Announcement on Resolutions of 13th Meeting of the 5th Session
of the Board of Directors (Announcement No.: 2022-049), the Announcement on the Plan of Repurchase Part of the Company's Public Shares (Announcement No.:
2022-050), the Announcement on Resolutions of the Second Extraordinary General Meeting of Shareholders in 2022 (Announcement No.: 2022-056), the Report on
the Plan of Repurchase Part of the Company's Public Shares (Announcement No.: 2022-057) published by the Company on cninfo website (www.cninfo.com.cn) on
September 16, 2022 and October 11, 2022. On October 11, 2022, the Company first repurchased 6,820,968 shares of the Company by means of centralized bidding
through a dedicated securities account for the repurchase, accounting for 0.0723% of the Company's total share capital at that time. The highest transaction price was
RMB29.65 per share, the lowest transaction price was RMB28.71 per share, and the total transaction amount was RMB199,981,024.67 (excluding transaction fees).
For details, please refer to the Announcement on the Initial Repurchase of the Company's Shares (Announcement No.: 2022-059) published by the Company on
cninfo website (www.cninfo.com.cn) on October 12, 2022. During the repurchase period, the Company disclosed the progress of repurchase as of the end of last
month within the first three trading days each month based on the regulation. For details, please refer to the Announcement on the Progress of Repurchase
(Announcement No.: 2022-063) (Announcement No.: 2022-066) published by the Company on cninfo website (www.cninfo.com.cn) on November 2, 2022,
December 3, 2022, respectively. As of December 30, 2022, the repurchase of shares had been completed, and the actual repurchase date was between October 11,
2022 and December 30, 2022, meet the requirement on implementation period of repurchase in repurchase plan. As of December 30, 2022, the Company used the
dedicated securities account for share repurchase to cumulatively repurchase shares with the total amount of 66,987,835 shares by means of centralized bidding,
accounting for 0.7103% of the Company's total share capital at that time (9,430,920,624 shares). The highest transaction price was RMB35.13 per share, the lowest
transaction price was RMB26.83 per share, and the total transaction amount was RMB2,043,476,488.53 (excluding transaction fees). The source of share-repurchase
funding was from the Company's own fund, and the price of repurchase did not exceed the upper limit of the price (RMB40 per share) specified in the repurchase
plan. The repurchase complies with relevant laws, regulations and rules from the disclosed repurchase plan. For details, please refer to the Announcement on the
Progress and Result of Repurchase of the Company's Shares and Changes in Shares (Announcement No.: 2023-001) published by the Company on cninfo website
(www.cninfo.com.cn) on January 4, 2023. On January 13, 2023, the Company had completed the cancellation procedures for the above shares at the Shenzhen branch
of China Securities Depository and Clearing Corporation Ltd., with the total amount of 66,987,835 shares, accounting for 0.7103% of the Company's total share
capital before the cancellation (9,430,920,624 shares), and the number of cancelled shares is equal to the number of actual repurchased shares. After the completion
of the repurchase and cancellation of shares, the Company's total share capital changes from 9,430,920,624 shares to 9,363,932,789 shares. For details, please refer to
the Announcement on the Completion of the Cancellation of the Company's Repurchased Shares and Changes in Shares (Announcement No.: 2023-002) published
by the Company on cninfo website (www.cninfo.com.cn) on January 17, 2023.
The implementation progress of reducing and repurchasing shares by centralized bidding
□Applicable √ Inapplicable
51
Hikvision 2023 Half Year Report
Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per share attributable to common shareholders of the Company, and
other financial indexes over the last year and last period
□Applicable √ Inapplicable
Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose
□ Applicable √ Inapplicable
2. Changes in restricted shares
√ Applicable □ Inapplicable
Unit: Share
Opening restricted Increased in 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 130,734,463 0 0 130,734,463 Equity Incentive Restricted Shares Note 3
(consolidated)
Qu Liyang 11,812 0 0 11,812 Restricted shares for senior executives
Wang Qiuchao 26,250 0 0 26,250 Restricted shares for senior executives According to the
relevant provisions of
shares management for
Xu Lirong 227,250 0 0 227,250 Restricted shares for senior executives senior executives
Hu Yangzhong 116,434,858 292,500 0 116,727,358 Restricted shares for senior executives
52
Hikvision 2023 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
Wu Weiqi 6,473,317 41,025 0 6,514,342 Restricted shares for senior executives
He Hongli 248,625 0 0 248,625 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 66,150 0 0 66,150 unlocked restricted shares turning into restricted shares
for senior executives
Restricted shares for senior executives + partial of the
Bi Huijuan 167,850 0 0 167,850 unlocked restricted shares turning into restricted shares
for senior executives
Restricted shares for senior executives + partial of the
Pu Shiliang 169,425 0 0 169,425 unlocked restricted shares turning into restricted shares
for senior executives
Jin Duo 82,125 0 0 82,125 Restricted shares for senior executives
Restricted shares for senior executives + partial of the
Jin Yan 180,000 0 0 180,000 unlocked restricted shares turning into restricted shares
for senior executives
53
Hikvision 2023 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
Huang Fanghon 248,875 0 0 248,875 unlocked restricted shares turning into restricted shares
for senior executives
Restricted shares for senior executives + partial of the
Xu Peng 1,811 0 0 1,811 unlocked restricted shares turning into restricted shares
for senior executives
Restricted shares for senior executives + partial of the
Guo Xudong 11,070 0 0 11,070 unlocked restricted shares turning into restricted shares
for senior executives
Total 255,166,006 333,525 0 255,499,531 -- --
Note:
1. Executives who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted within the total incentive restricted
shares (consolidated statistics) on the second row.
2. The directors of the Company, Hu Yangzhong and Wu weiqi, increased their holdings of the Company by 390,000 shares and 54,700 shares, respectively, which were
partially included in the restricted shares for senior executives in accordance with the relevant rules for the restriction of shares for senior executives.
3. The Company actually granted 97,402,605 shares under the 2021 Restricted Share Incentive Scheme, and the grant date was January 18, 2022, which has not yet
reached the unlocking date; the process of repurchase and cancellation of the third repurchase of the granted but unvested restricted shares under the 2018 Restricted
Share Incentive Scheme has been completed on July 5, 2023, and cancelled amount of 33,331,858 shares.
II. Issuance and listing of securities
□Applicable √ Inapplicable
There were no securities issues during the reporting period
54
Hikvision 2023 Half Year Report
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
382,245 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 36.35% 3,403,879,509 - - 3,403,879,509 Pledged 50,000,000
corporation
Co., Ltd.
Gong Hongjia Overseas individual 10.28% 962,504,814 - - 962,504,814 Pledged 136,020,000
Hangzhou Weixun Equity Domestic
Investment Partnership non-state-owned 4.81% 450,795,176 - - 450,795,176 Pledged 19,600,000
(Limited Partnership) corporation
Shanghai Perseverance
Asset Management
Partnership (Limited
Other 4.61% 432,000,000 - - 432,000,000 - -
Partnership) - Perseverance
Adjacent Mountain 1
Yuanwang Fund
CETC Investment
State-owned corporation 2.48% 232,307,903 - - 232,307,903 -
Holdings Co., Ltd.
55
Hikvision 2023 Half Year Report
Hangzhou Pukang Equity Domestic
Investment Partnership non-state-owned 1.95% 182,510,174 - - 182,510,174 Pledged 48,300,000
(Limited Partnership) corporation
nd
The 52 Research Institute
at China Electronics State-owned
1.93% 180,775,044 - - 180,775,044 - -
Technology corporation
Group Corporation
Hu Yangzhong Domestic Individual 1.66% 155,636,477 390,000 116,727,358 38,909,119 - -
Central Huijin Investment
State-owned corporation 0.69% 64,700,691 - - 64,700,691 - -
Co., Ltd.
Hong Kong Securities
Clearing Company Overseas corporation 0.56% 52,015,208 551,374 - 52,015,208 - -
Ltd.(HKSCC)
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. Chen Chunmei,
limited partner of Hangzhou Pukang Equity Investment Partnership (Limited Partnership), is the spouse of Gong Hongjia, foreign
Explanation on associated relationship or concerted
individual shareholder of the Company. Hu Yangzhong, domestic individual, is holding shares in both Hangzhou Weixun Equity
actions among the above-mentioned shareholders:
Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (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)
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
Hangzhou Weixun Equity Investment Partnership (Limited Partnership) 450,795,176 RMB common shares 450,795,176
56
Hikvision 2023 Half Year Report
Shanghai Perseverance Asset Management Partnership (Limited Partnership) -
432,000,000 RMB common shares 432,000,000
Perseverance Adjacent Mountain 1 Yuanwang Fund
CETC Investment Holdings Co., Ltd. 232,307,903 RMB common shares 232,307,903
Hangzhou Pukang Equity Investment Partnership (Limited Partnership) 182,510,174 RMB common shares 182,510,174
nd
The 52 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
Hong Kong Securities Clearing Company Ltd.(HKSCC) 52,015,208 RMB common shares 52,015,208
Shanghai Chongyang Strategic Investment Ltd. – Chongyang Strategic Intelligence Fund 39,068,969 RMB common shares 39,068,969
China Electronics Technology HIK Group Co., Ltd., CETC Investment Holdings Co., Ltd. and The 52nd 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. Chen Chunmei,
actions among top ten common shareholders holding limited partner of Hangzhou Pukang Equity Investment Partnership (Limited Partnership), is the spouse of 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 Hangzhou Weixun Equity
common shareholders and top ten common Investment Partnership (Limited Partnership) and Hangzhou Pukang Equity Investment Partnership (Limited Partnership). Except
shareholders holding shares without trading restrictions 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.
Information on Top 10 shareholders of ordinary shares
Shanghai Chongyang Strategic Investment Ltd. – Chongyang Strategic Intelligence Fund, a shareholder, held 39,068,969 shares of
participating in margin trading and short selling
the Company in a margin account.
business
Any of the Company's top 10 common shareholders or top 10 non-restricted common shareholders conducted any agreed buy-back in the reporting period?
□ Applicable √ Inapplicable
No such case during the current reporting period.
IV. Shareholding changes of directors, supervisors, senior management personnel
√ Applicable □ Inapplicable
57
Hikvision 2023 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)
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 155,246,477 390,000 0 155,636,477 0 0 0
General Manager (CEO)
Director,
Wu Weiqi Standing Deputy Incumbent 8,631,089 54,700 0 8,685,789 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
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
58
Hikvision 2023 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
Cai Changyang Incumbent 109,500 0 0 109,500 0 0 0
Manager
Senior Deputy General
Xu Ximing Incumbent 287,000 0 0 287,000 149,100 0 149,100
Manager
Senior Deputy General
Bi Huijuan Incumbent 273,000 0 0 273,000 36,900 0 36,900
Manager
Senior Deputy General
Pu Shiliang Incumbent 385,900 0 0 385,900 120,000 0 120,000
Manager
Senior Deputy General
Jin Duo Incumbent 109,500 0 0 109,500 0 0 0
Manager
Senior Deputy General
Jin Yan Manager, Incumbent 364,000 0 0 364,000 113,000 0 113,000
Person in charge of finance
Senior Deputy General
Huang
Manager, Incumbent 482,500 0 0 482,500 113,000 0 113,000
Fanghong
Board Secretary
Senior Deputy General
Chen Junke Incumbent 0 0 0 0 0 0 0
Manager
Senior Deputy General
Xu Peng Incumbent 147,244 0 0 147,244 108,622 0 108,622
Manager
59
Hikvision 2023 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
Guo Xudong Incumbent 44,280 0 1,000 43,280 22,140 0 22,140
Manager
Total -- -- 166,765,740 444,700 1,000 167,209,440 662,762 0 662,762
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 2023 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 2023 Half Year Report
Section IX Bonds
□ Applicable √ Inapplicable
62
Hikvision 2023 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 2023 Half Year Report has not been audited
63
Hikvision 2023 Half Year Report
On June 30, 2023
Consolidated Balance Sheet
Unit: RMB
Item Notes On June 30, 2023 On December 31, 2022 (Restated)
Current Assets:
Cash and bank balances (V)1 34,670,255,152.86 40,011,863,999.94
Held-for-trading financial assets (V)2 10,948,728.33 12,807,438.36
Notes receivable (V)3 2,161,899,917.86 2,519,988,159.23
Accounts receivable (V)4 31,626,699,148.70 29,906,294,410.40
Receivables for financing (V)5 1,502,906,978.21 1,484,218,258.74
Prepayments (V)6 1,127,865,721.56 534,780,120.52
Other receivables (V)7 1,295,693,306.42 516,503,485.58
Inventories (V)8 19,597,538,003.71 18,998,222,978.81
Contract assets (V)9 1,872,717,726.22 2,118,223,370.98
Non-current assets due within one year (V)10 1,063,928,330.52 996,902,343.27
Other current assets (V)11 1,089,875,637.26 806,832,941.58
Total Current Assets 96,020,328,651.65 97,906,637,507.41
Non-current Assets:
Long-term receivables (V)12 633,775,074.97 540,647,965.30
Long-term equity investment (V)13 1,120,713,426.25 1,252,033,513.41
Other non-current financial assets (V)14 474,823,086.64 423,893,239.94
Fixed assets (V)15 9,885,673,844.45 8,539,842,630.68
Construction in progress (V)16 3,807,474,388.06 3,770,803,300.80
Right-of-use assets (V)17 585,503,726.85 574,478,326.31
Intangible assets (V)18 1,598,118,965.64 1,544,933,502.19
Goodwill (V)19 397,931,899.85 217,386,531.28
Long-term deferred expenses (V)20 184,406,110.27 177,277,742.41
Deferred tax assets (V)21 1,624,110,111.40 1,470,966,695.68
Other non-current assets (V)22 2,584,388,789.41 2,815,702,012.70
Total Non-current Assets 22,896,919,423.79 21,327,965,460.70
Total Assets 118,917,248,075.44 119,234,602,968.11
64
Hikvision 2023 Half Year Report
On June 30, 2023
Consolidated Balance Sheet-continued
Unit: RMB
Item Notes On June 30, 2023 On December 31, 2022 (Restated)
Current Liabilities:
Short-term borrowings (V)23 3,150,804,135.09 3,343,071,972.89
Held-for-trading financial liabilities (V)24 49,948,979.70 68,299,685.57
Notes payable (V)25 905,757,774.63 1,207,756,963.94
Accounts payable (V)26 13,969,435,831.18 16,025,563,802.99
Contract liabilities (V)27 2,770,165,430.62 2,644,496,508.36
Payroll payable (V)28 3,679,313,269.07 4,837,302,455.95
Taxes payable (V)29 1,424,969,912.62 1,234,032,138.37
Other payables (V)30 3,148,507,577.98 3,203,308,686.31
Non-current liabilities due within one year (V)31 2,148,355,742.78 868,197,272.46
Other current liabilities (V)32 1,968,581,909.08 923,721,593.78
Total Current Liabilities 33,215,840,562.75 34,355,751,080.62
Non-current Liabilities:
Long-term borrowings (V)33 9,698,069,194.58 7,522,315,341.60
Lease liabilities (V)34 300,219,397.39 277,255,924.83
Long-term payables (V)35 5,906,267.08 7,569,934.67
Provisions (V)36 221,416,511.54 219,365,227.62
Deferred income (V)37 904,414,704.63 933,260,426.12
Deferred tax liabilities (V)21 121,696,057.59 117,340,377.75
Other non-current liabilities (V)38 1,670,282,155.16 2,831,108,087.59
Total Non-current Liabilities 12,922,004,287.97 11,908,215,320.18
Total Liabilities 46,137,844,850.72 46,263,966,400.80
Owners' Equity
Share capital (V)39 9,363,932,789.00 9,430,920,624.00
Capital reserves (V)40 8,533,537,109.48 10,141,153,435.32
Less: Treasury shares (V)41 3,180,634,300.79 5,316,033,650.24
Other comprehensive income (V)42 57,165,084.66 (42,587,158.81)
Surplus reserves (V)43 4,715,460,312.00 4,715,460,312.00
Retained earnings (V)44 48,242,872,642.09 49,459,757,577.51
Total owners' equity attributable to owner of the
67,732,333,636.44 68,388,671,139.78
Company
Minority equity 5,047,069,588.28 4,581,965,427.53
Total Owners' Equity 72,779,403,224.72 72,970,636,567.31
Total Liabilities and Owners' Equity 118,917,248,075.44 119,234,602,968.11
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 2023 Half Year Report
On June 30, 2023
Balance Sheet of the Parent Company
Unit: RMB
Item Notes On June 30, 2023 On December 31, 2022 (Restated)
Current Assets:
Cash and bank balances 24,035,495,376.63 27,826,883,144.97
Notes receivable 249,413,853.15 291,894,821.88
Accounts receivable (XV)1 24,674,658,344.34 24,375,815,151.52
Receivables for financing 7,164,244.88 1,380,237.21
Prepayments 114,527,955.78 78,220,424.69
Other receivables (XV)2 2,449,514,292.50 2,409,877,936.73
Inventories 243,707,644.21 287,356,998.22
Contract assets 3,825,789.69 2,070,526.66
Non-current assets due within one year 127,545,857.53 145,198,110.49
Other current assets 1,368,392,183.63 10,325,583.58
Total Current Assets 53,274,245,542.34 55,429,022,935.95
Non-current Assets:
Long-term accounts receivable 2,663,343,630.25 544,335,046.78
Long-term equity investment (XV)3 8,355,078,832.70 7,735,758,795.50
Other non-current financial assets 369,159,988.22 336,896,766.52
Fixed assets 3,488,394,696.11 3,632,220,781.28
Construction in progress 25,900,065.47 31,536,529.55
Right-of-use assets 142,379,852.03 106,886,641.18
Intangible assets 99,489,684.18 108,027,048.91
Long-term deferred expenses 47,361,808.76 44,756,196.08
Deferred tax assets 181,177,659.12 170,615,439.85
Other non-current assets 24,963,153.58 20,271,638.61
Total Non-current Assets 15,397,249,370.42 12,731,304,884.26
Total Assets 68,671,494,912.76 68,160,327,820.21
66
Hikvision 2023 Half Year Report
On June 30, 2023
Balance Sheet of the Parent Company - continued
Unit: RMB
Item Notes On June 30, 2023 On December 31, 2022 (Restated)
Current Liabilities:
Short-term borrowings 394,480,791.80 371,761,513.12
Accounts payable 702,220,008.78 871,899,603.98
Contract liabilities 251,748,887.13 252,386,307.55
Payroll payable 2,099,129,675.00 2,751,925,304.64
Taxes payable 694,176,493.05 371,935,883.41
Other payables 2,132,435,898.28 1,523,785,190.90
Non-current liabilities due within one year 647,964,606.02 280,431,699.90
Other current liabilities 1,578,529,858.24 504,448,226.96
Total Current Liabilities 8,500,686,218.30 6,928,573,730.46
Non-current Liabilities:
Long-term borrowings 3,842,794,000.00 1,674,051,800.00
Lease liabilities 79,419,540.00 51,034,219.65
Provisions 108,595,375.05 112,936,131.57
Deferred income 418,326,711.13 463,302,126.80
Other non-current liabilities 1,642,792,335.93 2,806,169,050.05
Total Non-current Liabilities 6,091,927,962.11 5,107,493,328.07
Total Liabilities 14,592,614,180.41 12,036,067,058.53
Owners' Equity
Share capital 9,363,932,789.00 9,430,920,624.00
Capital reserves 6,554,591,297.88 8,264,384,780.30
Less: Treasury shares 3,180,634,300.79 5,316,033,650.24
Surplus reserves 4,715,460,312.00 4,715,460,312.00
Retained earnings 36,625,530,634.26 39,029,528,695.62
Total Owners' Equity 54,078,880,732.35 56,124,260,761.68
Total Liabilities and Owners' Equity 68,671,494,912.76 68,160,327,820.21
67
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
Consolidated Income Statement
Unit: RMB
Amount for the
Amount for the
Item Notes prior period
current period
(Restated)
I. Total Revenue (V)45 37,570,786,397.89 37,257,516,590.62
Less: Total operating costs (V)45 20,594,523,514.10 21,182,955,700.93
Business taxes and surcharges (V)46 350,538,039.96 259,670,277.01
Selling expenses 4,887,451,798.48 4,536,589,939.10
Administrative expenses 1,274,582,030.17 1,200,010,815.48
Research and Development (R&D) expenses 5,285,435,437.59 4,675,061,688.81
Financial expenses (V)47 (567,373,249.81) (785,465,257.61)
Including: Interest expenses 194,501,879.71 140,732,663.66
Interest income 493,992,701.34 452,305,967.35
Add: Other income (V)48 1,028,735,937.62 993,271,624.47
Investment income (V)49 10,766,562.60 185,304,789.30
Including: Investment gains (losses) in associated enterprise
(42,240,571.07) 46,152,616.54
and joint-venture enterprise
Gains (losses) from changes in fair values (V)50 46,589,010.96 (118,462,092.82)
Credit impairment losses (V)51 (435,735,151.53) (372,674,934.04)
Impairment losses of assets (V)52 (195,555,997.08) (125,801,550.90)
Asset disposal losses (2,699,436.97) (10,638,858.24)
II. Operating Profit 6,197,729,753.00 6,739,692,404.67
Add: Non-operating income (V)53 58,542,916.96 36,155,570.95
Less: Non-operating expenses (V)54 9,634,567.46 9,248,079.55
III. Total Profit 6,246,638,102.50 6,766,599,896.07
Less: Income tax expenses (V)55 490,214,292.26 628,993,865.94
IV. Net Profit 5,756,423,810.24 6,137,606,030.13
4.1 Classification by continuous operation
(a) Net profit on continuous operation 5,756,423,810.24 6,137,606,030.13
(b) Net loss on terminated operation
4.2 Classification by attribution of ownership
(a) Profit or loss attributable to minority shareholders 418,555,793.36 378,937,983.57
(b) Net profit attributable to owners of parent company 5,337,868,016.88 5,758,668,046.56
V. Other Comprehensive Income, Net of Income Tax (V)42 209,956,944.59 52,624,946.63
Other comprehensive income attributable to owners of the
99,752,243.47 27,792,498.30
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
99,752,243.47 27,792,498.30
loss in subsequent periods
1. Exchange differences arising on conversion of financial
99,752,243.47 27,792,498.30
statements denominated in foreign currencies
Other comprehensive income attributable to minority interests, net
110,204,701.12 24,832,448.33
of tax
68
Hikvision 2023 Half Year Report
Amount for the
Amount for the
Item Notes prior period
current period
(Restated)
VI. Total Comprehensive Income 5,966,380,754.83 6,190,230,976.76
Total comprehensive income attributable to owners of the parent
5,437,620,260.35 5,786,460,544.86
company
Total comprehensive income attributable to minority shareholders 528,760,494.48 403,770,431.90
VII. Earnings Per Share
(I) Basic earnings per share (XVI)2 0.568 0.608
(II) Diluted earnings per share (XVI)2 0.568 0.608
69
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
Income statement of the parent company
Unit: RMB
Amount for the Amount for the
Item Notes
current period prior period
I. Total Revenue (XV)4 10,893,419,484.81 11,764,069,657.55
Less: Total operating costs (XV)4 1,814,681,256.69 2,181,526,620.42
Business taxes and surcharges 135,605,667.88 142,850,255.77
Selling expenses 1,760,677,203.45 1,748,230,784.18
Administrative expenses 410,460,246.76 387,780,229.37
Research and Development (R&D) expenses 3,318,060,585.94 3,091,156,108.94
Financial expenses (278,123,487.18) (359,933,229.16)
Including: Interest expenses 62,806,306.98 70,177,106.44
Interest income 403,066,666.24 372,666,149.98
Add: Other income 660,498,375.34 766,117,498.53
Investment income (XV)5 126,146,127.23 126,490,621.87
Including: Investment gains (losses) in associated
(41,007,402.96) 51,641,039.76
enterprise and joint-venture enterprise
Gains (losses) from changes in fair values 30,092,421.70 (21,359,456.79)
Credit impairment losses (82,668,082.79) (71,919,000.56)
Losses on asset impairment (754,499.20) (3,171,157.67)
Asset disposal gains (losses) (2,346,292.25) 176,984.43
II. Operating Profit 4,463,026,061.30 5,368,794,377.84
Add: Non-operating income 11,925,331.88 10,864,676.52
Less: Non-operating expenses 346,891.03 633,999.67
III. Total Profit 4,474,604,502.15 5,379,025,054.69
Less: Income tax expenses 323,849,611.21 365,046,580.47
IV. Net Profit 4,150,754,890.94 5,013,978,474.22
V. Other Comprehensive Income, Net of Income Tax - -
VI. Total Comprehensive Income 4,150,754,890.94 5,013,978,474.22
70
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
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 40,253,202,797.63 37,991,180,761.41
Receipts of tax refunds 1,610,889,713.88 1,858,427,296.61
Other cash receipts relating to operating activities (V)56(1) 993,431,093.48 996,902,818.46
Sub-total of cash inflows from operating activities 42,857,523,604.99 40,846,510,876.48
Cash payments for goods purchased and services received 26,311,803,835.94 28,517,145,082.71
Cash paid to and on behalf of employees 9,874,915,641.33 8,854,819,423.45
Payments of various types of taxes 2,810,328,190.91 2,819,627,091.55
Other cash payments relating to operating activities (V)56(2) 2,834,085,074.01 2,813,411,487.85
Sub-total of cash outflows from operating activities 41,831,132,742.19 43,005,003,085.56
Net Cash Flows from Operating Activities (V)57(1) 1,026,390,862.80 (2,158,492,209.08)
II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments 2,310,444,356.94 3,190,133,666.78
Net cash receipts from disposals of fixed assets, intangible assets and
5,400,328.59 8,886,261.07
other long-term assets
Other cash receipts relating to investing activities (V)56(3) 29,888,320.03 22,123,969.10
Sub-total of cash inflows from investing activities 2,345,733,005.56 3,221,143,896.95
Cash payments to acquire or construct fixed assets, intangible assets and
2,010,569,857.72 1,827,649,513.03
other long-term assets
Cash paid to acquire investments 2,376,037,040.30 3,090,730,900.01
Net cash paid to acquire subsidiaries and other business units (V)57(2) 43,992,651.82 -
Sub-total of cash outflows from investing activities 4,430,599,549.84 4,918,380,413.04
Net Cash Flows from Investing Activities (2,084,866,544.28) (1,697,236,516.09)
III. Cash Flows from Financing Activities:
Cash receipts from capital contributions 1,020,000.00 2,893,831,394.55
Including: Cash receipts from capital contributions from minority
1,020,000.00 -
owners of subsidiaries
Cash receipts from borrowings 4,663,907,463.39 3,244,389,312.95
Sub-total of cash inflows from financing activities 4,664,927,463.39 6,138,220,707.50
Cash repayments of borrowings 1,541,428,965.29 1,139,832,455.64
Cash payments for distribution of dividends or profits or settlement of
6,729,347,458.52 7,954,111,720.49
interest expenses
Including: Dividends and profits paid by subsidiaries to minority
127,750,000.00 1,000,000.00
shareholders
Other cash payments relating to financing activities (V)56(4) 789,007,637.60 106,254,586.43
Sub-total of cash outflows from financing activities 9,059,784,061.41 9,200,198,762.56
Net Cash Flows from Financing Activities (4,394,856,598.02) (3,061,978,055.06)
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash
160,538,952.06 72,663,543.66
Equivalents
V. Net Decrease in Cash and Cash Equivalents (V)57(1) (5,292,793,327.44) (6,845,043,236.57)
Add: Opening balance of cash and cash equivalents (V)57(1) 39,815,390,514.57 34,603,944,429.20
VI. Closing Balance of Cash and Cash Equivalents (V)57(3) 34,522,597,187.13 27,758,901,192.63
71
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
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 11,829,923,118.88 8,600,130,294.66
Receipts of tax refunds 606,043,131.31 689,224,260.83
Other cash receipts relating to operating activities 446,076,065.24 494,552,168.22
Sub-total of cash inflows from operating activities 12,882,042,315.43 9,783,906,723.71
Cash payments for goods acquired and services received 2,126,147,201.65 2,616,584,562.58
Cash payments to and on behalf of employees 4,702,719,220.93 4,226,728,575.81
Payments of various types of taxes 1,130,558,774.42 1,747,511,934.99
Other cash payments relating to operating activities 2,634,043,593.74 1,736,522,589.02
Sub-total of cash outflows from operating activities 10,593,468,790.74 10,327,347,662.40
Net Cash Flows from Operating Activities 2,288,573,524.69 (543,440,938.69)
II. Cash Flows from Investing Activities:
Cash receipts from recovery of investments 60,000,000.00 30,260,000.00
Cash receipts from investment income 147,708,123.70 44,492,681.25
Net cash receipts from disposals of fixed assets, intangible assets and
10,509,290.74 23,954,540.31
other long-term assets
Net cash receipts from disposals of subsidiaries and other business units 15,902,073.63 -
Other cash receipts relating to investing activities 32,317,830,897.43 34,278,715,825.83
Sub-total of cash inflows from investing activities 32,551,950,385.50 34,377,423,047.39
Cash payments to acquire or construct fixed assets, intangible assets and
67,100,494.72 339,052,800.88
other long-term assets
Cash payments to acquire investments 1,951,697,070.00 25,320,000.00
Other cash payments relating to investing activities 33,595,043,024.46 34,274,668,870.73
Sub-total of cash outflows from investing activities 35,613,840,589.18 34,639,041,671.61
Net Cash Flows from Investing Activities (3,061,890,203.68) (261,618,624.22)
III. Cash Flows from Financing Activities
Cash receipts from capital contributions - 2,893,831,394.55
Cash receipts from borrowings 2,480,000,000.00 280,000,000.00
Other cash receipts relating to financing activities 6,093,399,604.70 5,694,943,526.50
Sub-total of cash inflows from financing activities 8,573,399,604.70 8,868,774,921.05
Cash repayments of borrowings 14,436,600.00 14,436,600.00
Cash payments for distribution of dividends or profits or settlement of
6,508,940,764.63 7,788,147,750.64
interest expenses
Other cash payments relating to financing activities 5,025,058,701.85 4,191,920,331.61
Sub-total of cash outflows from financing activities 11,548,436,066.48 11,994,504,682.25
Net Cash Flows from Financing Activities (2,975,036,461.78) (3,125,729,761.20)
IV. Effect of Foreign Exchange Rate Changes on Cash and Cash
1,467,220.03 748,292.11
Equivalents
V. Net Decrease in Cash and Cash Equivalents (3,746,885,920.74) (3,930,041,032.00)
Add: Opening balance of cash and cash equivalents 27,771,201,246.40 26,639,582,696.49
VI. Closing Balance of Cash and Cash Equivalents 24,024,315,325.66 22,709,541,664.49
72
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
Consolidated Statement of Changes in Owners' Equity
Unit: RMB
Amount for the first half of 2023
Owner's equity attributable to the parent company
Items Other Minority Total owners'
Less: Treasury
Share capital Capital reserves comprehensive Surplus reserve Retained earnings interests equity
share
income
I. Closing Balance of the Prior
9,430,920,624.00 10,141,153,435.32 5,316,033,650.24 (42,587,158.81) 4,715,460,312.00 49,460,240,986.49 4,580,999,418.82 72,970,153,967.58
Year
Add: Changes due to alternation
- - - - - (483,408.98) 966,008.71 482,599.73
in accounting policies
II. Opening Balance of the
9,430,920,624.00 10,141,153,435.32 5,316,033,650.24 (42,587,158.81) 4,715,460,312.00 49,459,757,577.51 4,581,965,427.53 72,970,636,567.31
Current Period
III. Increase or Decrease in the
(66,987,835.00) (1,607,616,325.84) (2,135,399,349.45) 99,752,243.47 - (1,216,884,935.42) 465,104,160.75 (191,233,342.59)
Current Period
(I) Total comprehensive income - - - 99,752,243.47 - 5,337,868,016.88 528,760,494.48 5,966,380,754.83
(II) Owners' contributions and
(66,987,835.00) (1,607,616,325.84) (2,043,885,225.35) - - - 64,093,666.27 433,374,730.78
reduction in capital
1. Capital contribution from
- - - - - - 1,020,000.00 1,020,000.00
shareholders
2. Share-based payment
349,027,199.43 - - - - 24,501,363.63 373,528,563.06
recognized in owners' equity
3. Others (66,987,835.00) (1,956,643,525.27) (2,043,885,225.35) - - - 38,572,302.64 58,826,167.72
(III) Profit distribution - - (91,514,124.10) - - (6,554,752,952.30) (127,750,000.00) (6,590,988,828.20)
1. Transfer to surplus reserves - - - - - - - -
2. Distributions to shareholders - - (91,514,124.10) - - (6,554,752,952.30) (127,750,000.00) (6,590,988,828.20)
IV. Closing Balance of the
9,363,932,789.00 8,533,537,109.48 3,180,634,300.79 57,165,084.66 4,715,460,312.00 48,242,872,642.09 5,047,069,588.28 72,779,403,224.72
Current Period
Amount for the first half of 2022 (restated)
Owner's equity attributable to the parent company
Items Other Minority Total owners'
Less: Treasury
Share capital Capital reserves comprehensive Surplus reserve Retained earnings interests equity
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
Add: Changes due to alternation
(942,347.44) 730,041.84 (212,305.60)
in accounting policies
II. Opening Balance of the 45,147,935,104.08
9,335,806,114.00 5,404,070,600.07 1,023,188,723.04 (77,184,125.29) 4,672,505,348.00 1,934,485,652.46 65,394,429,970.28
Current Period
III. Increase or Decrease in the -
97,402,605.00 3,439,307,182.02 2,280,947,269.95 27,792,498.30 (2,731,219,800.54) 442,634,185.57 (1,005,030,599.60)
Current Period
(I) Total comprehensive income - - - 27,792,498.30 - 5,758,668,046.56 403,770,431.90 6,190,230,976.76
(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 - - - - -
73
Hikvision 2023 Half Year Report
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)
IV. 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 42,416,715,303.54 2,377,119,838.03 64,389,399,370.68
Current Period (Restated)
74
Hikvision 2023 Half Year Report
For the reporting period from January 1, 2023 to June 30, 2023
Statement of Changes in Owners' Equity of the Parent Company
Unit: RMB
Amount for the first half of 2023
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained earnings Total owners' equity
I. Closing Balance of the Prior Year 9,430,920,624.00 8,264,384,780.30 5,316,033,650.24 4,715,460,312.00 39,030,437,901.96 56,125,169,968.02
Add: Changes due to alternation in accounting policies - - - - (909,206.34) (909,206.34)
II. Opening Balance of the Current Period 9,430,920,624.00 8,264,384,780.30 5,316,033,650.24 4,715,460,312.00 39,029,528,695.62 56,124,260,761.68
III. Increase or Decrease in the Current Period (66,987,835.00) (1,709,793,482.42) (2,135,399,349.45) - (2,403,998,061.36) (2,045,380,029.33)
(I) Total comprehensive income - - - - 4,150,754,890.94 4,150,754,890.94
(II) Owners' contributions and reduction in capital (66,987,835.00) (1,709,793,482.42) (2,043,885,225.35) - - 267,103,907.93
1. Capital contribution from shareholders - - - - - -
2. Share-based payment recognized in owners' equity - 330,841,112.32 - - - 330,841,112.32
3. Others (66,987,835.00) (2,040,634,594.74) (2,043,885,225.35) - - (63,737,204.39)
(III) Profit distribution - - (91,514,124.10) - (6,554,752,952.30) (6,463,238,828.20)
1. Distributions to shareholders - - (91,514,124.10) - (6,554,752,952.30) (6,463,238,828.20)
IV. Closing Balance of the Current Period 9,363,932,789.00 6,554,591,297.88 3,180,634,300.79 4,715,460,312.00 36,625,530,634.26 54,078,880,732.35
Amount for the first half of 2022 (Restated)
Item
Share capital Capital reserves Less: Treasury share Surplus reserve Retained earnings Total owners' 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
Add: Changes due to alternation in accounting policies - - - - (443,175.56) (443,175.56)
II. Opening Balance of the Current Period 9,335,806,114.00 4,937,523,553.84 1,023,188,723.04 4,672,505,348.00 37,958,118,144.33 55,880,764,437.13
III. Increase or Decrease in the Current Period 97,402,605.00 3,348,359,936.52 2,280,947,269.95 - (3,475,909,372.88) (2,311,094,101.31)
(I) Total comprehensive income - - - - 5,013,978,474.22 5,013,978,474.22
(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. Share-based payment recognized in owners' equity 97,402,605.00 2,796,428,789.55 2,893,831,394.55 - - -
2. Share-based payment recognized in owners' equity - 450,746,177.86 - - - 450,746,177.86
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)
IV. Closing Balance of the Current Period (Restated) 9,433,208,719.00 8,285,883,490.36 3,304,135,992.99 4,672,505,348.00 34,482,208,771.45 53,569,670,335.82
75
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 30, 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 25, 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 28, 2010, the Company was listed on the Shenzhen
Stock Exchange.
In accordance with the authorization by the Company's second Extraordinary General Meeting in 2018, the resolution by
the 10th meeting of the 5th session of the Board of Directors on May 5, 2022, the resolution of the second Extraordinary
General Meeting in 2022 on October 10, 2021 and the revised Articles of Association, the Company repurchased and
cancelled the granted 2,288,095 restricted RMB treasury shares that have not been unlocked by cash. The Company
completed the deregistration on December 21, 2022 and the share capital was accordingly changed to 9,430,920,624 shares.
In accordance with the resolutions of the 13th meeting of the 5th session of the Board of Directors on September 15, 2022
and the second extraordinary general meeting of shareholders in 2022 on October 10, 2022, the Company used the
dedicated securities account for share repurchase to cumulatively repurchase shares with the total amount of 66,987,835
shares by means of centralized bidding from October 11, 2022 to December 30, 2022. On January 13, 2023, the Company
had completed the cancellation procedures. The total share capital of the Company was adjusted to 9, 363,932,789 shares.
For details of the share capital, please refer to Note (V), 39.
As of June 30, 2023, the Company's total registered capital is RMB9,363,932,789.00, with total capital shares of
9,363,932,789 shares (face value RMB1 per share), of which restricted A-shares were 255,499,531 shares, A-shares
without restriction are 9,108,433,258 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 equipment and its ancillary equipment, multimedia equipment, transmission and display
equipment), fire protection and control products, big data and IoT software and hardware products, aerial vehicles, robots,
intelligent equipment and intelligent systems, real-time communication systems, auto parts and accessories, electrical
signal equipment 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.
76
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Company's and consolidated financial reports were approved for issuance by the 18th meeting of the 5th session of the
Board of Directors of the Company on August 18, 2023.
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 30, 2023, 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.
77
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 30, 2023, 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 2023
truly and completely.
2. Accounting period
The Group has adopted the calendar year as its accounting year from January 1 to December 31 each year.
3. Business cycle
The business cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents.
The Group'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
78
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
subsidiaries of the Company determine their functional currency on the basis of the primary economic environment in
which it operates. 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 in stages 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.
79
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
80
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 in stages 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 re-measured 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 shall be accounted for on the same basis as the direct
disposal of the relevant assets or liabilities by the acquiree.
81
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
82
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
83
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
84
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
85
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
86
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
87
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
since initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, the
Group will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsisting
period. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group will
calculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.
The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial asset
at fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financial
asset classified as measured at fair value through other comprehensive income, the Group will recognize its credit loss
provision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the current
period, and will not decrease the book value of such financial asset presented in the balance sheet.
The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting period
of the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, such
financial instrument is no longer under the condition of significant increase in credit risk since initial recognition, the
Group calculates the loss provision for such financial instrument on the balance sheet date of the current period according
to an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amount
will be counted as impairment gain and booked into the profit and loss of the current period.
10.2.1 Significant increase in credit risk
The Group uses available and reasonable forward-looking information with justification, by comparing the default risk of
the financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whether
the credit risk of the financial instrument has significantly increased after initial recognition. When using the financial
instrument impairment rules for loan commitment and financial guarantee contracts, the date when the Group becomes a
party of an irrevocable commitment is deemed as the initial recognition date.
The Group considers the following factors when assessing whether the credit risk has significantly increased:
(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.
(2) Whether the external credit rating of financial instrument has actual or expected significant changes.
(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.
(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to cause
significant changes in the capability of the debtor to perform debt repayment obligations.
(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.
(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which
the debtor operates.
(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guarantee
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
88
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
repayment by the borrower according to the contractual term.
(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.
Whether or not the credit risks increase significantly after the foregoing assessments, if any contractual payment for any
financial instrument that overdue for over (including) 30 days, it indicates the credit risks of that financial instrument have
increased significantly.
On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumes
that the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk of
default on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in the
short term, and even if the economic situation and operating environment are adversely changed over a long period of time
but not necessarily reducing the borrower's performance of its contractual cash obligations, the financial instrument is
considered as having a lower credit risk.
10.2.2 Financial assets which have incurred credit impairment already
When one or more events which will have adverse effect on the expected future cash flows from the financial asset of the
Group have occurred, such financial asset will become a financial asset which have incurred credit impairment already.
The evidence of credit impairment occurred in a financial asset includes the following observable information:
(1) Material financial difficulties have occurred in the issuer or debtor;
(2) Breach of contract by the debtor, such as default or overdue for the payment of interest or repayment of principal;
(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has granted
concession to the debtor under no other circumstances;
(4) The debtor is likely to go bankrupt or carry out other financial restructuring;
(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financial
asset;
(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence of
credit loss.
10.2.3 Confirmation of expected credit loss
The Group's accounts receivable and other receivables, that are individually significant and the debtor has serious financial
difficulties, are determined on the basis of individual for its credit loss. The remaining accounts receivable and contract
assets are divided into different portfolios according to the area and target of the business as a common risk characteristic
and an impairment matrix is used to determine the credit losses of relevant financial instruments on a portfolio basis. For
the remaining other receivables and long-term receivables, the credit loss of the relevant financial instrument is determined
on a portfolio basis. Notes receivable and receivables are evaluated on a portfolio basis to determine credit losses by
assessing the probability of breach and loss given default based on the credit rating of the acceptor as a common risk
characteristic.
89
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Group confirms the expected credit loss of the relevant financial instrument according to the following method:
In respect of financial assets and 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
following method:
90
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
91
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
92
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability or
93
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
the current period.
94
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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, raw materials, and contract performance
costs 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.
95
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
96
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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;
97
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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. In the case that the equity
of the acquiree is obtained through multiple deals in stages 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", the sum of the
carrying amount of the equity investment of the acquiree plus the cost of the new investment shall be used as the initial
investment cost of the long-term equity investment calculated according to the cost method. The equity originally held is
accounted for by the equity method, and the relevant other comprehensive income will not be accounted for the time being.
Where the original equity investment is an investment in a non-traded equity instrument designated to be measured at fair
value and the change in which is included in other comprehensive income, the difference between its fair value and
carrying value, and the cumulative change in fair value originally recognized in other comprehensive income, are
transferred to retained earnings.
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
98
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
combination shall be initially measured at cost.
15.3 Subsequent measurement and recognition of profit or loss
15.3.1 Long-term equity investment accounted for using the cost method
Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's financial
statements. A subsidiary is an investee that is controlled by the Group.
The long-term equity investment accounted by the cost method shall be measured at its initial investment cost. If there are
additional investments or disinvestments, the long-term equity investment cost shall be adjusted. Income from the
investment in the current period shall be recognized in accordance with the cash dividends or profits declared and issued
by the investee.
15.3.2 Long-term equity investment accounted for using the equity method
Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, the
Group accounts for investment in associates and joint ventures using the equity method. An associate is an entity over
which the Group has significant influence and a joint venture is an entity over which the Group can only exercise joint
control along with other investors on the investee's net assets.
Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's share of
the fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made to the initial
investment cost. Where the initial investment cost is less than the Group's share of the fair value of the investee's
identifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost of
the long-term equity investment is adjusted accordingly.
Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of the
investee for the period as investment income or loss and comprehensive income for the period, meanwhile, the book value
of the long-term equity investment shall be adjusted; The Group shall accordingly reduce the book value of the long-term
equity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declared by the
invested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,
other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjusted
and be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of the
invested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the invested
entity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by the
invested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements of
99
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
the invested unit in accordance with the accounting policies and accounting periods of the Group to recognize the
investment income and other comprehensive incomes. For the transaction incurred between the group and associated
enterprises and joint ventures, invested or sold assets don't constitute a business, the part that doesn't achieve internal
transaction profit or loss or belongs to the Group calculated according to the enjoyed ratio will be offset, and the profit or
loss on investment will be confirmed on this basis. But for the unrealized loss arising from the internal transaction between
the Group and the invested unit, if such transaction loss is defined as the impairment loss of the transferred asset, they
cannot be offset.
When the Group determines the net loss of the invested unit that shall be shared, it is necessary to write-down the book
value of the long-term equity investment and other long-term equities substantially constituting the net investment of the
invested unit to zero as a limit. Besides, if the Group is obliged to bear extra loss for the invested unit, it shall be necessary
to determine provisions and record them to current investment loss in compliance with obligations expected to be assumed.
If the invested unit realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsets
its attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.
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
100
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
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
101
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
being used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowed
under general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings by
applying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over the
amounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable to
the general-purpose borrowings. During the capitalization period, exchange differences related to a specific-purpose
borrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purpose
borrowings are recognized in profit or loss in the period in which they are incurred.
19. Intangible assets
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.
102
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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;
(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, and intangible assets with a finite useful life may be impaired. If there is any indication
that such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefinite
useful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether there
is any indication that the assets may be impaired.
Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of an
individual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverable
amount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposal
expenses; or 2) the present value of the expected future cash flows of the asset or asset group.
103
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
If the recoverable amount of an asset or an asset group is less than its carrying amount, the deficit is accounted as an
impairment provision and is recognized in profit or loss for the period.
Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall be conducted
in accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the asset
group or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the date
of purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than book
value of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to the
book value of goodwill of the said asset group or asset portfolio, and then book value of other assets, except for goodwill,
in asset group or asset portfolio shall be abated in proportion.
Once the impairment loss of such assets is recognized, it cannot be reversed in any subsequent period.
21. Long-term deferred expenses
Long-term deferred expenses are the expenses that are already incurred but will be shared in the current reporting period
and later periods with amortization term of more than one year, mainly for the expenses on betterment of leased fixed
assets 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.
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
104
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
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.
105
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
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.
106
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
(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.
The Group evaluates the contract on the commencement date of the contract, identifies the individual performance
obligations contained in the contract and determines whether each individual performance obligation is to be performed
over a certain period of time or at a certain point in time. 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
information that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individual
selling price.
107
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
If there is variable consideration in the contract, the Group determines the best estimate of variable consideration based
on the expected value or the most likely amount. The transaction price including variable consideration shall not exceed
the amount that is likely to cause no significant reversal of accumulated recognized revenue when the relevant uncertainty
is eliminated. At each balance sheet date, the Group re-estimates the amount of variable consideration that should be
included in the transaction price.
For sales with sales return terms attached, as the customer obtains ownership of related goods, the Group recognizes
revenue in accordance with the consideration (excluding expected refund amounts due to sales returns) that the Group is
expected to receive due to the transfer of goods or services to the customer, and recognizes expected liabilities in
accordance with expected refund amounts due to sales returns. The remaining amount, subsequent to deduction of expected
costs from collecting the goods (including the decrease in value of the returned goods), is recognized as an asset in
accordance with the carrying amount during the expected transfer of returned goods after deducting the costs of the above
net assets carried forward.
For sales with quality assurance clauses, if the quality assurance provides a separate service beyond the assurance to the
customer that the goods or services sold meet established standards, the quality assurance constitutes a single performance
obligation. Otherwise, the Group conducts accounting for quality assurance responsibilities in accordance with the
Accounting Standards for Business Enterprises No. 13-Contingencies.
The additional purchase option of customers includes customer reward incentives. With respect to the additional purchase
option with material rights provided to customers, the Group regards it as a single performance obligation, and recognizes
relevant revenue upon obtaining the control over relevant goods or services by the customers who exercise the purchase
option in future or upon lapse of such option. If a stand-alone selling price of the additional purchase option of customers
is not directly observable, the Group shall consider all relevant information including the difference in discount obtained
with and without the exercise of such option by customers and the possibility of exercising such option by customers
during estimation.
If there is a significant financing component in the contract, the Group determines the transaction price based on the
amount payable in cash when the customer assumes control of the goods or services. The difference between the
transaction price and the contract consideration is amortized using the effective interest rate method during the contract
period. On the contract commencement date, the Group does not consider the significant financing components in the
contract if the interval between the customer obtaining control of the goods or services and the price being paid by the
customer is not more than one year.
The Group judges whether the Group's identity is the principal or agent when engaging in transactions based on whether
it has control over the goods or services before transferring the goods or services to customers. If the Group is able to
control the goods or services before transferring them to customers, the Group is the principal responsible person, and
revenue is recognized based on the total amount of consideration received or receivable; otherwise, the Group is an agent
108
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
of income from goods or services related to the assets, and are included in the current profit or loss. The Group's asset in
109
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
relation to contract costs are mainly contract performance costs, and they are included in inventories based on their current
nature.
27.3 Impairment losses on assets related to contract costs
In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assets
recognized in accordance with other relevant ASBEs and related to the contract. Then, for assets related to contract costs
whose carrying value is higher than the difference between the following two items, the Group makes provision for
impairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration expected
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 such relevant goods or services.
After provision for impairment is made for the asset related to contract costs, if the difference between the above two items
is higher than the carrying value 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 value of the
asset after the reversal shall not exceed the carrying value of the asset on the reversal date assuming no provision for
impairment is made.
28. Types of governmental subsidies and accounting treatment methods
Government subsidies refer to the monetary and non-monetary assets obtained by the Group from the government for free.
Government subsidies are recognized when they can meet the conditions attached to the government subsidies and can be
received.
If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable.
28.1 Judgment basis and Accountant treatment of government subsidy related to assets
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.
110
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
28.2 Judgment basis and accountant treatment of government subsidy related to income
The Group receives government subsidies including subsidies for special projects and Value-Added-Tax refund, etc.,
which are used to compensate the group-related costs or losses, and therefore are categorized as government subsidy
related to income.
For a government grant related to income, if the subsidy is a compensation for related expenses or losses to be incurred in
subsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which the
related costs or losses are recognized; If the subsidy, such as VAT refund, 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.
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.
111
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, except
where the Group is able to control the timing of the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognized to the extent that it is probable that there will be taxable
profits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable
future.
On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicable
tax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance with
the tax laws.
Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise from
transactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in which case
they are recognized in other comprehensive income or in shareholders' equity; and when they arise from business
combinations, in which case they adjust the carrying amount of goodwill.
At the balance sheet date, the carrying amount of deferred tax assets is reviewed and reduced if it is no longer probable
that sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Such
reduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.
29.3 Offset of income tax
When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assets
and settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.
When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or
different taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assets
and liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are
expected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.
30. Lease
Lease refers to a contract that conveys the right to use an asset for a period of time in exchange for consideration.
The Group assesses whether a contract is, or contains, a lease at the inception date. The Group does not re-assess whether
112
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
a contract contains a lease unless the terms and conditions of the contract are changed.
30.1 The Group as the lessee
30.1.1 Separating components of lease
In case the contract contains one or more lease and non-lease components, the Group separates each lease component and
non-lease component, and allocates the consideration to the lease and non-lease components based on the proportion of
relative stand-alone prices of the components.
30.1.2 Right-of-use assets
The Group recognizes the right-of-use assets for leases on the commencement date of the lease term, except for short-term
lease and lease of low-value assets. The commencement date of the lease term refers to the date from which the lessor
makes the leased assets available for use by the Group. Right-of-use assets are initially measured at cost. The cost includes:
Initial measurement amount of lease liabilities;
Amount of lease payment made at or before the commencement date of the lease, less any lease incentives received;
Initial direct costs incurred by the Group;
An estimate of any costs to be incurred by the Group in dismantling and removing the underlying asset, or restoring
the site on which it is located, or restoring the leased assets to the conditions as agreed under the terms of the lease,
excluding costs incurred to produce inventories.
The Group calculates depreciation of the right-of-use assets in accordance with the relevant depreciation provisions of
Accounting Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use asset is depreciated over the shorter
of the lease term and the useful life of the right-of-use asset, unless there is a transfer of ownership or purchase option
which is reasonably certain to be exercised at the end of the lease term.
The Group determines whether the right-of-use assets are impaired and accounts for the identified impairment loss in
accordance with the provisions of Accounting Standards for Business Enterprises No. 8 - Impairment of Assets.
30.1.3 Lease liabilities
The Group initially measures the lease liability on the commencement date at an amount equal to the present value of the
lease payments during the lease term that are not paid at that date, except short-term lease and lease of low-value assets.
In calculating the present value of the lease payments, the Group adopts the interest rate implicit in the lease as the discount
rate. The Group uses its incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined.
Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased asset
during the lease term, including:
Fixed payments, including in-substance fixed payments, less any lease incentives receivable;
113
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 re-measures the lease liability and adjusts the corresponding
right-of-use assets under the following circumstances. If the carrying value of the right-of-use assets has been reduced to
zero while the lease liability needs to be further reduced, the Group will recognize the difference into the current loss and
profit:
In case of any change of the lease term or any change in the valuation of the purchase option, the Group re-measures
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
re-measures 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 re-
measures 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
114
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 re-measured due to other lease modifications,
the Group adjusts the carrying amount of the right-of-use assets accordingly.
30.1.6 Sale-leaseback transactions
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 recognized
is limited to the proportion of the total gain or loss that relates to the rights transferred to the lessor.
30.2 The Group as the lessor
30.2.1 Separating components of lease
In case the contract contains both lease and non-lease components, the Group allocates the contract consideration in
accordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue on portion of
transaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.
30.2.2 Classification of lease
Finance lease is a lease that substantially transfers all the risks and rewards of incidental to ownership of an underlying
asset. Operating lease refers to the leases other than finance lease.
30.2.2.1 The Group records the operating lease business as the lessor
The Group recognizes the lease payments from operating leases as rental income on a straight-line basis for all periods
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
115
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
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
The Group as the buyer-lessor
116
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
If the transfer of the asset in a sale and leaseback transaction does not qualify as a sale, the Group does not recognize the
transferred asset, but recognizes a financial asset equal to the transfer proceeds and account for the financial asset in
accordance with the provisions of Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement
of Financial Instruments. If the transfer of the asset qualifies as a sale, the Group accounts for the purchase of the asset in
accordance with other applicable Accounting Standards for Business Enterprises and account for the lease of the asset.
31. Important judgments while applying accounting policy, and key assumptions and uncertainty factors applied
for accounting estimate
During the process of using accounting policy described in note (III), due to the uncertainty in operation activities, the
group should judge, estimate and assume the book value of the report items which may not be metered reliably. These
judgments, estimates and assumptions are based on the historical experience of the Group's management and other related
factors. Differences may exist between the actual results and the Group's estimate.
The Group regularly reviews the above judgments, assumptions and estimations on the basis of continuous operation. If
the changes of accounting estimate only influence current period, the influence amount will be affirmed during the
changing period; if it influences the current period and subsequent periods, the influence amount will be recognized in the
current period and future period.
- Key assumptions and uncertainties used in accounting estimate
On balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assets and
liabilities in subsequent future periods are:
Impairment provision for inventories
Except for contract performance costs, inventories are measured at the lower of cost or net realizable value. For raw
materials, the latest or future actual purchase price is used as the basis for determining the net realizable value; For products
in progress, the actual selling price of the latest or future finished product minus the estimated costs and costs that will be
incurred when similar products are completed in the current period, the estimated selling expenses and related taxes to be
incurred, is used as the basis for determining the net realizable value; For finished products, the actual selling price of the
latest or future finished product minus the estimated selling expenses and related taxes will be incurred, is used as the basis
for determining the net realizable value. The Group will regularly conduct a comprehensive stocktaking to review the
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
117
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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. For details,
please refer to Note (V) 8.
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 on a portfolio basis to determine its expected credit loss of the relevant accounts receivable. The Group
divides the risk characteristics according to the region and object of its business, and divides the relevant accounts
receivable into different portfolios. Based on the historical loss rate and consider reasonable and well-founded forward-
looking information in the industry, the Group determines the proportion of corresponding loss reserves for different
portfolios of various types of accounts receivable. As of December 31, 2022, based on the historically loss rate and consider
reasonable and well-founded forward-looking information in the industry, the Group determines the corresponding
proportion of loss provision for accounts receivable. The amount of the provision for expected credit losses will change
as the estimation of the Group. The details on the provision for expected credit losses of the accounts receivable of the
Group are given in Note (V) 4.
Useful life and predicted net residual value of fixed asset
The Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assets
with similar properties and functions, the estimation of predicted net residual value is the amount obtained currently by
the Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming the
conditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shall
conduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For the
current reporting period, the Group's management did not see signs either indicating a shortened or extended useful life of
the Group's fixed asset or indicating a change in predicted net residual value.
Accrued liabilities of product quality warranty
Accrued liabilities of product quality assurance are costs and expenses incurred to meet the established standards of
product quality assurance obligations to customers in accordance with the product contract; the Group made such an
estimation according to the predicted repair and replacement cost of relevant products. The estimation considers the
product claim rate trend, historic defect rate, industry practice and other major estimations. The management deems that
the current estimation on accrued liabilities of product quality warranty is reasonable, however, the Group will continue
to review the conditions of product repairs, and will conduct adjustment if any sign indicating the need to make adjustments
on accounting estimates.
Deferred tax assets and deferred tax liabilities
118
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 taxable income, taxable temporary
differences, and the effective tax rate of temporary difference in the future applicable years. If the actual taxable income
and taxable temporary differences 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 taxable income and taxable temporary differences in the future is more than the
estimation, or actual tax rate is higher than the estimation, then the deferred tax assets that are partially unrecognized
deductible losses and deductible temporary differences will be recognized and confirmed in the income statement during
the corresponding period.
Goodwill impairment
When performing impairment test on goodwill, the predicted present value of future cash flows of relevant asset group or
asset group portfolio included the goodwill need to be calculated, the future cash flows of relevant asset group or asset
group portfolio need to be estimated, and the proper pretax rate that fairly reflects the current market time value of money
and specific asset risk need to be determined. When the future actual result is different from the original estimation, the
goodwill impairment loss will alter.
Fair value measurement and valuation process
Held-for-trading financial assets, receivables for financing, and other non-current financial assets of the Group are
measured at fair value in the financial statement. When valuing 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 valuing the fair value of various assets are disclosed in Note
(IX).
32. Alternation in Accounting Policy
32.1 Significant alternation in accounting policy
The Content and Reason of Alternation in Accounting Policy Approval Process Note
Such alternation in
Interpretation No. 16 of Accounting Standards for Business Enterprises accounting policies are -
approved at a meeting
119
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Ministry of Finance issued the Interpretation No. 16 of Accounting Standards for Business of the Board of
Enterprises (the "Interpretation No. 16") on November 30, 2022. It specifies the accounting Directors of the Group
treatment of initial recognition exemptions for deferred income tax related to assets and liabilities
arising from single transactions
Accounting treatment of initial recognition exemptions for deferred income tax related to assets and
liabilities arising from single transaction.
The Interpretation No. 16 amends the scope of the initial recognition exemption for deferred income
tax in ASBE No. 18 – Income Tax. It clarifies that for single transaction that are not business
combinations, where neither accounting profits nor taxable income (or deductible losses) are affected
at the time of the transaction, and the assets and liabilities initially recognized result in equal taxable
temporary differences and deductible temporary differences do not apply to the provisions of ASBE
No. 18 – Income Tax on exemption from initial recognition of deferred tax liabilities and deferred tax
assets. This regulation is effective as of January 1, 2023, and can be implemented in advance. The
Group implemented this requirement on January 1, 2023 and applied retrospective adjustment to single
transactions occurring between the beginning of the earliest period of presentation of the financial
statements and December 31, 2022, and restated the financial statements for the comparative period.
For details, please refer to Note (III), 32.2.
32.2 The impact of the Group's Implement Interpretation No. 16 on the consolidated statement items
(1) The impact on the relevant items of the Group's consolidated balance sheet on January 1, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Deferred tax assets 1,210,877,575.24 758,784.91 1,211,636,360.15
Deferred tax liabilities 93,315,151.17 971,090.51 94,286,241.68
Retained earnings 45,148,877,451.52 (942,347.44) 45,147,935,104.08
Minority equity 1,933,755,610.62 730,041.84 1,934,485,652.46
(2) The impact on the relevant items of the Group's consolidated balance sheet on December 31, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Deferred tax assets 1,469,646,489.04 1,320,206.64 1,470,966,695.68
Deferred tax liabilities 116,502,770.84 837,606.91 117,340,377.75
Retained earnings 49,460,240,986.49 (483,408.98) 49,459,757,577.51
Minority equity 4,580,999,418.82 966,008.71 4,581,965,427.53
(3) The impact on the relevant items of the Group's 2022 consolidated income statement
Unit: RMB
Item Before the restatement Adjustment After the restatement
Income tax expenses 1,297,981,905.54 (694,905.33) 1,297,287,000.21
Net profit attributable to owners of parent
12,837,342,061.07 458,938.46 12,837,800,999.53
company
Profit or loss attributable to minority
719,627,660.86 235,966.87 719,863,627.73
shareholders
120
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
(4) The impact on items related to the Group's consolidated income statement for the period from January 1, 2022 to June
30, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Income tax expenses 628,419,906.49 573,959.45 628,993,865.94
Net profit attributable to owners of parent
5,759,254,775.26 (586,728.70) 5,758,668,046.56
company
Profit or loss attributable to minority
378,925,214.32 12,769.25 378,937,983.57
shareholders
(5) The impact on the relevant items of the parent company's balance sheet on January 1, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Deferred tax assets 281,893,463.93 (443,175.56) 281,450,288.37
Retained earnings 37,958,561,319.89 (443,175.56) 37,958,118,144.33
(6) The impact on the relevant items of the parent company's balance sheet on December 31, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Deferred tax assets 171,524,646.19 (909,206.34) 170,615,439.85
Retained earnings 39,030,437,901.96 (909,206.34) 39,029,528,695.62
(7) The impact on the relevant items of the parent company's 2022 income statement
Unit: RMB
Item Before the restatement Adjustment After the restatement
Income tax expenses 527,533,244.69 466,030.77 527,999,275.46
Net profit 9,597,855,108.17 (466,030.77) 9,597,389,077.40
(8) The impact on items related to the parent company's 2022 income statement for the period from January 1, 2022 to
June 30, 2022
Unit: RMB
Item Before the restatement Adjustment After the restatement
Income tax expenses 363,749,109.56 1,297,470.91 365,046,580.47
Net profit 5,015,275,945.13 (1,297,470.91) 5,013,978,474.22
IV. Taxes
1. Major categories of taxes and tax rates
Category of tax Basis of tax computation Tax rate
121
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 29, 2020, the Company was identified as the high-tech enterprise with a
valid term of 3 years and the preferential tax period is from 2020 to 2022. As of the approval date of this report, The
Company is still in the process of qualification review and application for high-tech enterprises in 2023. According to
the Announcement of the State Administration of Taxation on Issues Related to the Implementation of the Preferential
Income Tax Policy for High-tech Enterprises, within the year when the qualification period of a high-tech enterprise
expires, its enterprise income tax can be temporarily paid at a rate of 15% before it is re-recognized, so the enterprise
income tax for the current period is reduced by a tax rate of 15%. (2022: 15%)
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 2023 to pay the 2022 annual corporate income tax at
the rate of 10%.
(2) In accordance with Finance and Taxation [2011] No. 58 Document of Ministry of Finance, State Administration of
Taxation and General Administration of Customs, the subsidiaries, Chongqing Hikvision Technology Ltd. (hereinafter
referred to as "Chongqing Technology") and Chongqing Hikvision System Technology 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 Development
(Ministry of Finance, State Administration of Taxation, National Development and Reform Commission
Announcement [2020] No.23), the subsidiaries of the Company, Chongqing Technology and Chongqing System will
enjoy the preferential policies for the Western Development from 2021 to 2030. The subsidiary of the Company,
Chongqing EZVIZ Electronic Ltd. (hereinafter referred to as "Chongqing EZVIZ") will enjoy the preferential policies
for the Western Development from 2022. Therefore, the current enterprise income tax is calculated and paid on the
122
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
basis of a reduced tax rate of 15% in the current reporting period (2022:15%).
(3) In accordance with 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 24, 2022, Hangzhou Fuyang Haikang Baotai Surveillance Technology Service Ltd. (hereinafter referred to as
"Fuyang Baotai"), a subsidiary of the Company, is identified as a high-tech enterprise, and the validity period of the
identification is 3 years and the preferential tax period is 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 (2022:15%).
(4) In accordance with the List of High-tech Enterprises Recognized by Zhejiang Provincial Identification Institution in
2022 issued by the leading group office of Zhejiang high-tech enterprise identification management work on
December 24, 2022, the Company's subsidiaries, Hangzhou Hikvision System Technology Ltd. (hereinafter referred
to as "Hangzhou System") and Hangzhou Kuangxin Technology Co., Ltd. (hereinafter referred to as "Hangzhou
Kuangxin") , were recognized as a high-tech enterprise and was valid for 3 years and the preferential tax period is
from 2022 to 2024. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of
15% in the current reporting period (2022:15%).
(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 20, 2020, the
Company's wholly-owned subsidiary, Shanghai Goldway Intelligent Transportation System Ltd. (hereinafter referred
to as "Goldway") was identified as the high-tech enterprise with a valid term of 3 years, from 2020 to 2022. As of the
approval date of this report, Goldway is still in the process of qualification review and application for high-tech
enterprises in 2023. According to the Announcement of the State Administration of Taxation on Issues Related to the
Implementation of the Preferential Income Tax Policy for High-tech Enterprises, within the year when the qualification
period of a high-tech enterprise expires, its enterprise income tax can be temporarily paid at a rate of 15% before it is
re-recognized, so the enterprise income tax for the current period is reduced by a tax rate of 15%. (2022: 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 29, 2020, the Company's subsidiaries, Hangzhou Hikrobot Technology Co.,
Ltd. (formerly known as Hangzhou Hikrobot Technology Ltd. and hereinafter referred to as "HikRobot"), Hangzhou
Hikauto Software Ltd. (hereinafter referred to as "HikAuto Software") and Hangzhou Hikimaging Technology Ltd.
(hereinafter referred to as "HikImaging Technology") were identified as the high-tech enterprises with a valid term of
3 years and the preferential tax period is from 2020 to 2022. As of the approval date of this report, HikRobot, HikAuto
Software, and HikImaging Technology are still in the process of qualification review and application for high-tech
enterprises in 2023. According to the Announcement of the State Administration of Taxation on Issues Related to the
Implementation of the Preferential Income Tax Policy for High-tech Enterprises, within the year when the qualification
123
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
period of a high-tech enterprise expires, its enterprise income tax can be temporarily paid at a rate of 15% before it is
re-recognized, so the enterprise income tax for the current period is reduced by a tax rate of 15%. (2022: 15%)
(7) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang Provincial
Identification Institution in 2022 issued by the Leading Group Office of National High-tech Enterprise Identification
Management on January 17, 2023, the Company's subsidiary, Hangzhou Hikmicro Sensing Technology Ltd.
(hereinafter referred to as "Hikmicro Sensing") was identified as the high-tech enterprises with a valid term of 3 years
and the preferential tax period is from 2022 to 2024.
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,
No. 9 of 2021 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 in 2023(Fa Gai Gao Ji [2023] No. 287), Hikmicro Sensing was
identified as a key integrated circuit design enterprise in May 2023. The qualified enterprise will be exempted from
corporate income tax for the first year to the fifth year from the profitable year, and levied at a reduced rate of 10% in
the subsequent years. The year of 2023 is the third year of Hikmicro Sensing making profits and is exempt from
enterprise income tax (2022: tax-exempted).
(8) In accordance with the Management Measures of High-tech Enterprise Identification (Guo Ke Fa Huo [2016] No. 32)
and the Management Work Guidance of High-tech Enterprise Identification (Guo Ke Fa Huo [2016] No. 195),
Hangzhou Hikmicro Software Ltd. (hereinafter referred to as "Hangzhou Hikmicro Software") was identified as the
high-tech enterprises with a valid term of 3 years from 2022 to 2024.
In accordance with 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), Hangzhou Hikmicro Software was identified as a key software enterprises in May
2023. The qualified enterprise will be exempted from corporate income tax for the first year to the fifth year from the
profitable year, and levied at a reduced rate of 10% in the subsequent years. The year of 2023 is the third year of
Hikmicro Sensing making profits and is exempt from enterprise income tax (2022: tax-exempted).
(9) 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.
124
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Company's subsidiary, Hangzhou EZVIZ Software Ltd. (hereinafter referred to as "EZVIZ Software") was a
qualified software company and enjoy the preferential enterprise income tax at half of the 25% statutory tax rate (2022:
half of the 25% statutory tax rate).
(10) 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 24,
2022, the Company's subsidiary Hangzhou Hikstorage Technology Ltd. (hereinafter referred as "Hikstorage
Technology") was 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 (2022: 15%).
(11) According to the Recording and Publicity List of the High-tech Enterprises identified in 2022 by Zhejiang Provincial
Identification Institution issued by the Leading Group Office of National High-tech Enterprise Identification
Management Work on December 24, 2022, the Company's subsidiaries Hangzhou Rayin Technology Ltd. (hereinafter
referred as "Hangzhou Rayin Technology"), Hangzhou Hikfire Technology Ltd. (hereinafter referred as "HikFire
Technology"), and Zhejiang Hikfire Technology Ltd. (hereinafter referred as "Zhejiang Hikfire")were identified as
high-tech enterprises with a validity period of 3 years and the preferential tax period is from 2022 to 2024. Therefore,
the enterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting
period (2022: 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, HikRobot, HikAuto Software, Hangzhou EZVIZ Software, Hikstorage
Technology, HikImaging Technology, HikFire Technology. Hangzhou Rayin Technology, Hangzhou Microimage Software,
Henan Haikang Hua'an Baoquan Electronics Ltd. (hereinafter referred as "Hua'an Baoquan Electronics"), Hangzhou
Kuangxin, Fuyang Baotai, and Zhejiang Hailai Yunzhi Technology 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 21, 2019 to December 31, 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. In accordance
with the Announcement on clarifying policies such as VAT reduction and exemption for small-scale taxpayers (Ministry
125
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
of Finance, State Administration of Taxation Announcement [2023] No. 1), In 2023, 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.
The Company's subsidiaries, some branches of Hangzhou Hikvision Technology Ltd., Chongqing System, Hangzhou
Hikvision Security Equipment Leasing Service Ltd., Anhui Hikvision City Operation Service Ltd., some branches of
Hangzhou EZVIZ Network Co., Ltd. (hereinafter referred as "Ezviz Network"), Luliang Branch of Zhejiang Haikang City
Service Ltd., Luoyang Branch of Henan Hua'an Baoquan Intelligent Development Ltd., Henan Hua'an Security Services
Ltd. and Guizhou Haikang Traffic Big Data Ltd., comply with the provisions of the VAT Additional Deduction Policy and
were still entitled to additional deduction preferential tax policy of input tax in 2023. Meanwhile, some branches of the
Company, subsidiaries such as Urumqi HaiShi Xin'An Electronic Technology Ltd., Chengdu Hikvision Digital Technology
Ltd., Hangzhou EZVIZ Software, Hangzhou branch of Zhejiang Hikfire Technology Ltd., Henan Hua'An Bao Quan
Intelligent Development Ltd, Wuhan Hikvision Technology Ltd., and some branches of Hangzhou Haikang Intelligent
Technology Ltd. met the provisions of the VAT Additional Deduction Policy and had already entitled to additional
deduction preferential tax policy of input tax in 2023.
126
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 - - 1,768.37 - - 1,710.03
EUR 58,747.66 7.8771 462,761.21 43,514.50 7.4229 323,003.75
USD 5,175.59 7.2258 37,397.80 32,583.86 6.9646 226,933.53
Other
- - 301,745.91 - - 658,417.85
currencies
Bank balance：
35,604,295,321.0
RMB - -
31,031,034,101.61 2
USD 291,081,784.42 7.2258 2,103,298,757.83 369,237,191.93 6.9646 2,571,589,346.94
EUR 101,036,990.74 7.8771 795,878,479.76 116,323,339.53 7.4229 863,456,516.97
Other
- - 569,005,951.27 - - 568,425,909.28
currencies
Other
currency
funds:
RMB 125,799,943.92 - - 361,751,169.54
USD 1,841,737.28 7.2258 13,308,025.24 1,623,544.38 6.9646 11,307,337.16
EUR 640,664.58 7.8771 5,046,578.96 713,664.81 7.4229 5,297,462.51
Other
- - 26,079,640.98 - - 24,530,871.36
currencies
40,011,863,999.9
Total 34,670,255,152.86
4
Including:
deposited in 706,194,307.35 589,363,613.39
overseas banks
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：
Bank acceptance bills - - 10,334,984.97 - - 9,477,411.92
Deposits for letter of
- - 119,301,196.24 - - 126,434,505.79
guarantee
Other security deposits - - 18,021,784.52 - - 13,666,564.66
Other capitals with limitations - - - - - 46,895,003.00
127
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Subtotal 147,657,965.73 196,473,485.37
Capitals without
limitations:
Deposits in payment
instrument provided by third-
- - 21,743,875.54 - - 205,579,877.47
party and in securities
account
Other currency funds in USD 115,038.13 7.2258 831,242.52 93,664.25 6.9646 652,334.03
Other currency funds in EUR 140.32 7.8771 1,105.31 24,403.36 7.4229 181,143.70
Subtotal 22,576,223.37 206,413,355.20
Total 170,234,189.10 402,886,840.57
2. Held-for-trading financial assets
Unit: RMB
Item Closing balance Opening balance
Financial assets measured at fair value through current gain and loss 10,948,728.33 12,807,438.36
Including: derivative financial assets 10,948,728.33 12,807,438.36
Total 10,948,728.33 12,807,438.36
3. Notes receivable
3.1 Categories of notes receivable
Unit：RMB
Category Closing balance Opening balance
Bank acceptance bill 1,885,560,918.99 2,184,776,591.31
Commercial acceptance bill 276,338,998.87 335,211,567.92
Total 2,161,899,917.86 2,519,988,159.23
3.2 As of June 30, 2023, the pledged notes receivable by the Group is nil.
3.3 At the end of the current reporting period, notes receivable endorsed or discounted by the Group but not yet due at the
balance sheet day
Unit：RMB
Category Amount not derecognized as of June 30. 2023
Bank acceptance bill 1,036,158,614.97
Commercial acceptance bill 8,708,039.90
Total 1,044,866,654.87
As of June 30, 2023, the Group gave RMB1,015,747,479.47 (2022: RMB1,182,413,217.20 ) undue notes receivable to
suppliers for endorsement and the Group discounted RMB29,119,175.40 (2022: RMB59,466,804.99) undue notes
receivable to the banks. Since the Group has not transferred almost all the risks and rewards of ownership of financial
128
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
assets, the Group has not terminated its confirmation. For details, please refer to Note (V) 23 and Note (V) 30.3.
3.4 As of June 30, 2023, the Group transferred the defaulted notes receivable into accounts receivable.
Unit：RMB
Category Amounts transferred into accounts receivable as of June 30, 2023
Commercial Acceptance Bill 2,829,460.74
Total 2,829,460.74
3.5 Classified disclosure by method of provision for bad debts
Unit：RMB
Closing balance
Category Carrying amount Credit loss provision Book value
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for bad debts of notes receivables
- - - - -
on a single basis
Provision for bad debts of notes receivables
2,163,804,285.53 100.00 1,904,367.67 0.09 2,161,899,917.86
by portfolios
Total 2,163,804,285.53 100.00 1,904,367.67 0.09 2,161,899,917.86
Opening balance
Category Carrying amount Credit loss provision Book value
Proportion Proportion
Amount Amount Amount
(%) (%)
Provision for bad debts of notes receivables
- - - - -
on a single basis
Provision for bad debts of notes receivables
2,519,988,159.23 100.00 - - 2,519,988,159.23
by portfolios
Total 2,519,988,159.23 100.00 - - 2,519,988,159.23
Provision for bad debts of notes receivables by portfolios：
Unit：RMB
Closing balance
Item
Carrying amount provision for bad debts Proportion (%)
Bank acceptance bill 1,885,560,918.99 - -
Commercial acceptance bill 278,243,366.54 1,904,367.67 0.68
Total 2,163,804,285.53 1,904,367.67 0.09
3.6 Provision for bad debts
Unit：RMB
Amount of changes in the current reporting period
Opening Closing
Category Recollect or
balance Provision Write off Other balance
reverse
Commercial acceptance bill - 1,904,367.67 - - - 1,904,367.67
Total - 1,904,367.67 - - - 1,904,367.67
129
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
4. Accounts receivable
4.1 Disclosure by aging
Unit: RMB
Aging Closing balance Opening balance
Within credit period 17,538,893,195.74 17,802,665,327.45
Within 1 year after exceeding credit period 12,117,350,283.19 10,468,264,283.90
1-2 years after exceeding credit period 2,398,824,440.36 1,906,850,057.03
2-3 years after exceeding credit period 939,705,951.42 907,553,767.72
3-4 years after exceeding credit period 547,588,697.37 762,308,314.38
Over 4 years after exceeding credit period 970,062,214.89 557,358,170.53
Accounts receivable 34,512,424,782.97 32,404,999,921.01
Less: Credit impairment provision 2,885,725,634.27 2,498,705,510.61
Carrying amount 31,626,699,148.70 29,906,294,410.40
4.2 Classified disclosure of credit loss provision by methods
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
34,512,424,782.97 100.00 2,885,725,634.27 8.36 31,626,699,148.70
portfolios
Total 34,512,424,782.97 100.00 2,885,725,634.27 8.36 31,626,699,148.70
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
32,404,999,921.01 100.00 2,498,705,510.61 7.71 29,906,294,410.40
portfolios
Total 32,404,999,921.01 100.00 2,498,705,510.61 7.71 29,906,294,410.40
Provision for credit loss by portfolios for accounts receivable
Unit: RMB
Closing balance
Customer
Carrying amount Credit loss provision Proportion (%)
Portfolio A 4,150,096,917.93 76,350,684.50 1.84
Portfolio B 23,287,289,728.53 2,571,251,591.33 11.04
Portfolio C 7,075,038,136.51 238,123,358.44 3.37
Total 34,512,424,782.97 2,885,725,634.27 8.36
Description of credit loss provision by portfolios for accounts receivable:
As part of the Group's credit risk management, the Group uses the aging exceeding credit period 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.
130
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
As of June 30, 2023 and January 1, 2023, the credit risk and expected credit losses of accounts receivable from portfolio A are as follows:
Unit: RMB
Closing balance Opening balance
Aging Estimated average Credit loss Estimated average Credit loss
Carrying amount Book value Carrying amount Book value
loss rate (%) provision loss rate (%) provision
Within credit period 0.03 3,188,164,602.63 1,106,521.12 3,187,058,081.51 0.03 2,958,550,090.46 952,575.87 2,957,597,514.59
Within 1 year after exceeding credit period 1.59 875,830,695.93 13,900,599.95 861,930,095.98 2.02 672,866,835.07 13,604,729.18 659,262,105.89
1-2 years after exceeding credit period 43.36 37,484,226.44 16,254,615.22 21,229,611.22 48.47 27,091,133.84 13,129,835.35 13,961,298.49
2-3 years after exceeding credit period 68.30 11,131,242.35 7,602,797.63 3,528,444.72 77.48 23,880,801.35 18,503,703.14 5,377,098.21
3-4 years after exceeding credit period 100.00 23,270,845.32 23,270,845.32 - 100.00 13,340,404.86 13,340,404.86 -
Over 4 years after exceeding credit period 100.00 14,215,305.26 14,215,305.26 - 100.00 8,509,701.80 8,509,701.80 -
Total 1.84 4,150,096,917.93 76,350,684.50 4,073,746,233.43 1.84 3,704,238,967.38 68,040,950.20 3,636,198,017.18
As of June 30, 2023 and January 1, 2023, the credit risk and expected credit losses of accounts receivable from portfolio B are as follows:
Unit: RMB
Closing balance Opening balance
Aging Estimated average Credit loss Estimated average Credit loss
Carrying amount Book value Carrying amount Book value
loss rate (%) provision loss rate (%) provision
Within credit period 0.66 8,285,412,034.62 54,948,530.03 8,230,463,504.59 0.76 8,531,459,822.34 65,085,907.08 8,466,373,915.26
Within 1 year after exceeding credit period 4.43 10,434,331,051.38 462,001,173.44 9,972,329,877.94 5.30 9,133,051,848.20 484,083,420.12 8,648,968,428.08
1-2 years after exceeding credit period 21.79 2,316,027,385.63 504,588,823.97 1,811,438,561.66 18.66 1,841,980,392.51 343,623,789.72 1,498,356,602.79
2-3 years after exceeding credit period 37.12 897,815,685.03 333,304,970.46 564,510,714.57 38.19 835,970,994.09 319,296,676.54 516,674,317.55
3-4 years after exceeding credit period 70.69 468,480,830.15 331,185,351.71 137,295,478.44 72.52 702,886,673.06 509,743,109.66 193,143,563.40
Over 4 years after exceeding credit period 100.00 885,222,741.72 885,222,741.72 - 100.00 500,527,605.77 500,527,605.77 -
Total 11.04 23,287,289,728.53 2,571,251,591.33 20,716,038,137.20 10.31 21,545,877,335.97 2,222,360,508.89 19,323,516,827.08
As of June 30, 2023 and January 1, 2023, the credit risk and expected credit losses of accounts receivable from portfolio C are as follows:
131
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Unit: RMB
Closing balance Opening balance
Aging Estimated average Credit loss Estimated average Credit loss
Carrying amount Book value Carrying amount Book value
loss rate (%) provision loss rate (%) provision
Within credit period 0.24 6,065,316,558.49 14,470,023.97 6,050,846,534.52 0.25 6,312,655,414.65 15,648,321.26 6,297,007,093.39
Within 1 year after exceeding credit period 6.25 807,188,535.88 50,457,671.06 756,730,864.82 5.72 662,345,600.63 37,905,044.12 624,440,556.51
1-2 years after exceeding credit period 47.46 45,312,828.29 21,504,582.57 23,808,245.72 48.19 37,778,530.68 18,205,757.98 19,572,772.70
2-3 years after exceeding credit period 82.02 30,759,024.04 25,229,891.03 5,529,133.01 88.35 47,701,972.28 42,142,828.74 5,559,143.54
3-4 years after exceeding credit period 100.00 55,837,021.90 55,837,021.90 - 100.00 46,081,236.46 46,081,236.46 -
Over 4 years after exceeding credit period 100.00 70,624,167.91 70,624,167.91 - 100.00 48,320,862.96 48,320,862.96 -
Total 3.37 7,075,038,136.51 238,123,358.44 6,836,914,778.07 2.91 7,154,883,617.66 208,304,051.52 6,946,579,566.14
4.3 Details of 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 1, 2023 2,498,705,510.61
Provision/(reverse) during the current reporting period 382,111,246.61
Derecognition of financial assets (including direct write-downs) and transfer out (104,965.71)
Difference arised from foreign currency statement translation 5,013,842.76
Balance on June 30, 2023 2,885,725,634.27
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 RMB104,965.71.
132
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 274,701,791.20 219,386,856.60 0.80
(Note)
Third Party A Third party 272,403,474.42 1,464,483.58 0.79
Third Party B Third party 231,629,251.58 13,606,725.50 0.67
Third Party C Third party 221,376,957.49 46,783,295.86 0.64
Third Party D Third party 202,410,647.18 8,420,282.92 0.59
Total 1,202,522,121.87 289,661,644.46 3.49
Note: A subsidiary of CETC is a subsidiary of China Electronics Technology Group Co., Ltd. (hereinafter referred to as
"CETC"), the Company's ultimate controller.
4.5 As of June 30, 2023, there is no termination of accounts receivable booking due to transfer of a financial asset.
4.6 As of June 30, 2023, 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 categories
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 1,502,906,978.21 1,484,218,258.74
Total- 1,502,906,978.21 1,484,218,258.74
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
Item Derecognized amount as of June 30, 2023
Bank acceptance bill 1,532,254,662.29
Total 1,532,254,662.29
133
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
5.4 The Group believes that the acceptance bank's credit rating of the bank acceptance bill held is high, and there is no
significant credit risk, so no loss provision is made.
6. Prepayments
6.1 Prepayments by aging analysis
Unit: RMB
Closing balance Opening balance
Aging
Amount Proportion (%) Amount Proportion (%)
Within 1 year 1,061,803,845.88 94.14 467,175,741.37 87.36
1-2 years 56,939,358.03 5.05 60,041,088.41 11.23
2-3 years 4,749,148.93 0.42 4,732,310.18 0.88
Over 3 years 4,373,368.72 0.39 2,830,980.56 0.53
Total 1,127,865,721.56 100.00 534,780,120.52 100.00
6.2 Details of closing balances of top five prepayments parties
As of June 30, 2023, the Group's top five balances of prepayments amounted to RMB686,414,188.81, accounting for
60.86% of total closing balance of prepayments.
7. Other receivables
7.1 Other receivables by aging
Unit: RMB
Aging Closing balance Opening balance
Within contract period 1,194,834,634.37 435,726,390.34
Within 1 year 80,941,553.40 74,536,873.66
1-2 years 24,516,577.88 6,501,889.62
2-3 years 3,721,978.22 5,758,160.62
3-4 years 3,025,152.94 8,938,449.42
Over 4 years 21,362,303.51 15,094,368.40
Other receivables 1,328,402,200.32 546,556,132.06
Less: Credit impairment provision 32,708,893.90 30,052,646.48
Carrying amount 1,295,693,306.42 516,503,485.58
7.2 Details of other receivables by nature of the payment
Unit: RMB
Item Closing balance Opening balance
Repurchase payments for restricted share 693,632,312.71 80,136,229.12
Guarantee deposits 262,700,477.45 262,305,393.59
134
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Item Closing balance Opening balance
Temporary payments for receivables 126,233,782.64 73,826,738.9
Tax rebates 149,838,649.77 2,166,013.19
Others 95,996,977.75 128,121,757.26
Total 1,328,402,200.32 546,556,132.06
7.3 Details of provision for credit loss
Unit: RMB
Amount of changes in the current reporting
period Difference resulted from
Opening Closing
Category foreign currency
balance Recollect or Resell or balance
Provision statements conversion
reverse write off
Other receivables 30,052,646.48 3,090,987.68 (1,173,267.42) (23,687.58) 762,214.74 32,708,893.90
Total 30,052,646.48 3,090,987.68 (1,173,267.42) (23,687.58) 762,214.74 32,708,893.90
Changes in credit loss provisions for other receivables
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Provision for credit loss Expected credit for the entire
for the entire duration Total
losses in the next duration (credit
12 months (credit impairment has impairment has
not incurred) occurred)
Balance on January 1, 2023 2,647,306.22 4,248,324.22 23,157,016.04 30,052,646.48
The book balance of other
receivables on January 1, 2023
in the current reporting period
--Transfer into stage 2 (493,743.48) 493,743.48 - -
--Transfer into stage 3 - (658,045.75) 658,045.75 -
--Provision/(reverse) in the
(768,186.35) 1,764,099.57 921,807.04 1,917,720.26
current reporting period
--Derecognition of financial
assets (including direct write- - - (23,687.58) (23,687.58)
down) and transfer out
Other changes 762,214.74 - - 762,214.74
Balance on June 30, 2023 2,147,591.13 5,848,121.52 24,713,181.25 32,708,893.90
135
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
7.4 Actual write-off of other receivables during the current reporting period
The actual write off of other receivables during the current reporting period is RMB23,687.58.
7.5 Top five debtors based on corresponding closing balance of other receivables
Unit: RMB
Proportion of total closing balance for
Entities Nature Closing balance Aging Closing balance for credit loss provision
other receivables (%)
Third party E Tax refund 149,311,974.06 Within contract period 11.24 -
Third party F Guarantee deposits 17,848,880.00 Within 1 year 1.34 742,513.41
Third party G Temporary payments for receivables 11,511,485.80 Within contract period 0.87 71,371.21
Third party H Guarantee deposits 9,313,977.75 1-2 years 0.70 1,612,249.55
Third party I Guarantee deposits 7,428,988.00 Within contract period 0.56 46,059.73
Total 195,415,305.61 14.71 2,472,193.90
7.6 As of June 30, 2023, the Group does not have other receivables related to government subsidies.
7.7 As of June 30, 2023, there is no termination of other receivables booking due to transfer of a financial asset.
7.8 As of June 30, 2023, the Group has no assets/liabilities booked due to any transferred other receivable that the Group continues to be involved in.
136
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 8,744,962,436.06 387,353,356.56 8,357,609,079.50 8,590,579,068.82 405,402,336.01 8,185,176,732.81
Work-in-progress 685,756,292.11 - 685,756,292.11 413,355,134.81 - 413,355,134.81
Finished goods 11,016,056,851.01 836,298,431.35 10,179,758,419.66 10,955,174,807.28 839,876,008.09 10,115,298,799.19
Contract performance cost 381,009,958.20 6,595,745.76 374,414,212.44 290,988,057.76 6,595,745.76 284,392,312.00
Total 20,827,785,537.38 1,230,247,533.67 19,597,538,003.71 20,250,097,068.67 1,251,874,089.86 18,998,222,978.81
8.2 Provision for decline in value of inventories
Unit: RMB
Effect on conversion of
Decrease in the current reporting period
Increase in the current financial statements
Category Opening balance Closing balance
reporting period denominated in foreign
Reversals Write-off
currencies
Raw materials 405,402,336.01 99,604,441.83 117,653,421.28 - - 387,353,356.56
Finished goods 839,876,008.09 115,989,712.68 159,743,862.16 40,176,572.74 836,298,431.35
Contract performance
6,595,745.76 - - - - 6,595,745.76
cost
Subtotal 1,251,874,089.86 215,594,154.51 277,397,283.44 - 40,176,572.74 1,230,247,533.67
The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.
137
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 1,645,606,055.38 8,397,080.02 1,637,208,975.36 1,859,628,746.45 10,664,372.98 1,848,964,373.47
Maintenance
236,988,330.56 1,479,579.70 235,508,750.86 270,901,478.31 1,642,480.80 269,258,997.51
services
Total 1,882,594,385.94 9,876,659.72 1,872,717,726.22 2,130,530,224.76 12,306,853.78 2,118,223,370.98
9.2 The classification and disclosure of the method of provision for impairment of contract assets during the current
reporting period:
Unit: RMB
Closing balance
Carrying amount Provisions for impairment Book value
Items
Provision
Proportion
Amount Amount proportion Amount
(%)
(%)
Provision for impairment on a single item - - - - -
Provision for impairment by portfolio 1,882,594,385.94 100.00 9,876,659.72 0.52 1,872,717,726.22
Total 1,882,594,385.94 100.00 9,876,659.72 0.52 1,872,717,726.22
Provision for impairment of contract assets in the current reporting period:
Unit: RMB
Credit loss provision Total
Balance on January 1, 2023 12,306,853.78
Provision (reverse) during the current reporting period (2,430,194.06)
Balance on June 30, 2023 9,876,659.72
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.
138
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
10. Non-current assets due within one year
Unit: RMB
Item Closing balance Opening balance
Long-term receivables due within one year (Note (V) 12) 1,063,928,330.52 996,902,343.27
Total 1,063,928,330.52 996,902,343.27
11. Other current assets
Unit: RMB
Item Closing balance Opening balance
Deductible VAT input 856,594,690.30 670,250,077.42
Prepaid corporate income tax 125,367,739.62 61,808,729.93
Prepaid tariff 35,980,607.13 17,113,351.36
Others 71,932,600.21 57,660,782.87
Total 1,089,875,637.26 806,832,941.58
139
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
12. Long-term receivables
12.1 Details of long-term receivables
Unit: RMB
Closing balance Opening balance
Item Provision for Provision for
Carrying amount Book value Carrying amount Book value
credit loss credit loss
Financial leases receivables 302,586,268.80 47,690,096.81 254,896,171.99 294,708,514.70 41,885,999.65 252,822,515.05
Including: Unrealized income from financing 7,424,453.53 - 7,424,453.53 8,548,939.32 - 8,548,939.32
Installments business 1,153,472,611.36 169,835,964.42 983,636,646.94 916,676,013.71 125,838,244.59 790,837,769.12
Including: Unrealized income from financing 32,405,464.02 - 32,405,464.02 32,175,399.92 - 32,175,399.92
Employee housing loan 459,170,586.56 - 459,170,586.56 493,890,024.40 - 493,890,024.40
Including: Unrealized income from financing 48,688,877.44 - 48,688,877.44 44,084,149.81 - 44,084,149.81
Less: Non-current assets due within one year (Note (V) 10) 1,279,626,216.92 215,697,886.40 1,063,928,330.52 1,163,050,529.25 166,148,185.98 996,902,343.27
Total 635,603,249.80 1,828,174.83 633,775,074.97 542,224,023.56 1,576,058.26 540,647,965.30
12.2 Credit loss provision
The Group believes that the employees corresponding to the long-term receivable employee housing loans held by the Group all have labor relations with the Group and the Group
assesses that the relevant debtors have good credit records, and the Group believes that there is no significant credit risk and therefore loss of provision is made.
140
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
As of June 30, 2023, the credit risk and expected credit losses of long-term receivables are as follows:
Unit: RMB
Closing balance
Aging
Amounts Credit loss provision Estimated average loss rate (%)
Within credit period 616,295,250.95 3,821,272.41 0.62
Within 1 year after exceeding credit period 321,081,042.56 13,356,971.37 4.16
1-2 years after exceeding credit period 227,628,913.02 39,402,564.84 17.31
2-3 years after exceeding credit period 149,821,656.42 55,853,513.52 37.28
3-4 years after exceeding credit period 102,963,755.32 66,823,477.20 64.90
Over 4 years after exceeding credit period 38,268,261.89 38,268,261.89 100.00
Total 1,456,058,880.16 217,526,061.23 14.94
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 1, 2023 3,014,883.93 48,189,847.34 116,519,512.97 167,724,244.24
On January 1, 2023, the book balance of long-term accounts receivable in the current reporting period
Transfer into stage 2 (2,119,134.88) 2,119,134.88 - -
Transfer into stage 3 - (26,383,593.70) 26,383,593.70 -
Provision/(reverse) during the current reporting period 2,925,523.36 28,834,147.69 18,042,145.94 49,801,816.99
Balance on June 30, 2023 3,821,272.41 52,759,536.21 160,945,252.61 217,526,061.23
12.3 As of June 30, 2023, there is no termination of long-term receivables booking due to transfer of a financial asset.
12.4 As of June 30, 2023, the Group has no assets/liabilities booked due to any transferred long-term receivable that the Group continue to be involved in.
141
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
13. Long-term equity investment
Unit: RMB
Increase/Decrease in the current reporting period
Closing
Investment Profit balance
Opening Adjustment: Declaration of Closing
The invested entity (Loss) Other for
Balance Additional Investment Other cash dividends Impairment Balance
recognized under Changes others impairment
Investments reduction comprehensive or profit provision provision
the equity in equity
income distribution
Method
1. Joint venture companies
Hangzhou Haikang Intelligent
Industrial Equity Investment Fund 829,825,387.60 - - (32,069,650.91) - 4,103,623.46 - - - 801,859,360.15 -
Partnership (L.P.)
Zhejiang City Digital Technology
26,341,510.80 - - 800,625.28 - - - - - 27,142,136.08 -
Ltd.
Zhejiang Haishi Huayue Digital
13,382,016.23 - - (34,812.41) - - - - - 13,347,203.82 -
Technology Ltd.
Guangxi Haishi Urban Operation
13,059,993.97 - - 260,727.19 - - - - - 13,320,721.16 -
Management Ltd.
Xuzhou Kangbo Urban Operation
10,385,566.88 - - (43,315.31) - - - - - 10,342,251.57 -
Management Service Ltd.
Yunnan Yinghai Parking Service
5,077,998.04 - - (146,686.51) - - - - - 4,931,311.53 -
Ltd.
Shenzhen Haishi Urban Service
1,674,806.73 - - (1,106,775.95) - - - - - 568,030.78 -
Operatio Ltd.
Subtotal 899,747,280.25 - - (32,339,888.62) - 4,103,623.46 - - - 871,511,015.09 -
2. Associated Companies
142
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Increase/Decrease in the current reporting period
Closing
Investment Profit balance
Opening Adjustment: Declaration of Closing
The invested entity (Loss) Other for
Balance Additional Investment Other cash dividends Impairment Balance
recognized under Changes others impairment
Investments reduction comprehensive or profit provision provision
the equity in equity
income distribution
Method
Maxio Technology (Hangzhou)
143,900,081.27 - - (3,158,580.74) - - - - - 140,741,500.53 -
Co., Ltd.
Wuhu Sensortech Intelligent
98,094,380.52 - - (4,911,240.97) - - - - (93,183,139.55) - -
Technology Ltd. (Note 1)
Beijing Taifang Techology LLC 39,695,050.60 - - (2,347,336.65) - - - - - 37,347,713.95 -
Jiaxin Haishi JiaAn Zhicheng
24,348,699.37 - - 2,959,588.28 - - - - - 27,308,287.65 -
Technology Ltd.
Zhiguang Hailian Big Data
22,425,370.08 - - (1,954,393.50) - - - - - 20,470,976.58 -
Technology Ltd.
Terapark (Nanjing) Ltd. 19,603,125.69 - - (657,897.02) - - - - - 18,945,228.67 -
Sanmenxia Xiaoyun Vision
2,628,242.87 - - 249,437.69 - - - - - 2,877,680.56 -
Technology Ltd.
Zhejiang Changyun Haibao
1,591,282.76 - - (80,259.54) - - - - - 1,511,023.22 -
Technology Ltd.
Subtotal 352,286,233.16 - - (9,900,682.45) - - - - (93,183,139.55) 249,202,411.16 -
Total 1,252,033,513.41 - - (42,240,571.07) - 4,103,623.46 - - (93,183,139.55) 1,120,713,426.25 -
Note 1: In the current period, the Group included Wuhu Sensortech Intelligent Technology Ltd. in the scope of consolidated financial statements and no longer accounted for it as an
associated enterprise. For details, please refer to Note (VI) 1.
143
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
14. Other non-current financial assets
Unit: RMB
Item Closing balance Opening balance
Investments in equity instruments (Note) 474,823,086.64 423,893,239.94
Total 474,823,086.64 423,893,239.94
Note: 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. During the current reporting period, the Company did not receive cash dividend
from such investee enterprises (2022 half year: RMB51,892,209.92) 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. Original carrying amount
1. Opening balance 7,452,114,917.55 1,795,698,464.97 2,966,436,208.66 101,263,567.44 12,315,513,158.62
2. Increase in the current
1,448,500,932.27 92,718,281.38 321,133,920.23 5,357,561.93 1,867,710,695.81
reporting period
1) purchase 1,320,730.35 85,789,824.89 196,422,075.44 3,173,998.15 286,706,628.83
2) transferred from
1,447,180,201.92 237,627.24 48,583,642.93 - 1,496,001,472.09
construction in progress
3) transferred from
- - 5,715,228.87 - 5,715,228.87
inventory
4) increase in business
combinations under non- - 6,690,829.25 70,412,972.99 2,183,563.78 79,287,366.02
common control
3. Decrease in the current
- 21,073,959.10 16,223,189.82 2,627,039.12 39,924,188.04
reporting period
1) disposal or write-off - 21,073,959.10 16,223,189.82 2,627,039.12 39,924,188.04
4. Effect on conversion of
financial statements
29,466,613.46 24,052,237.44 5,764,911.33 1,986,632.56 61,270,394.79
denominated in foreign
currencies
5. Closing balance 8,930,082,463.28 1,891,395,024.69 3,277,111,850.40 105,980,722.81 14,204,570,061.18
II. Accumulated depreciation
1. Opening balance 1,509,685,892.00 760,815,155.19 1,440,166,642.10 65,002,838.65 3,775,670,527.94
2. Increase in the current
184,058,550.08 149,442,074.34 216,133,368.66 6,334,976.70 555,968,969.78
reporting period
1) accrual 184,058,550.08 149,442,074.34 216,133,368.66 6,334,976.70 555,968,969.78
3. Decrease in the
current reporting - 15,847,312.44 13,055,245.44 2,403,495.45 31,306,053.33
period
1) disposal or
- 15,847,312.44 13,055,245.44 2,403,495.45 31,306,053.33
write-off
4. Effect on conversion of
financial statements
2,774,336.04 11,504,342.60 3,565,979.76 718,113.94 18,562,772.34
denominated in foreign
currencies
144
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Building and General-purpose Special-purpose Transportation
Items Total
construction equipment equipment vehicles
5. Closing balance 1,696,518,778.12 905,914,259.69 1,646,810,745.08 69,652,433.84 4,318,896,216.73
III. Total book value
Closing balance on book
7,233,563,685.16 985,480,765.00 1,630,301,105.32 36,328,288.97 9,885,673,844.45
value
Opening balance on book
5,942,429,025.55 1,034,883,309.78 1,526,269,566.56 36,260,728.79 8,539,842,630.68
value
15.2 As of June 30, 2023, the Group did not have any significant idle fixed assets.
15.3 As of June 30, 2023, the carrying amount of fixed assets leased by the Group through operating leases is RMB137,
654,210.43
15.4 Fixed assets of which certificates of title have not been granted as of June 30, 2023 are as follows:
Unit: RMB
Item Carrying amount Reason for certificates of title not granted
Office building for branches 12,357,672.13 In the process of obtaining the real estate certificates
Hangzhou Innovation Industrial Park 769,750,794.06 In the process of obtaining the real estate certificates
Total 782,108,466.19
145
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
Xi'an Science and Technology Park Project 705,669,450.47 - 705,669,450.47 510,141,028.55 - 510,141,028.55
Wuhan Intelligence Industrial Park 558,403,968.14 - 558,403,968.14 362,495,271.16 - 362,495,271.16
EZVIZ Smart Home Products Industrial Base Project
438,190,505.80 - 438,190,505.80 282,125,289.92 - 282,125,289.92
(Infrastructure Part)
EZVIZ Intelligent Manufacturing Chongqing Base
430,577,169.38 - 430,577,169.38 72,173,018.20 - 72,173,018.20
Project (Infrastructure Part)
Security Industrial Base (Tonglu) Phase III 375,876,041.10 - 375,876,041.10 256,401,113.99 - 256,401,113.99
Shijiazhuang Science and Technology Park Project 330,982,988.46 - 330,982,988.46 240,987,635.91 - 240,987,635.91
Chongqing Science and Technology Park Project
140,147,442.65 - 140,147,442.65 88,837,517.21 - 88,837,517.21
Phase III
Hefei Science and Technology Park Project 137,581,753.67 - 137,581,753.67 96,324,257.68 - 96,324,257.68
Zhengzhou Science and Technology Park Project 132,040,277.94 - 132,040,277.94 93,894,775.99 - 93,894,775.99
Nanchang Science and Technology Park Project 81,425,062.83 - 81,425,062.83 55,299,275.67 - 55,299,275.67
Nanjing Science and Technology Park Project 78,496,222.18 - 78,496,222.18 59,330,672.30 - 59,330,672.30
Hikvision Global Warehousing Logistics Center
74,098,726.64 - 74,098,726.64 21,838,347.13 - 21,838,347.13
(Phase I)
Infrared Thermal Imaging Complete Machine
62,670,995.69 - 62,670,995.69 369,535.06 - 369,535.06
Products Industrial Base
Chengdu Science and Technology Park Project - - - 1,424,680,236.64 - 1,424,680,236.64
Others 261,313,783.11 - 261,313,783.11 205,905,325.39 - 205,905,325.39
Total 3,807,474,388.06 - 3,807,474,388.06 3,770,803,300.80 - 3,770,803,300.80
146
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
16.2 Changes in significant construction in progress during the current reporting period
Unit: RMB
Effect on Amount Including:
Accumulated
Transferred to conversion of invested capitalized Capitalization
Other capitalized
Increase in the fixed assets financial as Construction interest and rate for interest Source of
Budget Reductions interest and
Item Opening balance current reporting during the statements Closing balance proportion in Progress profit/loss on in the current
(RMB0,000) (Note 1) profit/loss on funds
period current reporting denominated of budget (%) exchange for the reporting
exchange
period in foreign amount current reporting period
(Note 2)
currencies (%) period
Chengdu Science
(1,429,368,089.70
and Technology 144,925.00 1,424,680,236.64 4,687,853.06 - - - 98.63% 100.00% - - - Self-fund
)
Park Project
Xi'an Science and
Technology Park 170,989.00 510,141,028.55 195,528,421.92 - - - 705,669,450.47 41.27% 41.27% - - - Self-fund
Project
Wuhan Intelligence
Industrial Park 113,204.00 362,495,271.16 195,908,696.98 - - - 558,403,968.14 49.33% 49.33% - - - Self-fund
Project
EZVIZ Smart Self-fund
Home Products /specific
Industrial Base 75,300.00 282,125,289.92 156,065,215.88 - - - 438,190,505.80 58.19% 58.19% 8,254,631.80 4,421,395.72 3.65% loan/
Project raised
(Infrastructure Part) fund
EZVIZ Intelligent
Manufacturing Self-fund/
Chongqing Base 117,000.00 72,173,018.20 358,404,151.18 - - - 430,577,169.38 36.80% 36.80% - - - raised
Project fund
(Infrastructure Part)
Security Industrial
Base (Tonglu) 62,153.00 256,401,113.99 119,474,927.11 - - - 375,876,041.10 60.48% 60.48% - - - Self-fund
Phase III
Shijiazhuang
Science and
Technology Park
72,345.00 240,987,635.91 89,995,352.55 - - - 330,982,988.46 45.75% 45.75% - - - Self-fund
Project
Chongqing Science
and Technology
Park Project Phase
36,855.00 88,837,517.21 51,309,925.44 - - - 140,147,442.65 38.03% 38.03% - - - Self-fund
III
Hefei Science and
Technology Park 47,229.00 96,324,257.68 41,257,495.99 - - - 137,581,753.67 29.13% 29.13% - - - Self-fund
Project
Zhengzhou Science
and Technology 38,493.00 93,894,775.99 38,145,501.95 - - - 132,040,277.94 34.30% 34.30% - - - Self-fund
Park Project
Nanchang Science
and Technology 37,128.00 55,299,275.67 26,125,787.16 - - - 81,425,062.83 21.93% 21.93% - - - Self-fund
Park Project
147
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Nanjing Science
and Technology 45,773.00 59,330,672.30 19,165,549.88 - - - 78,496,222.18 17.15% 17.15% - - - Self-fund
Park Project
Hikvision Global
Warehousing
Logistics Center
13,013.00 21,838,347.13 52,260,379.51 - - - 74,098,726.64 56.94% 56.94% - - - Self-fund
(Phase I)
Infrared Thermal
Imaging Complete
Machine Products
89,817.00 369,535.06 62,301,460.63 - - - 62,670,995.69 6.98% 6.98% - - - Self-fund
Industrial Base
(16,083,852.5
Others 205,905,325.39 136,402,354.03 (66,633,382.39) 1,723,338.65
7)
261,313,783.11 - - - - - Self-fund
(16,083,852.5
Total 1,064,224.00 3,770,803,300.80 1,547,033,073.27 (1,496,001,472.09 1,723,338.65 3,807,474,388.06 - - 8,254,631.80 4,421,395.72
7)
)
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 30, 2023, the Group did not have any sign of impairment of projects under construction; therefore, no provision for impairment loss was booked.
17. Right-of-use assets
Unit: RMB
Items Houses and Buildings General Equipment Special-purpose equipment Transportation vehicles Total
I. Original carrying amount
1. Opening balance 861,163,145.37 298,882.81 91,934,144.20 24,869,131.92 978,265,304.30
2. Increased 139,904,660.02 - - 606,834.39 140,511,494.41
(1) New Lease 135,613,285.45 - - 606,834.39 136,220,119.84
(2) Increase in business combinations under non-common control 4,291,374.57 - - - 4,291,374.57
3. Decreased 57,804,656.70 - - 1,531,702.65 59,336,359.35
(1) The lease contract expires or terminates early 57,804,656.70 - - 1,531,702.65 59,336,359.35
4. Effect on conversion of financial statements denominated in foreign
18,392,109.21 6,113.78 - 1,494,426.07 19,892,649.06
currencies
5. Ending balance 961,655,257.90 304,996.59 91,934,144.20 25,438,689.73 1,079,333,088.42
II. Accumulated depreciation
1. Opening balance 309,924,850.37 226,559.76 82,732,047.46 10,903,520.40 403,786,977.99
148
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Items Houses and Buildings General Equipment Special-purpose equipment Transportation vehicles Total
2. Increased 131,190,708.07 40,808.66 3,894,603.07 3,070,717.25 138,196,837.05
(1) Provisions 131,190,708.07 40,808.66 3,894,603.07 3,070,717.25 138,196,837.05
3. Decreased 54,434,803.32 - - 1,529,855.99 55,964,659.31
(1) The lease contract expires or terminates early 54,434,803.32 - - 1,529,855.99 55,964,659.31
4. Effect on conversion of financial statements denominated in foreign
7,091,625.18 3,585.60 - 714,995.06 7,810,205.84
currencies
5. Ending balance 393,772,380.30 270,954.02 86,626,650.53 13,159,376.72 493,829,361.57
III. Total book value
1. Closing balance on book value 567,882,877.60 34,042.57 5,307,493.67 12,279,313.01 585,503,726.85
2. Opening balance on book value 551,238,295.00 72,323.05 9,202,096.74 13,965,611.52 574,478,326.31
Note: The Group leases a number of assets, including houses and buildings, general equipment, special-purpose equipment and transportation vehicles, for lease terms ranging from 1
month to 13 years. The above right-of use assets cannot be used for purposes including borrowing, mortgage, and guarantee, etc.
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
RMB65,275,536.47 (2022 half year: RMB35,566,397.42).
In the current reporting period, the Group's total cash outflow related to leases was RMB190,387,090.48 (2022 half year: RMB137,599,374.23).
As of June 30, 2023, 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
Item Land use right Intellectual property right Application software Franchise Total
I. Original carrying amount
1. Opening balance 1,582,307,939.63 70,012,763.87 397,648,996.73 103,241,971.57 2,153,211,671.80
2. Increased 74,559,348.02 565,119.39 9,218,634.24 4,233,254.63 88,576,356.28
149
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Item Land use right Intellectual property right Application software Franchise Total
(1) Purchase 74,559,348.02 565,119.39 5,497,573.24 4,233,254.63 84,855,295.28
(2) Increase in business combinations under non-common control - - 3,721,061.00 - 3,721,061.00
3. Decreased - - 729,319.68 - 729,319.68
(1) Disposal or write-off - - 729,319.68 - 729,319.68
4. Effect on conversion of financial statements denominated in
- 115,061.61 2,487,408.04 (14,977.25) 2,587,492.40
foreign currencies
5. Closing balance 1,656,867,287.65 70,692,944.87 408,625,719.33 107,460,248.95 2,243,646,200.80
II. Total accumulated amortization
1.Opening balance 135,271,377.29 68,378,497.22 342,499,507.53 20,094,724.08 566,244,106.12
2. Increased 17,312,948.86 678,244.89 15,261,812.42 2,193,196.36 35,446,202.53
(1) Accrual 17,312,948.86 678,244.89 15,261,812.42 2,193,196.36 35,446,202.53
3. Decreased - - 712,385.42 - 712,385.42
(1) Disposal or write-off - - 712,385.42 - 712,385.42
4. Effect on conversion of financial statements denominated in
- 103,784.07 2,422,057.27 (10,592.90) 2,515,248.44
foreign currencies
5. Closing balance 152,584,326.15 69,160,526.18 359,470,991.80 22,277,327.54 603,493,171.67
III. Impairment provision
1. Opening balance - - - 42,034,063.49 42,034,063.49
2. Increased - - - - -
3. Decreased - - - - -
4. Closing balance - - - 42,034,063.49 42,034,063.49
VI. Total book value
1. Closing balance on book value 1,504,282,961.50 1,532,418.69 49,154,727.53 43,148,857.92 1,598,118,965.64
2. Opening balance on book value 1,447,036,562.34 1,634,266.65 55,149,489.20 41,113,184.00 1,544,933,502.19
18.2 At the end of the current reporting period, the intangible asset of the Group that has not completed the title certificate is nil.
150
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
79,881,823.62 - - 2,995,883.80 82,877,707.42
COMUNICACIN, S.A. DE C.V.
HuaAn Baoquan Intelligence and its
61,322,871.63 - - - 61,322,871.63
subsidiaries
Hangzhou Kuangxin Technology Ltd. 59,060,454.06 - - - 59,060,454.06
Zhejiang Zhiyuan Fire Safety
8,199,253.77 - - - 8,199,253.77
Engineering Co., Ltd.
BK EESTI AKTSIASELTS 4,464,161.60 - - 272,778.62 4,736,940.22
SIA "BK Latvia" 4,457,966.60 - - 273,157.69 4,731,124.29
Wuhu Sensortech Intelligent
- 177,003,548.46 - - 177,003,548.46
Technology Ltd. and its subsidiaries
Total 217,386,531.28 177,003,548.46 - 3,541,820.11 397,931,899.85
Note 1: The Group acquired Wuhu Sensortech in February 2023, resulting in a goodwill of RMB177,003,548.46, see Note
(VI), 1.
20. Long-term deferred expenses
Unit: RMB
Difference of
Other
Invested unit Opening balance Increased Amortized foreign currency Closing balance
decreased
translation
Improvement expenditure
133,193,592.60 32,859,440.85 32,013,790.75 - 1,677,990.13 135,717,232.83
for leased fixed asset
Employee housing loan
44,084,149.81 14,658,920.50 9,662,651.17 391,541.70 - 48,688,877.44
deferred interest
Total 177,277,742.41 47,518,361.35 41,676,441.92 391,541.70 1,677,990.13 184,406,110.27
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 (Restated)
Item Deductible Deductible
temporary Deferred tax assets temporary Deferred tax assets
differences differences
Provision for impairment losses of assets 1,248,998,391.30 306,340,770.25 1,244,117,898.85 303,398,701.08
Provision for credit loss 2,999,015,578.71 615,920,114.81 2,592,933,147.29 539,409,348.22
Payroll payables 1,301,429,661.25 200,924,480.80 866,731,426.46 135,343,862.92
Share-based payment 148,354,879.15 24,861,519.00 102,865,533.19 18,154,808.30
Provisions 136,404,994.03 21,675,833.36 159,335,457.04 26,406,150.70
Accrued unliquidated liabilities 440,708,488.78 104,801,465.49 416,294,075.36 80,952,178.12
Unrealized profit from inter-group 2,627,236,308.30 390,015,349.71 2,407,578,813.30 361,136,821.99
151
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
transactions
Changes in the fair value of derivative
49,653,855.30 12,413,463.83 68,299,685.57 17,074,921.39
financial instruments
Deferred income 856,809,234.61 102,625,417.20 913,846,162.56 108,383,170.93
Changes in the fair value of other non-
2,608,839.78 391,325.97 32,701,261.48 4,905,189.22
current financial assets
Depreciation difference of fixed assets and
296,580,298.84 16,619,640.03 305,795,669.55 13,305,393.19
amortization difference of intangible assets
Lease liabilities 570,156,121.91 101,390,691.09 575,799,161.83 105,171,791.45
Recoverable loss 287,344,433.30 41,295,043.22 294,467,968.83 39,179,829.21
Total 10,965,301,085.26 1,939,275,114.76 9,980,766,261.31 1,752,822,166.72
21.2 Deferred tax liabilities that are not presented on net off basis
Unit: RMB
Closing balance Opening balance (Restated)
Item Taxable temporary Deferred tax Taxable temporary Deferred tax
differences liabilities differences liabilities
Depreciation difference of fixed assets and
1,654,539,548.85 297,026,923.65 1,439,877,224.17 256,804,768.33
amortization difference of intangible assets
Right-of-use assets 579,537,837.53 102,651,394.94 574,478,326.31 104,689,191.72
Long term investment – partnership (L.P.)
201,859,360.15 30,278,904.02 230,000,194.33 34,500,029.15
accounted by the equity method
Changes in the fair value of derivative financial
10,948,728.33 2,737,182.09 12,807,438.36 3,201,859.59
instruments
Changes in fair value of other non-current
16,666,625.00 4,166,656.25 - -
financial assets
Total 2,463,552,099.86 436,861,060.95 2,257,163,183.17 399,195,848.79
21.3 Deferred tax assets or deferred tax liabilities that are presented at the net amount after offset
Unit: RMB
Closing balance Opening balance (Restated)
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 315,165,003.36 1,624,110,111.40 281,855,471.04 1,470,966,695.68
Deferred tax liabilities 315,165,003.36 121,696,057.59 281,855,471.04 117,340,377.75
152
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
22. Other non-current assets
Unit: RMB
Closing balance Opening balance
Item Impairment Impairment
Carrying amount provision Book value Carrying amount Book value
provision
Contract assets 2,076,416,569.11 13,713,549.97 2,062,703,019.14 2,229,022,015.47 15,524,799.08 2,213,497,216.39
Prepayments for
363,836,643.94 - 363,836,643.94 363,341,827.45 - 363,341,827.45
real estate
Prepayments for
acquisition of 56,305,350.25 - 56,305,350.25 127,079,348.02 - 127,079,348.02
land
Prepayments for
81,723,895.56 - 81,723,895.56 70,134,950.70 - 70,134,950.70
equipment
Prepayments for
17,638,822.56 - 17,638,822.56 39,467,612.18 - 39,467,612.18
infrastructure
Others 2,181,057.96 - 2,181,057.96 2,181,057.96 - 2,181,057.96
Total 2,598,102,339.38 13,713,549.97 2,584,388,789.41 2,831,226,811.78 15,524,799.08 2,815,702,012.70
23. Short-term borrowings
23.1 Categories of short-term borrowings
Unit: RMB
Item Closing balance Opening balance
Fiduciary loan 3,121,684,959.69 3,283,605,167.90
Discounted but not expired notes 29,119,175.40 59,466,804.99
Total 3,150,804,135.09 3,343,071,972.89
23.2 As of June 30, 2023, 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
49,948,979.70 68,299,685.57
current profits and losses
Including: derivative financial liabilities 49,948,979.70 68,299,685.57
total 49,948,979.70 68,299,685.57
25. Notes payable
Unit: RMB
Item Closing balance Opening balance
Bank acceptance bill 905,757,774.63 1,207,756,963.94
Total 905,757,774.63 1,207,756,963.94
As of June 30, 2023, the Group did not have any unpaid matured notes payable.
153
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
26. Accounts payable
26.1 List of accounts payable
Unit: RMB
Item Closing balance Opening balance
Payments for goods 13,630,723,366.87 15,803,616,247.96
Payables on equipment 338,712,464.31 221,947,555.03
Total 13,969,435,831.18 16,025,563,802.99
26.2 As of June 30, 2023, 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 2,146,038,997.27 2,177,001,350.72
Advanced receipts for construction settlement payment 350,229,990.35 216,246,689.72
Advanced receipts from services 301,386,262.23 276,187,505.46
Subtotal 2,797,655,249.85 2,669,435,545.90
Less: contract liabilities included in other non-current liabilities
27,489,819.23 24,939,037.54
(Note (V),38)
Total 2,770,165,430.62 2,644,496,508.36
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
154
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
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 4,709,892,590.60 8,107,664,493.77 9,218,467,567.37 3,599,089,517.00
2. Termination benefits – defined
127,409,865.35 585,687,748.90 632,873,862.18 80,223,752.07
contribution scheme
Total 4,837,302,455.95 8,693,352,242.67 9,851,341,429.55 3,679,313,269.07
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,
4,364,544,911.02 7,129,864,853.58 8,279,583,333.80 3,214,826,430.80
allowances and subsidies
2. Staff welfare - 149,302,556.06 149,143,769.82 158,786.24
3. Social insurance contributions 67,666,467.66 311,665,173.78 341,787,906.43 37,543,735.01
Including:
64,600,517.79 297,168,493.08 325,920,370.71 35,848,640.16
Medical insurance
Injury insurance 2,577,031.70 11,547,395.34 12,568,359.45 1,556,067.59
Maternity insurance 488,918.17 2,949,285.36 3,299,176.27 139,027.26
4. Housing funds 3,892,614.17 390,093,649.17 393,986,263.34 -
5. Labor union and education fund 273,788,597.75 126,738,261.18 53,966,293.98 346,560,564.95
Subtotal 4,709,892,590.60 8,107,664,493.77 9,218,467,567.37 3,599,089,517.00
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 125,140,923.68 565,893,572.53 611,475,544.74 79,558,951.47
2. Unemployment insurance 2,268,941.67 19,794,176.37 21,398,317.44 664,800.60
Subtotal 127,409,865.35 585,687,748.90 632,873,862.18 80,223,752.07
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.
155
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
29. Taxes payable
Unit: RMB
Item Closing balance Opening balance
Enterprise income tax 667,539,511.57 648,624,680.00
Value-added tax 598,680,177.80 380,413,435.90
City construction and maintenance tax 31,367,873.34 29,362,098.03
Education surcharges 14,465,999.70 13,048,855.45
Local education surcharges 9,956,544.21 9,328,597.02
Others 102,959,806.00 153,254,471.97
Total 1,424,969,912.62 1,234,032,138.37
30. Other payables
30.1 By categories
Unit: RMB
Item Closing balance Opening balance
Dividend payable 412,151,566.73 300,150,894.34
Other payables 2,736,356,011.25 2,903,157,791.97
Total 3,148,507,577.98 3,203,308,686.31
30.2 Dividends payable
Unit: RMB
Item Closing balance Opening balance
Dividends of incentive restricted shares 279,172,042.60 187,657,918.50
Dividends payable to minority shareholders 132,979,524.13 112,492,975.84
Total 412,151,566.73 300,150,894.34
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
1,015,747,479.47 1,182,413,217.20
(V)-3)
Accrued expenses 815,591,307.32 988,937,734.54
Guarantee and deposit fees 459,739,291.14 401,628,843.74
Collection and payment on behalf 293,066,890.37 236,839,241.37
Other expense payable 152,211,042.95 93,338,755.12
Total 2,736,356,011.25 2,903,157,791.97
30.3.2 As of June 30, 2023, the Group did not have any significant other payables aging over one year.
156
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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) 1,863,536,560.83 562,906,197.43
Lease liabilities due within one year (Note (V), 34) 282,664,695.56 303,328,658.06
Long-term payables due within one year (Note (V) 35) 2,154,486.39 1,962,416.97
Total 2,148,355,742.78 868,197,272.46
32. Other current liabilities
Unit: RMB
Item Closing balance Opening balance
Repurchase obligation of restricted shares 1,537,841,964.86 465,979,374.84
Output VAT to be transferred 430,739,944.22 457,742,218.94
Total 1,968,581,909.08 923,721,593.78
33. Long-term borrowings
Unit: RMB
Item Closing balance Opening balance
Pledged loan (Note 1) 1,312,168,859.17 1,363,216,974.37
Mortgage loan (Note 2) 281,412,830.03 229,070,200.25
Fiduciary loan (Note 3) 9,926,024,066.21 6,315,934,364.41
Other borrowing (Note 4) 42,000,000.00 177,000,000.00
Less：Long-term loans due within one year (Note (V) 31) 1,863,536,560.83 562,906,197.43
Total 9,698,069,194.58 7,522,315,341.60
Note 1: As of June 30, 2023, the pledged loan was obtained by the Group with all the rights and benefits under related PPP
projects pledged. The maturity date interval is from June 20, 2028 to March 26, 2040, and the annual interest rate of the
above loans is floating interest rate, which ranges from 3.895% to 4.195%.
Note 2: As of June 30, 2023, the mortgage loan was obtained by the Group with the use right of land as the mortgage. The
maturity date is on August, 13, 2026 with the annual interest rate of 1-year LPR rate, which is adjusted each 12 months.
Note 3: At the end of the reporting period, the maturity period of credit loan is from September 27, 2023 to December 1,
2027, and the annual interest rate ranges from 0.8% to 3.85%
Note 4: During 2016, the Group and CDB Development Fund Ltd. (CDBDF) jointly inject capital into Hikvision
Electronics Co., Ltd. ("Hangzhou Electronics"), a subsidiary of the Group. Pursuant to the capital injection agreement,
CDBDF would not participate in senior management personnel such as directors, and it would either take part in decision-
making or make significant influence on Hangzhou Electronics. The Group shall pay a 1.2% annualized return to CDBDF
through dividends or interest payments, and the Group is required to redeem the CDBDF's equity investment in the current
reporting period by installments each year from 2021 to 2024. Therefore, the capital injection by CDBDF is treated as a
long-term loan. The Group paid RMB135,000,000.00 to redeem the 20.23% equity interest in Hangzhou Electronics
Company held by CDBDF in the current period. As of June 30, 2023, the balance of the loan is 42 million (December 31,
2022: RMB177 million).
157
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
34. Lease liabilities
Unit: RMB
Item Closing balance Opening balance
Lease liabilities 582,884,092.95 580,584,582.89
Less: Lease liabilities due within one year (Note (V), 31) 282,664,695.56 303,328,658.06
Total 300,219,397.39 277,255,924.83
35. Long-term payables
Unit: RMB
Item Closing balance Opening balance
Purchase goods in installments 8,060,753.47 9,532,351.64
Less: Long-term payables due within one year (Note (V), 31) 2,154,486.39 1,962,416.97
Total 5,906,267.08 7,569,934.67
36. Provisions
Unit: RMB
Item Closing balance Opening balance
Product quality warranty 204,944,862.47 205,095,341.94
Return payment payable 16,471,649.07 14,269,885.68
Total 221,416,511.54 219,365,227.62
37. Deferred income
Unit: RMB
Increase in current Decrease in current
Item Opening balance Closing balance Details
reporting period reporting period
Government Subsidies 933,260,426.12 90,679,392.75 119,525,114.24 904,414,704.63 Note
Total 933,260,426.12 90,679,392.75 119,525,114.24 904,414,704.63
As of June 30, 2023, 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
38,298,809.18 - 1,209,436.08 - 37,089,373.10
Park construction assets
Related to
Other special subsidies 621,290,248.87 36,737,592.75 32,087,457.97 - 625,940,383.65
assets
Related to
Other special subsidies 273,671,368.07 53,941,800.00 86,228,220.19 - 241,384,947.88
incomes
Subtotal 933,260,426.12 90,679,392.75 119,525,114.24 - 904,414,704.63
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.
158
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
38. Other non-current liabilities
Unit: RMB
Item Closing balance Opening balance
Repurchase obligation for restricted stocks 1,642,792,335.93 2,806,169,050.05
Contract liabilities (Note (V), 27) 27,489,819.23 24,939,037.54
Total 1,670,282,155.16 2,831,108,087.59
39. Share capital
Unit: RMB
Changes for the current reporting period
Opening
New issue Bonus Transfer from Closing balance
balance Others (Note) Subtotal
of shares issue Capital Reserve
2023.06.30
Total shares 9,430,920,624.00 - - - (66,987,835.00) (66,987,835.00) 9,363,932,789.00
Note: Pursuant to the resolutions of the 13 th meeting of the 5th session of the Board of Directors of the Company on 15
September 2022 and the 2022 second extraordinary general meeting of the Company on October 10, 2022, from October
11, 2022 to December 30, 2022, the Company accumulatively repurchased 66,987,835 outstanding shares of the Company
through the special securities account for share repurchase by means of centralized competitive bidding transaction. The
capital stock is reduced by RMB66,987,835.00, and the capital reserve is reduced by RMB1,976,897,390.35. The
Company completed deregistration on January 13, 2023.
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)
2023.06.30
Share premium 9,289,814,942.29 34,559,200.83 2,003,803,854.97 7,320,570,288.15
Other capital reserves 851,338,493.03 361,628,328.30 - 1,212,966,821.33
Total 10,141,153,435.32 396,187,529.13 2,003,803,854.97 8,533,537,109.48
Note 1: The increase in share premium of RMB6,300,234.68 in the current period is due to the transfer of the asset portfolio
of the business department of the Company to its subsidiary, Hangzhou Micro Sensing; RMB28,258,966.15 is formed by
the Company increasing the capital of its subsidiary Shijiazhuang Sensortech Intelligent Technology Co., Ltd.
("Shijiazhuang Sensortech") at the price of 60.00% equity of Hangzhou Hikauto Technology Co., Ltd. ("Automotive
Technology"), a subsidiary of Wuhu Sensortech, and 44.40% of the equity of Wuhu Sensortech. Upon completion of the
capital increase, the Company's direct shareholding in Shijiazhuang Sensortech was diluted from 100% to 56.0969%, the
Company's direct shareholding in HikAuto was changed from 60.00% to 56.0969%, and the Company's direct
shareholding in Wuhu Sensortech was changed from 44.40% to 56.0969%, please refer to Note (VII), 2.
The increase in other capital reserves in the current reporting period of RMB358,140,248.45 is due to the equity-settled
share-based payment included in the capital reserve, please refer to Note (XI); RMB3,488,079.85 was due to changes in
other equity of the investee in the long-term equity investment.
Note 2: The decrease in share premium of RMB1,976,897,390.35 in the current reporting period is due to the repurchase
and cancellation of 66,987,835 outstanding shares by the Company, please refer to Note (V).39 for details;
RMB9,113,049.02 is the part of the equity-settled share-based payment shared by minority shareholders.
RMB17,793,415.60 is the difference between the consideration paid for the acquisition of a 20.00% minority interest in
159
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Hangzhou Kuangxin Technology Co., Ltd. ("Kuangxin Technology"), a subsidiary of the Company, and the share of net
assets payable on a scale of the new shareholding, please refer to Note (VII). 2 for details.
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)
2023.06.30
Restricted shares incentive scheme 3,272,148,424.89 - 91,514,124.10 3,180,634,300.79
Outstanding shares 2,043,885,225.35 - 2,043,885,225.35 -
Total 5,316,033,650.24 - 2,135,399,349.45 3,180,634,300.79
Note 1: During the current reporting period, due to the company repurchased and cancelled 66,987,835 outstanding shares,
reduced treasury shares by RMB2,043,885,225.35, please refer to Note(V).39; Due to the Company's provision of
restricted stock cash dividends, treasury shares were reduced by RMB91,514,124.10.
42. Other comprehensive income
Unit: RMB
Amounts occurred in the current reporting period
Less: transfer
The before- to current
income-tax Less: Attributable to Attributable to
Opening period P/L
Item amount incurred income owner of the minority Closing balance
balance from previous
during the tax parent company shareholders
current other expense (after tax)
(after tax)
reporting period comprehensiv
e income
2023.06.30
Other incomes
that may be
reclassified
(42,587,158.81) 209,956,944.59 - - 99,752,243.47 110,204,701.12 57,165,084.66
subsequently
to profit or
loss
Included:
Effect on
conversion of
financial
(42,587,158.81) 209,956,944.59 - - 99,752,243.47 110,204,701.12 57,165,084.66
statements
denominated
in foreign
currencies
Other
comprehensiv (42,587,158.81) 209,956,944.59 - - 99,752,243.47 110,204,701.12 57,165,084.66
e income
43. Surplus reserves
Unit: RMB
Increase in the Decrease in the
Item Opening balance current reporting current reporting Closing balance
period period
2023.06.30
Statutory surplus reserves (Note) 4,715,460,312.00 - - 4,715,460,312.00
Total 4,715,460,312.00 - - 4,715,460,312.00
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
160
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
amount of the statutory surplus reserve fund reaches more than 50% of the registered capital, it may not be withdrew. As
of June 30, 2023, the accumulated amount of the Company's statutory surplus reserve 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 2023 First half year of 2022 (Restated)
Retained Earnings at the close of the prior reporting period
49,460,240,986.49 45,148,877,451.52
before adjustment
Add: Impact of changes in accounting policies (483,408.98) (942,347.44)
Undistributed profit at beginning of period after adjustment 49,459,757,577.51 45,147,935,104.08
Add: Net profit attributable to the parent company for the
5,337,868,016.88 5,758,668,046.56
current reporting period
Less: Withdrawal of statutory surplus reserve - -
Dividends payable on common shares (Note) 6,554,752,952.30 8,489,887,847.10
Retained earnings at the end of the current reporting period 48,242,872,642.09 42,416,715,303.54
Note：According to the resolution of 2022 Annual General Meeting held on May 10, 2023, 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 RMB7 (tax inclusive), the rest of retained earnings were all carried forward for future distributions.
45. Revenue/operating costs
45.1 Revenue and operating cost
Unit: RMB
First half year of 2023 First half year of 2022
Item
Revenue Cost Revenue Cost
Major business 37,300,729,580.38 20,483,188,439.76 36,969,461,995.42 20,997,985,934.97
Other business 270,056,817.51 111,335,074.34 288,054,595.20 184,969,765.96
Total 37,570,786,397.89 20,594,523,514.10 37,257,516,590.62 21,182,955,700.93
45.2 Revenue (By product or business type)
Item First half year of 2023 First half year of 2022
Products and services for main business (Note) 28,634,288,679.38 29,365,919,626.68
Constructions of main business 748,219,037.49 883,860,678.27
Innovative businesses 8,188,278,681.02 7,007,736,285.67
Including: Robotic business 2,278,447,297.18 1,766,179,532.22
Smart home business 2,183,062,932.81 1,959,836,601.63
Thermal imaging business 1,475,222,288.91 1,360,474,051.98
Auto electronics business 1,001,472,278.41 823,757,230.56
Storage business 792,630,227.93 728,160,403.93
Other innovative businesses 457,443,655.78 369,328,465.35
Total 37,570,786,397.89 37,257,516,590.62
Note: Main business refers to the business parts other than the innovative businesses.
161
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
45.3 Major business (by business type)
Unit: RMB
First half year of 2023
Item
Revenue Cost
Product sales 35,716,798,726.12 19,651,761,673.32
Construction contract 748,219,037.49 565,835,111.46
Provide services 835,711,816.77 265,591,654.98
Total 37,300,729,580.38 20,483,188,439.76
45.4 Major business (by the time of revenue recognition)
Unit: RMB
First half year of 2023
Item
Revenue Cost
Recognized at a point in time 35,716,798,726.12 19,651,761,673.32
Recognized over time 1,583,930,854.26 831,426,766.44
Total 37,300,729,580.38 20,483,188,439.76
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.
162
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
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.
46. Business Taxes and Surcharges
Unit: RMB
Items First half year of 2023 First half year of 2022
City construction and maintenance tax 156,223,720.16 115,474,391.40
Education surcharges 67,679,309.37 50,676,365.58
Local education surcharges 45,119,539.57 33,784,436.59
Real estate tax 40,573,777.76 28,463,726.55
Stamp duty 35,735,215.66 27,070,763.30
Tax on use of land 4,058,891.61 3,565,327.53
Vehicle and vessel tax 90,406.44 86,691.53
Others 1,057,179.39 548,574.53
Total 350,538,039.96 259,670,277.01
47. Financial Expenses
Unit: RMB
Items First half year of 2023 First half year of 2022
Interest expenses 189,625,292.12 132,611,236.17
Interest expense on lease liabilities 9,297,983.31 10,337,503.94
Less: Interest income 493,992,701.34 452,305,967.35
Foreign exchange gains (285,146,313.96) (499,135,620.25)
Less: Capitalized specific loan interests and foreign
4,421,395.72 (5,122,147.93)
exchange differences on specific loan
Others 17,263,885.78 17,905,441.95
Total (567,373,249.81) (785,465,257.61)
163
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
48. Other income
Unit: RMB
Items First half year of 2023 First half year of 2022
VAT refund 782,559,408.82 828,593,505.82
Special subsidies 228,252,374.13 144,644,000.16
Tax relief 16,499,949.35 17,399,591.10
Value-added tax reduction 1,424,205.32 2,634,527.39
Total 1,028,735,937.62 993,271,624.47
49. Investment income
Unit: RMB
Items First half year of 2023 First half year of 2022
Long-term equity investment income (losses) based on equity method (42,240,571.07) 46,152,616.54
Investment income (losses) from disposal of held-for-trading financial assets (63,426,476.78) 82,624,092.42
Investment income from other non-current financial assets during the holding period - 51,892,209.92
Investment income from disposal of subsidiaries and other business units - 3,375,870.42
Investment income from disposal of other non-current financial assets - 1,260,000.00
The profit of business combination under different control realized in stages by -
116,433,610.45
multiple transactions
Total 10,766,562.60 185,304,789.30
50. Gains (Losses) from changes in fair values
Unit: RMB
Sources of gains (losses) from changes in fair values First half year of 2023 First half year of 2022
Held-for-trading financial assets (1,858,710.03) 13,688,362.53
Including: gains and losses on the changes in fair value of derivative financial
(1,858,710.03) 13,688,362.53
instruments
Gains (losses) from changes in fair value of other non-current financial assets 30,092,421.70 (26,448,715.78)
Held-for-trading financial liabilities 18,355,299.29 (105,701,739.57)
Including: gains (losses) on the changes in fair value of derivative financial
18,355,299.29 (105,701,739.57)
instruments
Total 46,589,010.96 (118,462,092.82)
51. Credit impairment loss
Unit: RMB
Items First half year of 2023 First half year of 2022
Credit impairment losses of accounts receivable (382,111,246.61) (348,840,630.65)
Credit impairment losses of notes receivable (1,904,367.67) -
Credit impairment (losses) of other receivables (1,917,720.26) (3,564,338.48)
Credit impairment losses of long-term receivables (49,801,816.99) (20,269,964.91)
Total (435,735,151.53) (372,674,934.04)
52. Impairment losses of assets
Unit: RMB
Items First half year of 2023 First half year of 2022
Losses on inventory devaluation (199,797,440.25) (125,852,762.39)
Contract assets impairment reverses 4,241,443.17 51,211.49
Total (195,555,997.08) (125,801,550.90)
164
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
53. Non-operating income
Unit: RMB
Items The amount booked into current period
First half year of 2023 First half year of 2022
non-recurring profits and looses
Fines and confiscations 51,204,267.88 22,811,897.19 51,204,267.88
Special subsidies 352,034.41 413,760.04 352,034.41
Others 6,986,614.67 12,929,913.72 6,986,614.67
Total 58,542,916.96 36,155,570.95 58,542,916.96
54. Non-operating expenses
Unit: RMB
First half year of First half year of The amount booked into current period non-
Items
2023 2022 recurring profits and looses
Local water conservancy construction fund 1,410,890.77 1,286,929.67 1,410,890.77
Others 8,223,676.69 7,961,149.88 8,223,676.69
Total 9,634,567.46 9,248,079.55 9,634,567.46
55. Income tax expenses
Unit: RMB
First half year of 2022
Items First half year of 2023
(Restated)
Income tax for the current reporting period 1,030,881,689.99 1,148,346,797.29
Deferred income tax expenses (143,004,387.17) (159,534,539.63)
Differences in filing and payment of income tax in previous reporting years (397,663,010.56) (359,818,391.72)
Total 490,214,292.26 628,993,865.94
56. Notes to consolidated cash flow statement items
56.1 Other cash receipts relating to operating activities
Unit: RMB
Items First half year of 2023 First half year of 2022
Interest income 433,297,201.84 389,350,124.38
Government subsidies 170,623,695.43 183,059,552.14
Others 389,510,196.21 424,493,141.94
Total 993,431,093.48 996,902,818.46
56.2 Other cash payments relating to operating activities
Unit: RMB
Item First half year of 2023 First half year of 2022
Office expenses and business expenses 797,192,324.36 590,969,162.07
R&D expenses 659,721,480.90 711,626,778.29
Advertising and Selling services 606,833,876.02 677,292,677.34
Travelling expenses 339,884,727.61 199,375,690.87
Shipping and transportation expenses 226,255,040.46 200,108,194.48
Rental expenses 58,070,114.51 31,344,787.80
165
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Item First half year of 2023 First half year of 2022
Others 146,127,510.15 402,694,197.00
Total 2,834,085,074.01 2,813,411,487.85
56.3 Other cash receipts relating to investing activities
Unit: RMB
Item First half year of 2023 First half year of 2022
Receipts of financing lease payments 29,888,320.03 21,941,152.14
Cash received from acquisition of subsidiaries - 182,816.96
Total 29,888,320.03 22,123,969.10
56.4 Other cash payments relating to financing activities
Unit: RMB
Item First half year of 2023 First half year of 2022
Repurchase of restricted shares 613,496,083.59 -
Repayment of lease liabilities 125,111,554.01 106,254,586.43
Consideration paid for acquisition of minority interests 50,400,000.00 -
Total 789,007,637.60 106,254,586.43
57. Supplementary information about cash flow statement
57.1 Supplementary information about cash flow statement
Unit: RMB
Supplementary information First half year of 2023 First half year of 2022
1. Reconciliation of net profit to cash flows from operating activities:
Net profit 5,756,423,810.24 6,137,606,030.13
Add: Impairment of assets 195,555,997.08 125,801,550.90
Provision for credit losses 435,735,151.53 372,674,934.04
Fixed assets depreciation 555,968,969.78 483,474,642.69
Amortization of intangible assets 35,446,202.53 38,851,810.72
Right-of-use assets depreciation 138,196,837.05 116,600,040.59
Long-term deferred expenses amortization 41,676,441.92 50,684,862.57
Losses on disposal of fixed assets, intangible assets and other long-term assets 2,699,436.97 10,638,858.24
Obsolescence losses of fixed assets, intangible assets and other long-term
527,310.75 674,414.12
assets
Losses (gains) from changes in fair value (46,589,010.96) 118,462,092.82
Financial expenses 109,325,790.05 (11,336,256.06)
Investment income (10,766,562.60) (185,304,789.30)
Share-based payment based on equity settlement 373,528,563.06 539,601,648.97
Decrease (increase) of restricted funds 53,835,939.99 (149,925,859.57)
Increase in deferred income tax assets (153,758,959.24) (143,545,250.53)
Increase (decrease) in deferred income tax liabilities 1,208,557.08 (17,314,320.14)
Increase in inventories (541,945,868.02) (2,769,881,190.63)
Increase in operating receivables (2,393,337,294.55) (3,327,600,966.39)
166
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Supplementary information First half year of 2023 First half year of 2022
Decrease in operating payables (3,469,359,736.75) (3,586,743,181.54)
Increase (decrease) in deferred income (57,980,713.11) 38,088,719.29
Net cash flows from operating activities 1,026,390,862.80 (2,158,492,209.08)
2. Significant investing and financing activities not involving cash receipts and
payments:
3. Net changes in cash and cash equivalents:
Closing balance of cash 34,522,597,187.13 27,758,901,192.63
Less: Opening balance of cash 39,815,390,514.57 34,603,944,429.20
Add: Closing balance of cash equivalents - -
Less: Opening balance of cash equivalents - -
Net decrease in cash and cash equivalents (5,292,793,327.44) (6,845,043,236.57)
57.2 Net cash paid to acquire subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents paid in the current period for business combination 56,297,070.00
Including: Sensortech 56,297,070.00
Less: Cash and cash equivalents held by the Company on the date of purchase 12,304,418.18
Including: Sensortech 12,304,418.18
Net cash paid to acquire the subsidiary 43,992,651.82
57.3 Constituents of cash and cash equivalents
Unit: RMB
Item Closing balance Opening balance
Cash 34,522,597,187.13 39,815,390,514.57
Including: Cash on hand 803,673.29 1,210,065.16
Bank deposit for payment at any time 34,499,217,290.47 39,607,767,094.21
Other monetary capital for payment at any time 22,576,223.37 206,413,355.20
Cash equivalents - -
Closing balance of cash and cash equivalents 34,522,597,187.13 39,815,390,514.57
Among the total balance of RMB170,234,189.10 of the other cash and bank balances at the end of the reporting period
(December 31, 2022: RMB402,886,840.57), RMB147,657,965.73 are various guarantee deposits and other restricted
funds, etc. (December 31, 2022: RMB196,473,485.37), 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
Cash and bank balances 147,657,965.73 Various guarantee deposits and other restricted funds
Notes receivable 1,044,866,654.87 Endorsed to suppliers, Discounted to bank
Accounts receivable 335,127,298.72 Pledged for long-term borrowings
Contract assets 235,324,648.36 Pledged for long-term borrowings
Fixed assets 137,654,210.43 Fixed assets leased out under operating leases
Intangible assets 38,344,908.58 Pledged and mortgage for long-term borrowings
Other non-current assets 1,542,940,336.45 Pledged for long-term borrowings
Total 3,481,916,023.14
167
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 the
Items
the end of the reporting period conversion end of the reporting period
Cash and bank balances
Including: USD 288,168,109.67 7.2258 2,082,245,126.86
EUR 86,007,404.67 7.8771 677,488,927.33
Accounts receivable
Including: EUR 292,636,645.38 7.8771 2,305,128,119.32
USD 109,823,014.80 7.2258 793,559,140.34
Short-term borrowings
Including: EUR 150,136,155.54 7.8771 1,182,637,510.80
USD 24,970,081.98 7.2258 180,428,818.36
Accounts payable
Including: USD 37,180,310.83 7.2258 268,657,490.00
EUR 242,997.49 7.8771 1,914,115.53
Long-term borrowings
Including: EUR 140,000,000.00 7.8771 1,102,794,000.00
Non-current liabilities due within
one year - long-term borrowings
Including: EUR 4,032,000.00 7.8771 31,760,467.20
60. Government Subsidies
60.1 By categories
Unit: RMB
Amount booked in
Category Amount Financial Report Items
current profit and loss
VAT rebate 782,559,408.82 Other Income 782,559,408.82
Special subsidies 170,623,695.43 228,604,408.54
Deferred income / Other income/
Including: Other special subsidies 170,623,695.43 227,394,972.46
Non-operating income
Chongqing Manufacture Park construction - Deferred income / Other income 1,209,436.08
subsidies
Total 953,183,104.25
60.2 There was no refund of government subsidies during the current reporting period.
168
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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
Wuhu Sensortech Intelligent Technology Ltd. ("Wuhu Sensortech")
In December 2016, the Company acquired 35% equity of Wuhu Sensortech for RMB35,000,000.00, and Wuhu Sensortech
became the Company's associated company. In January 2023, the Company and the original shareholder of Wuhu
Sensortech signed the Equity Acquisition Agreement, agreed to acquire 9.40% equity of Wuhu Sensortech held by the
original shareholder for RMB56,297,070.00. On February 28, 2023, the delivery of Wuhu Sensortech Equity was
completed and the Group has acquired 44.40% equity of Wuhu Sensortech and has obtained the control of Wuhu
Sensortech. Therefore, the Group has taken February 28, 2023 as the acquisition date and has included it in the scope of
consolidation statement from the acquisition date. As of June 30, 2023, the Group has completed the payment of 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
Wuhu February Cash February 28, for obtaining control
56,297,070.00 9.40 222,475,852.86 (22,608,562.54)
Sensortech 2023 Payments 2023 of the purchased
party
1.2 Cost of business combination and goodwill
Unit: RMB
Cost of business combination Wuhu Sensortech
- Cash 56,297,070.00
- The fair value of the equity held before the acquisition date at the acquisition date 209,616,750.00
Total cost of business combination 265,913,820.00
Less: The fair value of identifiable net assets obtained 88,910,271.54
Goodwill 177,003,548.46
1.3 Acquiree's book value of assets and liabilities at the date of acquisition
Unit: RMB
Wuhu Sensortech (Note)
Book value on the date of acquisition Fair value on the date of acquisition
Assets:
Cash and bank balances 17,324,838.53 17,324,838.53
Notes receivable 33,920,858.51 33,920,858.51
Accounts receivable 445,730,934.47 445,730,934.47
Prepayments 6,061,869.66 6,061,869.66
Other receivables 40,599,296.61 40,599,296.61
Inventories 303,058,398.74 303,058,398.74
Other current assets 24,974,849.27 24,974,849.27
169
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Wuhu Sensortech (Note)
Book value on the date of acquisition Fair value on the date of acquisition
Other non-current financial assets 18,666,625.00 18,666,625.00
Fixed assets 79,287,366.02 79,287,366.02
Construction in progress 3,191,074.02 3,191,074.02
Intangible assets 3,721,061.00 3,721,061.00
Right-of-use asset 4,291,374.57 4,291,374.57
Long-term deferred expenses 2,215,794.17 2,215,794.17
Other non-current assets 5,115,243.10 5,115,243.10
Liabilities:
Accounts payable 340,340,391.41 340,340,391.41
Notes payable 24,850,000.00 24,850,000.00
Contract liabilities 1,039,132.78 1,039,132.78
Taxes payable 4,377,557.95 4,377,557.95
Payroll payable 11,689,495.44 11,689,495.44
Other payables 42,060,116.80 42,060,116.80
Short-term borrowings 327,277,293.17 327,277,293.17
Non-current liabilities due within one year 1,740,061.74 1,740,061.74
Other current liabilities 134,494.95 134,494.95
Lease liabilities 2,120,565.73 2,120,565.73
Deferred income 29,134,991.62 29,134,991.62
Deferred income tax liabilities 3,147,122.76 3,147,122.76
Net assets acquired 200,248,359.32 200,248,359.32
Less: Minority interests 111,338,087.78 111,338,087.78
Net assets acquired 88,910,271.54 88,910,271.54
Note: In order to confirm the fair value of Wuhu Sensortech, which is not a business under common control, the Group has engaged
independent valuers to assess the fair value of its net identifiable assets. As of the reporting date of the financial statements, the related appraisal
work has not been completed. The management of the Group temporarily made the financial statements based on the book value of its
identifiable net assets. The Group will also make adjustments according to the final assessment results, and the amount of goodwill will also
be adjusted accordingly.
1.4 Gains or losses arising from the re-measurement of equity held before the acquisition date at fair value
The method and
Gains or losses main assumptions The amount of other
The book value of The fair value of
arising from the for determining the comprehensive income
the original equity the original equity
Name of the re-measurement of fair value of the related to the original
held before the held before the
acquiree equity held before original equity shareholding transferred to
purchase date on purchase date on
the acquisition held before the investment income before
the purchase date the purchase date
date at fair value purchase date on the purchase date
the purchase date
Calculated at the
fair value of the
Wuhu Sensortech 93,183,139.55 209,616,750.00 116,433,610.45 -
newly increased
shareholding ratio
170
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 Ltd. Hangzhou Hangzhou, Zhejiang System integration, Technology development Establishment
Hangzhou Hikvision Technology Ltd. Hangzhou Hangzhou, Zhejiang Manufacture Establishment
Hangzhou EZVIZ Network Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou EZVIZ Software Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou Hikrobot Co., Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
Hangzhou Haikang Intelligent Technology Ltd. Hangzhou Hangzhou, Zhejiang Technology development Establishment
2. Changes in the share of owners' equity in subsidiaries and still controls the transactions of subsidiaries.
(1) Description of the change in the share of owners' equity in subsidiaries
Capital increase for Shijiazhuang Sensortech
On March 28, 2023, the Company entered into the Capital Increase Agreement with external strategic investors. It is agreed that Shijiazhuang Sensortech, a subsidiary of the Company,
will increase the registered capital by RMB2,398,000,000, in which the Company will increase the capital by RMB1,078,800,000 with 60.00% equity of HikAuto, a subsidiary of the
Company, and RMB266,400,000 with 44.40% equity of Wuhu Sensortech, a subsidiary of the Company, with a total equity price of RMB1,345,200,000. Upon completion of the capital
increase, the Company's direct shareholding in Shijiazhuang Sensortech was diluted from 100% to 56.0969%, the Company's direct shareholding in HikAuto was changed from 60.00%
to 56.0969%, and the Company's direct holding of Wuhu Sensortech changed from 44.40% to indirect holding of 56.0969%.The Group's control over the three subsidiaries remains
unchanged.
Unit: RMB
Shijiazhuang Sensortech Wuhu Sensortech HikAuto
Cost of acquisition/Disposal consideration
Less:
Net assets of subsidiaries according to the 259,000.35 22,497,280.64 5,502,685.16
proportion of equity acquired/disposed
Balance adjusted capital surplus (259,000.35) (22,497,280.64) (5,502,685.16)
171
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Acquisition of a minority stake of Hangzhou Kuangxin.
On May 22, 2023, the Company and the former minority shareholders of its subsidiary, Hangzhou Kuangxin, signed the Equity Transfer Agreement in respect of Hangzhou Kuangxin
Technology Co., Ltd. It is agreed to purchase 20.00% minority equity of Hangzhou Kuangxin held by the original shareholder at RMB56 million. On June 30, 2023, the equity delivery
of Hangzhou Kuangxin completed, and the Company held 100% equity of Hangzhou Kuangxin in total. As of June 30, 2023, the Company has paid RMB50.4 million for equity transfer.
Unit: RMB
Hangzhou Kuangxin
Purchase consideration 56,000,000.00
Less:
38,206,584.40
Net assets of subsidiaries according to the proportion of equity acquired
Balance adjusted capital surplus 17,793,415.60
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 2023 Opening balance / Amount for the first half of 2022
Associates：
The aggregate carrying amount of investments in associates 249,202,411.16 352,286,233.16
The aggregate amount of the following items calculated based on the Company's equity share percentage
of the associates
- Net income (loss) (9,900,682.45) (5,965,866.51)
- Other comprehensive income - -
- Net income (loss) and total comprehensive income (loss) (9,900,682.45) (5,965,866.51)
Joint Ventures:
Total investment book value 871,511,015.09 899,747,280.25
The sum of the following items calculated according to the shareholding ratio
- Net income (loss) (32,339,888.62) 52,118,483.05
- Other comprehensive income - -
- Net income (loss) and total comprehensive income (loss) (32,339,888.62) 52,118,483.05
172
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Group uses the equity method to account for the aforementioned associates and joint ventures.
3.2 There are no significant restrictions on the ability of the joint ventures or associates to transfer funds to the Group.
3.3 No excess losses were incurred by the joint ventures or associates.
3.4 Unrecognized commitments related to investment in joint ventures
Unit：000 RMB
Joint venture Capital commitment (Note)
Shenzhen Hikvision Urban Service Operation Ltd. 10,500.00
Guangxi Haishi Urban Operation Management 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.
3.5 The Group has no contingent liabilities related to investments in joint ventures or associates.
173
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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, some of other non-
current assets, borrowings, notes payable, accounts payable, other payables, some of other non-current liabilities, part of
the other current liabilities, long-term payables, derivative financial instruments, etc. Details of these financial instruments
are set out in Note (V). Below are the risks associated with such financial instruments and the risk management policies
adopted by the Group to mitigate such risks. The management of the Group manages and monitors such risk exposures to
ensure such risks are contained within a prescribed scope.
1. Classification of financial instruments
Unit: RMB
Closing balance of the current Ending balance of the prior year
Items
reporting period (on December 31, 2022)
Financial assets：
Measured at fair value through current profit and loss
Held –for-trading financial assets 10,948,728.33 12,807,438.36
Other non-current financial assets 474,823,086.64 423,893,239.94
Measured at fair value through other comprehensive income
Receivables for financing 1,502,906,978.21 1,484,218,258.74
Measured at amortized cost
Cash and bank balances 34,670,255,152.86 40,011,863,999.94
Notes receivable 2,161,899,917.86 2,519,988,159.23
Accounts receivable 31,626,699,148.70 29,906,294,410.40
Other receivables 1,295,693,306.42 516,503,485.58
Other non-current assets 2,181,057.96 2,181,057.96
Long-term receivables (including those due within one year) 1,697,703,405.49 1,537,550,308.57
Unit: RMB
Closing balance of the current Ending balance of the prior year (on
Items
reporting period December31, 2022)
Financial liabilities
Measured at fair value through current profit and loss
Held-for-trading financial liabilities 49,948,979.70 68,299,685.57
Measured at amortized cost
Short-term borrowings 3,150,804,135.09 3,343,071,972.89
Notes payable 905,757,774.63 1,207,756,963.94
Accounts payable 13,969,435,831.18 16,025,563,802.99
Other payables 3,148,507,577.98 3,203,308,686.31
Other current liabilities 1,537,841,964.86 465,979,374.84
Long-term borrowings (including those due within one year) 11,561,605,755.41 8,085,221,539.03
Long-term payables (including those due within one year) 8,060,753.47 9,532,351.64
Other non-current liabilities 1,642,792,335.93 2,806,169,050.05
174
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
The Group adopts sensitivity analysis techniques to analyze the possible effects of rational and probable changes in risk
variables to profit or loss for the period or to the interests of shareholders. Since risk variables seldom change on a stand-
alone basis, while the correlation between variables may have significant influence to the ultimate amount of change
effected by the change in a single risk variable, the analysis below is based on the assumption that the changes in each
variable occurred separately.
2. Objectives and policies of risk management
The Group engages in risk management with the aim of achieving an appropriate balance between risk and return, where
the negative effects of risks against the Group's operating results are minimized, in order to maximize the benefits of
shareholders and other stakeholders. Based on such objective in risk management, the underlying strategy of the Group's
risk management is to ascertain and analyze all types of risks exposures of the Group, establish appropriate risk tolerance
thresholds, carry out risk management procedures and perform risk monitoring on all kinds of risks in a timely and reliable
manner, thus containing risk exposures within a prescribed scope.
2.1 Market risks
2.1.1 Foreign exchange risks
Foreign exchange risks refer to the risk that losses will occur because of changes in foreign exchange rates. The Company
is primarily exposed to risks relating to the currencies such as USD, EUR and etc. The Group's subsidiaries in the mainland
of China whose procurement, sales and financing are denominated in RMB, USD and EUR, other principal activities are
settled in RMB. The Group's subsidiaries in China Hong Kong and outside China are principally engaged in procurement,
sales, financing and other major business activities in local currencies such as USD, EUR and etc.
As of June 30th 2023, 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 2,982,617,046.65 2,951,284,991.71 2,319,106,093.53 2,200,890,176.03
USD 2,875,804,267.20 3,241,969,531.76 449,086,308.36 655,023,052.11
The Group has been paying close attention to the effect of fluctuation in exchange rate on the foreign exchange risks of
the Group, and has purchased various financial derivative instruments, such as forward foreign exchange contracts and
etc., to mitigate the foreign exchange risk exposure.
Sensitivity analysis on exchange rate risk
The sensitivity analysis of the Group's foreign exchange risk includes only monetary items denominated in foreign
currencies and does not consider the impact of the purchased derivative financial instruments.
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 2023 First half year of 2022
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 33,175,547.66 33,175,547.66 20,053,966.09 20,053,966.09
5% depreciation of EUR against RMB (33,175,547.66) (33,175,547.66) (20,053,966.09) (20,053,966.09)
5% appreciation of USD against RMB 121,335,897.94 121,335,897.94 48,151,444.79 48,151,444.79
5% depreciation of USD against RMB (121,335,897.94) (121,335,897.94) (48,151,444.79) (48,151,444.79)
175
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 (please refer to Note (V) 33) and bank deposits bearing floating
interest rate. The Group's risks of changes in the fair value of financial instruments due to changes in interest rates are
related to fixed-rate bank borrowings (please refer to Note (V) 23 and Note (V) 33) and fixed-rate bank deposits.
The Group determines the relative proportion of fixed interest rate contracts and floating interest rate contracts based on
the prevailing market environment. On June 30, 2023, the Group's total long-term and short-term interest-bearing debts
bearing fixed interest rates amounted to RMB12,861,421,548.20 (December 31, 2022: RMB9,106,539,532.31) (Note (V)
23 and Note (V) 33). The total amount of long-term and short-term interest-bearing debts bearing floating interest rates is
RMB1,850,988,342.30 (December 31, 2022: RMB2,262,287,174.62) (Note (V) 33).
The Group expects that the exposure to cash flow risk arising from floating-rate bank deposits and the exposure to changes
in fair value arising from fixed-rate bank deposits are not significant.
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 30, 2023, 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), contract assets (Note (V). 9), other non-current assets (Note (V). 22), 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 notes receivable – commercial acceptance notes, accounts receivable, contract assets and long-term receivables, the
Group has put in place relevant policies to control credit risk exposure. The Group assesses credit quality of customers
and sets corresponding credit period based on the customer's financial status, the possibility of obtaining guarantees from
third parties, credit history and other factors such as current market conditions. The Group will regularly monitor the credit
history of its customers. For customers with poor credit history, the Group takes various measures, such as written payment
reminders, shorten or cancel the credit period, to ensure that the overall credit risk of the Group is maintained in a
controllable range. For notes receivable - commercial acceptance notes, accounts receivable and contract assets, the Group
176
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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). 3, (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 - bank acceptance notes and receivables for financing are mainly bank 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 30, 2023
Within one year 1-5 years More than five years Total
Non-derivative financial liabilities
Short-term borrowings 3,191,804,403.01 - - 3,191,804,403.01
Notes payable 905,757,774.63 - - 905,757,774.63
Accounts payable 13,969,435,831.18 - - 13,969,435,831.18
Other payables 3,148,507,577.98 - - 3,148,507,577.98
Other current liabilities 1,537,841,964.86 - - 1,537,841,964.86
Other non-current liabilities - 1,642,792,335.93 1,642,792,335.93
Long-term borrowings (including those due
2,169,190,668.43 9,247,241,382.74 842,000,134.23 12,258,432,185.40
within one year)
Long-term payables (including those due
2,415,726.42 6,200,000.00 - 8,615,726.42
within one year)
Derivative financial instruments
Forward foreign exchange contracts -
settled in the gross amount
- Cash inflow 2,162,257,215.54 - - 2,162,257,215.54
- Cash outflow 2,201,257,467.49 - - 2,201,257,467.49
- Net cash outflow 39,000,251.96 - - 39,000,251.96
IX. Fair value disclosure
1. The financial assets and financial liabilities measured at fair value at the end of the reporting period
177
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Unit：RMB
Closing fair value
Items
Level 1 Level 2 Level 3 Total
I. Continuous fair value measurement - 1,463,906,726.84 474,823,086.64 1,938,729,813.48
(I) Financial assets measured at fair value
- 10,948,728.33 474,823,086.64 485,771,814.97
through profit and loss
1. Held-for-trading Financial Assets - 10,948,728.33 - 10,948,728.33
-- Derivative financial assets - 10,948,728.33 - 10,948,728.33
2. Other non-current financial assets - - 474,823,086.64 474,823,086.64
(II) Receivables for financing - 1,502,906,978.21 1,502,906,978.21
Total assets measured continuously at fair
- 1,513,855,706.54 474,823,086.64 1,988,678,793.18
value
(III) Financial liabilities measured at fair
- 49,948,979.70 - 49,948,979.70
value through profit and loss
1. Held-for-trading Financial Liabilities - 49,948,979.70 - 49,948,979.70
-- Derivative financial liabilities - 49,948,979.70 - 49,948,979.70
Total liabilities measured continuously at
- 49,948,979.70 - 49,948,979.70
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 30, 2023
Forward exchange rate
Forward foreign exchange contracts Discounted cash flow
10,948,728.33 Discounted rate that reflects the
(Assets) approach
credit risk of counterparty
Forward exchange rate
Forward foreign exchange contracts Discounted cash flow
(49,948,979.70) Discounted rate that reflects the
(Liabilities) approach
credit risk of counterparty
Discounted cash flow Discounted rate that reflects the
Receivables for financing 1,502,906,978.21
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 30, 2023
Comparable public companies' PB
Other non-current financial assets--
Market approach/Income (price/book value) ratio within the
Investment in equity instruments of private 474,823,086.64
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 1, 2023 423,893,239.94
Increase in the current reporting period 20,837,425.00
Decrease in the current reporting period -
Changes in fair value booked into profit and loss during the current reporting period 30,092,421.70
Book value on June 30, 2023 474,823,086.64
The total amount included in profit or loss in the first half of 2023 includes unrealized gains of RMB30,092,421.70 (June
178
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
30, 2022: RMB26,448,715.78) 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; There was no realized gains of
financial assets measured at fair value at the end of the current reporting period which were included in investment income
(June 30, 2022: RMB51,892,209.92).
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, some of other current
liabilities, non-current liabilities due within one year, long-term borrowings, long-term payables and some of 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. RMB660 million 36.35 36.35
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 Sensortech Intelligent Technology Ltd. and its subsidiaries (Note 1)(Note 3) Associated company
Maxio Technology (Hangzhou) Co., Ltd. and its subsidiaries (Note 1) Associated company
Zhiguang Hailian Big Data Technology Ltd. and its subsidiaries (Note 1) Associated company
Jiaxin Haishi JiaAn Zhicheng Technology Ltd. (Note 1) Associated company
Sanmenxia Xiaoyun Vision Technology Ltd. (Note 1) Associated company
Beijing Taifang Technology LLC. and its subsidiaries (Note 1) Associated company
Guangxi Haishi City Operation Management Ltd. and its subsidiaries (Note 2) Joint venture
Shenzhen Haishi City Service Operation Ltd. and its subsidiaries (Note 2) Joint venture
Xuzhou Kangbo City Operation Management Service Ltd. (Note 2) Joint venture
Yunnan Yinghai Parking Service Ltd. (Note 2) Joint venture
Zhejiang City Digital Technology Ltd. (Note 2) Joint venture
179
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Name of the associates or joint ventures Relationship with the Company
Zhejiang Haishi Huayue Digital Technology Ltd. (Note 2) Joint venture
Note 1: Those companies are collectively referred to as "associated companies" in the following disclosures of related
party transactions, receivables from related parties, and payable from related parties.
Note 2: hose companies are collectively referred to as "joint ventures" in the following disclosures of related party
transactions, receivables from related parties, and payable from related parties.
Note 3: During the period from December 2016 to February 2023, Sensortech is an associated company of the Company.
On February 28, 2023, the Company included Sensortech in the scope of the consolidated financial statements. During the
period from January 2023 to February 2023, this company is a related party of the Group.
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 (Note 1) Relationship
Shanghai Fullhan Microelectronics Co., Ltd. and its subsidiaries Shareholder(s) that hold(s) more than 5% shares of the Company
(Note 2) was(were) the director(s) of this company
Shareholder(s) that hold(s) more than 5% shares of the Company
Shenzhen Guoteng'an vocational education Technology Ltd.
serve(s) as the director(s) of this company
The Group's senior management serve(s) as director(s) of this
Confirmware Technology (Hangzhou) Co., Ltd.
company
Zhejiang Fast Line data fusion Information Technology Co., Ltd. and The Group's senior management serve(s) as director(s) of this
its subsidiaries company
Chengdu Guoshengtianfeng Network Technology Ltd. and its The Group's senior management serve(s) as director(s) of this
subsidiaries company
The Group's independent director(s) serve(s) as director(s) of
Ningbo Industrial Internet Research Institute Ltd.
this company
INESA (Group) Ltd. and its subsidiaries The Group's supervisor(s) serve(s) as director(s) of this company
The Group's supervisor(s) serve(s) as independent director(s) of
Bank of Tianjing Co., Ltd. and its subsidiaries
this company
The Group's former independent director(s) serve(s) as
Aurotek CORP. and its subsidiaries (Note 3)
director(s) of this company (Note 1)
The Group's chairman(chairmen) of Board of the Supervisors
Shenzhen Zhongtu Instrument Co., Ltd. (Note 4）
was(were) he director(s) of this company
The Group's chairman(chairmen) of Board of the Supervisors
Suzhou Ximeng Technology Co., Ltd.
was(were) he director(s) of this company
Under common control of the ultimate controlling party of the
Subsidiaries of CETC (Note 5)
Company
Note 1: Those companies (excluding subsidiaries of CETC) are collectively referred to as "Enterprises with directors,
supervisors, senior executives and related natural persons of the Company serving as directors" in the following disclosures
of related party transactions, receivables from related parties, and payable from related parties.
Note 2: Gong Hongjia, a shareholder holding more than 5% shares of the Company, departed the Company in December
2022. Therefore, this company was recognized as a related party of the Group in 2022 and 2023.
Note 3: Cheng Tianzong, a former independent director of the Group, once served as a director of the Company, and
departed the Company in March 2021. Therefore, this company was recognized as a related party of the Group during
January 2022 to March 2022.
Note 4: Hong Tianfeng, the chairman of Board of the Supervisors of the Group, once served as a director of the Company.
Hong Tianfeng departed the Company in April 2022. Therefore, this company was still recognized as a related party of
the Company during January 2023 to April 2023.
Note 5: Subsidiaries of CETC, excluding Hikvision and its subsidiaries.
180
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 2023 half of 2022
Purchase of materials and
Subsidiaries of CETC 975,912,021.92 1,053,890,910.70
receiving of services
Purchase of materials and
Joint ventures 755,956.76 337,281.30
receiving of services
Purchase of materials and
Associated companies 98,585,985.58 229,107,731.02
receiving of services
Enterprises with directors, supervisors, senior
Purchase of materials and
executives and related natural persons of the 602,307,517.40 916,297,997.14
receiving of services
Company serving as directors
Total 1,677,561,481.66 2,199,633,920.16
Sales of commodities / rendering of services:
Unit: RMB
Amount occurred in the Amount occurred in the first
Related party Transaction content
first half of 2023 half of 2022
Sales of products and
Subsidiaries of CETC 117,617,666.95 168,042,187.48
rendering of services
Sales of products and
Joint ventures 19,625,412.30 33,132,355.91
rendering of services
Sales of products and
Associated companies 27,862,625.23 39,739,875.36
rendering of services
Enterprises with directors, supervisors, senior
Sales of products and
executives and related natural persons of the 6,119,099.86 4,016,002.60
rendering of services
Company serving as directors
Total 171,224,804.34 244,930,421.35
5.2 Related party lease
Rental fee confirmed in the first half of Rental fee confirmed in the first half
Lessor Type of leased assets
2023 of 2022
Subsidiaries of CETC Equipment 6,764,242.38 10,354,580.73
Subsidiaries of CETC House 1,076,516.38 -
Joint ventures House - 542,554.11
Total 7,840,758.76 10,897,134.84
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 2023 the first half of 2022
reporting period
Deposit into
Subsidiaries of CETC (withdraw from) 200,102,712.94 200,136,231.62 (499,974,692.98) 33,518.68
current deposits
Deposit into fixed
Subsidiaries of CETC (200,000,000.00) 3,800,000,000.00 - 4,000,000,000.00
deposits
Total 102,712.94 4,000,136,231.62 (499,974,692.98) 4,000,033,518.68
181
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Note: For the deposits that the Group deposited into China Electronic Technology Finance Co., Ltd., the interest income
on deposits during the reporting period was RMB4, 026,455.23.
Information on notes discounted:
At the end of the current reporting period, there was no bank acceptance bill discounted by the Group to China Electronics
Technology Finance Co., Ltd. (June 30, 2022: RMB33,564,209.39). There was no expired bank acceptance bills
discounted to China Electronics Technology Finance Co., Ltd. (June 30, 2022: RMB33,564,209.39). There was no interest
expense arising from discounting the notes (June 30, 2022: RMB241,747.39).
Information on entrusted loan:
During the current reporting period, the Group issued entrusted loans of RMB1,410.00 million to its subsidiaries through
China Electronic Technology Finance Company Limited
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 695,632,587.99 348,117,348.37 703,246,712.68 226,247,765.93
receivable
Accounts
Joint ventures 33,323,349.60 1,275,155.05 33,380,436.75 1,573,681.64
receivable
Accounts
Associated companies 84,345,319.45 7,231,621.02 101,753,693.78 5,670,312.45
receivable
Enterprises with directors,
supervisors, senior executives
Accounts
and related natural persons of 4,995,363.57 163,216.06 3,849,485.72 79,488.44
receivable
the Company serving as
directors
Total 818,296,620.61 356,787,340.50 842,230,328.93 233,571,248.46
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Notes
Subsidiaries of CETC 92,421,461.45 523,430.01 170,543,239.65 -
receivable
Notes
Joint ventures 742,656.67 - 2,500,000.00 -
receivable
Notes
Associated companies 18,922,205.50 - 2,358,308.70 -
receivable
Enterprises with directors,
supervisors, senior executives
Notes
and related natural persons of 1,322,276.00 - 281,113.19 -
receivable
the Company serving as
directors
Total 113,408,599.62 523,430.01 175,682,661.54 -
Unit: RMB
Closing balance Opening balance
Item Related Party
Carrying balance Credit loss provision Carrying balance Credit loss provision
Other receivables Subsidiaries of CETC 1,827,031.50 374,018.27 1,720,917.15 240,722.93
Other receivables Joint ventures 464,994.50 7,838.96 374,619.85 2,472.49
Total 2,292,026.00 381,857.23 2,095,537.00 243,195.42
182
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 187,594.83 1,163.09 300,478.44 1,983.16
(including those due
within one year)
Long-term
receivables
Joint ventures 39,676,363.54 1,095,799.66 43,800,876.33 973,106.36
(including those due
within one year)
Total 39,863,958.37 1,096,962.75 44,101,354.77 975,089.52
Unit: RMB
Item Related Party Closing balance Opening balance
Prepayments Subsidiaries of CETC 5,077,483.26 6,707,516.94
Companies in which directors, supervisors,
Prepayments senior management, and related natural 34,008,794.39 -
persons of the Company serve as directors
Total 39,086,277.65 6,707,516.94
6.2 Payables to related parties
Unit: RMB
Item Related Party Closing balance Opening balance
Accounts payable Subsidiaries of CETC 529,989,851.88 759,760,264.93
Accounts payable Joint ventures 3,984,905.66 966,037.73
Accounts payable Associated companies 28,401,177.89 88,750,828.96
Enterprises with directors, supervisors, senior
Accounts payable executives and related natural persons of the 311,726,530.97 240,030,055.22
Company serving as directors
Total 874,102,466.40 1,089,507,186.84
Unit: RMB
Item Related Party Closing balance Opening balance
Notes Payable Subsidiaries of CETC 17,262,113.18 7,561,539.70
Enterprises with directors, supervisors, senior
Notes Payable executives and related natural persons of the 12,989,302.80 31,994,311.07
Company serving as directors
Total 30,251,415.98 39,555,850.77
Unit: RMB
Item Related Party Closing balance Opening balance
Contract liabilities Subsidiaries of CETC 8,159,399.04 8,673,665.99
Contract liabilities Joint ventures 3,033,007.18 2,558,659.59
Enterprises with directors, supervisors, senior
Contract liabilities executives and related natural persons of the 91,187.19 -
Company serving as directors
Total 11,283,593.41 11,232,325.58
Unit: RMB
Item Related Party Closing balance Opening balance
Other payables Subsidiaries of CETC 52,790,103.01 56,652,471.09
183
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Other payables Joint ventures 10,000.00 10,000.00
Other payables Associated companies 409,990.00 236,000.00
Enterprises with directors, supervisors, senior
Other payables executives and related natural persons of the 820,000.00 250,000.00
Company serving as directors
Total 54,030,093.01 57,148,471.09
Unit: RMB
Item Related Party Closing balance Opening balance
Lease liabilities (including
Subsidiaries of CETC 9,425,191.09 16,863,126.87
those due within one year)
Total 9,425,191.09 16,863,126.87
XI. Share-based payments
1. Overview of share-based payments
Restrictive Share Incentive Scheme
According to the Approval of the Implementation of the Restrictive Share Incentive Scheme of Hangzhou Hikvision Digital
Technology Co., Ltd. (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. (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 25, 2012 and the first
extraordinary general meeting for 2012 on August 13, 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, revenue growth rate and economic value added), 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 relevant provisions of this plan.
On December 20, 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 RMB16.98 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 vesting 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
184
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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.
In accordance with the authorization by the Company's second Extraordinary General Meeting in 2018, the resolution by
the 10th meeting of the 5th session of the Board of Directors on April 13, 2023, the resolution of the second Extraordinary
General Meeting in 2022 on May 9, 2023 and the revised Articles of Association, the Company repurchased and cancelled
the granted 33,331,858 restricted RMB treasury shares that have not been unlocked by cash. The Company completed
deregistration on July 5, 2023 and the implementation of the 2018 Restricted Share Incentive Scheme was completed.
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 RMB29.71 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
2021 Share Incentive Scheme First half year of 2023 2022
Total of equity instruments outstanding at the beginning of the
97,402,605 -
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 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 RMB29.71/share & 42 months RMB29.71/share & 48 months
period of the contract
Share Incentive Scheme of Staff Co-Investment in Innovative Businesses
On October 22, 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 7, 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 branches and subsidiaries,
185
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
and are able to invest in all innovative businesses. Grantees of plan B are comprised of core and full-time staff from
innovative business subsidiaries and its branches and subsidiaries, and could participate in investment on innovative
business subsidiaries where they serve. The Co-Investment Platform will increase capitals annually, the corresponding
increased equity of which will be distributed to core staff who meets investment conditions pursuant to particular rules.
The waiting period shall be five years after equity of Co-Investment Platform is held by the staff. Within the waiting 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.
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.
In December 2020, Co-Investment Staff signed a Supplemental Agreement of Entrusted Investment Agreement (hereafter
referred to as "Supplemental Agreement") with Hikvision Labor Union. On December 25, 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 31, 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 waiting period is the fifth anniversary of the employee's work in the Company or
its subsidiaries. For the confirmed shares of plan B, the waiting 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.
2. Information of the share-based payment through equity settlements
Restrictive Share Incentive Scheme
Unit: RMB
2021 Share Incentive Scheme
Method of determine the fair value of equity Determined based on stock price at the grant date and the costs of restricted shares
instruments at the grant date during lock-up period
Recognition basis of the number of the equity
Determined based on the results estimation of each vesting period
instruments qualified for vesting
Reasons of the significant difference between the
estimates of the current reporting period with that of None
the prior year
Accumulative amount of share-based payment
through equity settlement and further included in the 937,877,313.52
capital reserve
Total amount of the expenses recognized according
to share-based payment through equity settlement in 318,256,904.02
the 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
522,289,848.03
further included in the capital reserve
186
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Total amount of the expenses recognized according to share-based payment
55,271,659.04
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 RMB24,501,363.63 was due to share distributions to 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 11,947,262 16,521,850
- Commitment on external investments 12,940 12,940
Total 11,960,202 16,534,790
1.2 As of June 30, 2023, 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
As of August 18, 2023, the Company has no significant events after the balance sheet date that need to be disclosed
XIV. Other significant events
1. Segment information
1.1 Report segment determining and accounting policy
According to the Group's internal organization structure, management requirements and internal report principles, the
Group has only one operating segment, which is the research and development, production and sales of AIoT products
and services.
1.2 Segment financial reporting
External revenue by geographical area & non-current assets by geographical location
Unit: RMB
187
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Item First half year of 2023 First half year of 2022
External revenue generated in domestic area 25,503,419,211.78 25,544,764,018.60
External revenue generated in overseas area 12,067,367,186.11 11,712,752,572.02
Total 37,570,786,397.89 37,257,516,590.62
Unit: RMB
Item (Note) On June 30, 2023 On January 1, 2023
Non-current assets in domestic area 18,157,812,759.13 16,808,935,279.10
Non-current assets in overseas area 885,684,965.40 831,488,767.27
Total 18,157,812,759.13 17,640,424,046.37
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.
188
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 7,876,696,931.58 6,720,405.82 0.09
Within 1 year after exceeding credit period 16,221,228,287.49 80,217,559.70 0.49
1-2 years after exceeding credit period 517,978,907.99 110,683,686.18 21.37
2-3 years after exceeding credit period 316,311,621.51 124,374,494.33 39.32
3-4 years after exceeding credit period 185,097,974.70 120,659,232.90 65.19
Over 4 years after exceeding credit period 232,610,854.93 232,610,854.93 100.00
Subtotal 25,349,924,578.20 675,266,233.86 2.66
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
25,349,924,578.20 100.00 675,266,233.86 2.66 24,674,658,344.34 24,967,758,597.12 100.00 591,943,445.60 2.37 24,375,815,151.52
loss by portfolios
Total 25,349,924,578.20 100.00 675,266,233.86 2.66 24,674,658,344.34 24,967,758,597.12 100.00 591,943,445.60 2.37 24,375,815,151.52
189
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Accounts receivable provision for credit loss by portfolios
Unit: RMB
Closing balance
Customer
Carrying balance Credit loss provision Proportion (%)
Subsidiaries' customers 21,313,139,422.98 - -
Portfolio A 926,296.36 312,737.44 33.76
Portfolio B 4,035,631,152.24 674,725,789.80 16.72
Portfolio C 227,706.62 227,706.62 100.00
Total 25,349,924,578.20 675,266,233.86 2.66
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 RMB83,319,596.26.
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 RMB3,192.00.
190
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 21,160,804,548.12 - 83.47
CETC's subsidiary company A Related party 120,213,834.14 58,673,681.45 0.47
Third party J Third party 87,724,307.40 3,460,963.85 0.35
Third party K Third party 65,212,459.79 2,167,853.00 0.26
Third party L Third party 32,179,382.19 7,185,691.53 0.13
Total 21,466,134,531.64 71,488,189.83 84.68
1.5 As of June 30, 2023, there is no termination of accounts receivable booking due to transfer of a financial asset.
1.6 As of June 30, 2023, the Company has no assets/liabilities booked due to transferred accounts receivable that the Company still continue to be involved in.
191
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
2. Other receivables
2.1 By categories
Unit：RMB
Category Closing balance Opening balance
Dividends receivable - 85,323,007.51
Other receivables 2,449,514,292.50 2,324,554,929.22
Total 2,449,514,292.50 2,409,877,936.73
2.2 Dividends receivable
Unit：RMB
Investees Closing balance Opening balance
Subsidiaries of Hikvision - 85,323,007.51
Total - 85,323,007.51
2.3 Other receivables
2.3.1 Other receivables by aging
Unit: RMB
Item Closing balance Opening balance
Within contract period 2,388,619,523.18 2,291,096,654.42
Within 1 year 56,812,812.10 33,503,835.61
192
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
1-2 years 5,292,356.11 2,112,945.32
2-3 years 629,090.84 341,396.88
3-4 years 187,088.10 946,880.46
Over 4 years 1,033,250.95 646,571.70
Other receivables 2,452,574,121.28 2,328,648,284.39
Less: Credit impairment reserve 3,059,828.78 4,093,355.17
Book value 2,449,514,292.50 2,324,554,929.22
2.3.2 Other receivables by nature of the payment
Unit: RMB
Nature Closing balance Opening balance
Payments by related parties within the Group 1,603,639,393.44 2,137,185,066.96
Restricted stock repurchase funds 693,632,312.71 80,136,229.12
Temporary payments for receivables 67,562,096.44 29,809,325.81
Guarantee deposit 63,424,311.40 69,392,171.01
Others 24,316,007.29 12,125,491.49
Total 2,452,574,121.28 2,328,648,284.39
2.3.3 Provision for credit losses
The amount of credit loss provision reversed in the current period was RMB1,033,526.39.
2.3.4 The actual write-off of other receivables in the current reporting period was nil.
193
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 524,681,230.77 21.39 -
period
Within contract
Subsidiary C Subsidiary Internal Payment 220,166,191.97 period 8.98 -
Within contract
Subsidiary D Subsidiary Internal Payment 156,749,344.47 6.39 -
period
Within contract
Subsidiary E Subsidiary Internal Payment 138,294,808.29 5.64 -
period
Within contract
Subsidiary F Subsidiary Internal Payment 91,631,025.06 3.74 -
period
Total 1,131,522,600.56 46.14 -
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 7,378,499,186.79 - 7,378,499,186.79 6,629,092,230.54 - 6,629,092,230.54
Investments in associated enterprises and joint ventures 976,579,645.91 - 976,579,645.91 1,106,666,564.96 - 1,106,666,564.96
Total 8,355,078,832.70 - 8,355,078,832.70 7,735,758,795.50 - 7,735,758,795.50
194
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
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 Ltd. 873,470,130.37 17,701,842.20 - 891,171,972.57 - -
Hangzhou Hikvision Technology Ltd. 1,099,649,009.63 18,477,361.32 - 1,118,126,370.95 -
Hangzhou EZVIZ Network Co., Ltd. 60,631,166.55 51,645.76 - 60,682,812.31 - -
Hangzhou EZVIZ Software Ltd. 32,365,508.28 115,145.58 - 32,480,653.86 -
Hangzhou Hikrobot Technology Ltd. 137,606,813.93 451,915.72 - 138,058,729.65 - -
Hangzhou Haikang Intelligent Technology Ltd. 8,398,458.69 484,706.51 - 8,883,165.20 -
3.2 Investments in associated enterprises and joint ventures
Unit：RMB
Increase/Decrease during the current reporting period
Balance of
Investment impairment loss
Other Other changes Declared cash
Name of investee Opening balance income (losses) Closing balance provision at the end
Additional Reduced comprehensi dividends or Provision for
recognized Others of the current
Investments Investments ve income in equity profit impairment
under the reporting period
adjustment distribution
equity method
1. Joint Ventures
Hangzhou Haikang
Intelligent Industrial
Equity Investment 829,825,387.60 - - (32,069,650.91) - 4,103,623.46 - - 801,859,360.15 -
Fund Partnership
(L.P.)
Zhejiang City Digital
Technology Ltd.
26,341,510.80 - - 800,625.28 - - - - 27,142,136.08 -
195
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Zhejiang Haishi -
Huayue Digital 13,382,016.23 - - (34,812.41) - - - - 13,347,203.82
Technology Ltd.
Guangxi Haishi City
-
Operation 13,059,993.97 - - 260,727.19 - - - - 13,320,721.16
Management Ltd.
Xuzhou Kangbo City -
Operation
Management Service
10,385,566.88 - - (43,315.31) - - - - 10,342,251.57
Ltd
Yunnan Yinghai
Parking Service Ltd.
5,077,998.04 - - (146,686.51) - - - - 4,931,311.53 -
Shenzhen Haishi -
Urban Service 1,674,806.73 - - (1,106,775.95) - - - - 568,030.78
Operation Ltd.
Subtotal 899,747,280.25 - - (32,339,888.62) - 4,103,623.46 - - 871,511,015.09 -
2. Associated Companies
Wuhu Sensortech
Intelligent
98,094,380.52 - - (4,911,240.97) - - - - (93,183,139.55) - -
Technology Ltd.
(Note 1)
Maxio Technology
86,399,534.11 - - (1,801,879.87) - - - - - 84,597,654.24 -
(Hangzhou) Co., Ltd.
Zhiguang Hailian Big
22,425,370.08 - - (1,954,393.50) - - - - - 20,470,976.58 -
Data Technology Ltd.
Subtotal 206,919,284.71 - - (8,667,514.34) - - - - (93,183,139.55) 105,068,630.82 -
Total 1,106,666,564.96 - - (41,007,402.96) - 4,103,623.46 - - (93,183,139.55) 976,579,645.91 -
Note 1: During the current reporting period, the Group included Wuhu Sensortech Intelligent Technology Ltd. in the scope of consolidated financial statements and no
longer accounted for it as an associate, see Note (VI). 1 for details.
3.3 As of June 30, 2023, there were no restrictions on the capability of transferring fund to the Company from investees in which the Company held long-term equity
investment.
196
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
4. Revenue and operating costs
Unit：RMB
First half year of 2023 First half year of 2022
Item
Revenue Cost Revenue Cost
Major business 9,370,837,249.86 1,733,392,550.35 10,333,485,585.25 2,123,002,343.03
Other business 1,522,582,234.95 81,288,706.34 1,430,584,072.30 58,524,277.39
Total 10,893,419,484.81 1,814,681,256.69 11,764,069,657.55 2,181,526,620.42
5. Investment income
Details of investment income
Unit：RMB
Item First half year of 2023 First half year of 2022
Long-term equity investment income calculated by cost method 141,000,000.00 22,171,425.49
Long-term equity investment income(losses) measured by equity method (41,007,402.96) 51,641,039.76
Investment income from disposal of asset portfolio 15,902,073.63 -
Investment income from holding debt investment 10,251,456.56 -
Investment income from disposal of other non-current financial assets - 1,260,000.00
Investment income of other non-current financial assets during the
holding period - 51,892,209.92
Investment losses from disposal of held of trading financial assets - (474,053.30)
Total 126,146,127.23 126,490,621.87
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 (3,226,747.72) /
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 245,104,357.89 /
subsidy based on standard quota or quantitative continuous
enjoyment according to the state industrial policy)
In addition to the Company's normal business related to the
effective hedging business, gains and losses on changes in fair
value arising from holding derivative financial assets, derivative
(16,837,465.82) /
financial liabilities, other non-current financial assets, and
investment gains from the disposal of the above-mentioned
financial assets/financial liabilities and receivables financing
The profit and loss of business combination under different
116,433,610.45
control realized in stages by multiple transactions
Other non-operating income and expense except the items
50,494,516.61 /
mentioned above
Impact of income tax (29,677,695.82) /
197
Hikvision 2023 Half Year Report
Notes to Financial Statements
For the reporting period from January 1, 2023 to June 30, 2023
Item Amount Description
The impact of minority equity (60,551,191.67) /
Total 301,739,383.92 /
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
7.60% 0.568 0.568
Company
Net profit excluding non-recurring items of profit or loss
attributable to ordinary shareholders of the Company 7.17% 0.568 0.568
198
Hikvision 2023 Half Year Report
Section XI Documents Available for Reference
1. The half year 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 19, 2023
Note:
This document is a translated version of the Chinese version 2023 Half Year Report (“2023 年半年
度报告”), and the published announcements in the Chinese version shall prevail. The complete
published Chinese 2023 Half Year Report may be obtained at www.cninfo.com.cn.
199
