ZKTeco 2024 Half Year Report
ZKTECO CO., LTD.
2024 Half Year Report
Announcement No.: 2024-037
August 2024
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ZKTeco 2024 Half Year Report
Section I Important Notes, Contents and Definitions
The Board of Directors, the Board of Supervisors, directors, supervisors and
senior managers guarantee that the information presented in this report is true,
accurate and complete without any false records, misleading statements or
material omissions, and will undertake individual and joint legal liabilities.
The Company's legal representative, Jin Hairong, the person in charge of the
accounting work, Wang Youwu, and the person in charge of accounting institution
(accounting supervisor), Fang Li, hereby declare that the financial information in
this report is true, accurate and complete.
All directors have attended the board meeting to review this report.
The Company has elaborated in detail on the potential risk factors that may
occur in the future in this report. Investors are advised to refer to the full text of
this report and pay special attention to the content of "Section III Management
Discussion and Analysis" - "X. Risks Faced by the Company and
Countermeasures".
The Company will not distribute cash dividend, distribute bonus shares, or
distribute shares from capital reserve during the current reporting period.
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ZKTeco 2024 Half Year Report
Table of Contents
Section I Important Notes, Contents and Definitions ........................................................................................... 2
Section II Company Profile and Key Financial Indicators .................................................................................. 7
Section III Management Discussion and Analysis .............................................................................................. 11
Section IV Corporate Governance ....................................................................................................................... 71
Section V Environmental and Social Responsibility ........................................................................................... 73
Section VI Significant Events................................................................................................................................ 76
Section VII Changes in Shares and Information about Shareholders .............................................................. 83
Section VIII Information of Preferred Shares .................................................................................................... 89
Section IX Bonds.................................................................................................................................................... 90
Section X Financial Report ................................................................................................................................... 91
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ZKTeco 2024 Half Year Report
Documents Available for Inspection
I. The original text of the 2024 Half Year Report signed by the Company's legal representative and stamped by the Company;
II. Financial statements affixed with official stamps and the signatures of the Company's legal representative, the person in charge of
the accounting work and the person in charge of accounting institution (accounting supervisor) of the Company.
III. All original copies of the Company's documents and the original drafts of the Company's announcements as disclosed on websites
designated by the CSRC during the reporting period.
Place for document inspection: Office of the Company's Board of Directors
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ZKTeco 2024 Half Year Report
Definitions
Terms Refers to Definitions
Company, the Company,
Refers to ZKTECO CO., LTD.
ZKTeco
Shenzhen ZKTeco Times Investment Co., Ltd., a controlling shareholder of the
ZKTeco Times Refers to
Company
Dongguan LX Investment Partnership Enterprise (Limited Partnership), a
LX Investment Refers to
shareholder of the Company
Shenzhen JYLX Consulting Enterprise (Limited Partnership), a shareholder of the
JYLX Refers to
Company
Guangdong Zkteco Refers to ZKTECO (GUANGDONG) CO., LTD, a wholly-owned subsidiary of the Company
Shenzhen ZKTeco Biometric Identification Technology Co., Ltd., a wholly-owned
Shenzhen ZKTeco Refers to
subsidiary of the Company
Shenzhen Zhongjiang Intelligent Technology Co., Ltd., a company which 51%
Shenzhen Zhongjiang Refers to
equity holding by the Company, currently in compulsory liquidation proceedings.
XIAMEN ZKTECO Refers to XIAMEN ZKTECO CO., LTD., a wholly-owned subsidiary of the Company
Shenzhen Zhongan Intelligent Control Technology Co., Ltd., previously a controlling
Zhongan Intelligent Control Refers to
subsidiary of the Company, with its equity in the Company transferred in 2019
Zokon Industry Refers to Shenzhen Zokon Industry Development Co., Ltd.
Articles of Association Refers to Articles of Association of ZKTECO CO., LTD.
A shares Refers to RMB denominated ordinary shares
RMB, RMB '0,000 Refers to RMB, RMB '0,000
Reporting Period Refers to January-June 2024
End of Reporting Period Refers to June 30, 2024
CV Refers to Computer Vision
BioCV Refers to Biometrics & Computer Vision
A computer technology that utilizes the analysis of human biological characteristics
to distinguish biological organisms. It is used for personal identification by a close
combination of computer technology with high-tech methods such as optics,
Biometrics Refers to
acoustics, biosensors, and biostatistics, and utilizing the inherent physiological
characteristics of the human body (fingerprints, facial features, palm veins, iris, etc.)
or behavioral characteristics (sound, gait, etc.)
Used to simulate biological vision using cameras, computers, and related equipment;
simulate human visual abilities, capture and process three-dimensional information
Computer Vision Refers to
of the scene by using optical systems and image processing tools, understand and
command specific devices to execute decisions
Radio Frequency Identification (RFID), a wireless communication technology that
can identify specific targets and read and write relevant data through radio signals
RF, RFID Refers to
without establishing mechanical or optical contact between the identification system
and specific targets
Used to connect any object to the network by using information sensing devices and
following agreed protocols. The object exchanges and communicates information
Internet of Things/IoT Refers to
through information dissemination media to achieve intelligent recognition,
positioning, tracking, supervision, and other functions
2nd-Generation ID Card,
Refers to 2nd-Generation Resident ID Card
Resident ID Card
Single Minute Exchange of Die, a process improvement method that minimizes the
product die exchange time, production startup time, or adjustment time of the die. It
SMED Refers to
can significantly shorten the time required for machine installation and die exchange
setting
Software as a Service, a software application model that provides software services
SaaS Refers to
through the Internet
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ZKTeco 2024 Half Year Report
Cyber Trusted Identity, an authoritative network identity certificate issued to
CTID Refers to individuals by the "Internet+" trusted identity authentication platform (CTID
Platform)
ZigBee Refers to A wireless network protocol for low speed short distance transmission
A protection level for electrical equipment casings against foreign object intrusion,
IP65 Refers to which can completely prevent dust from entering and wash with water without any
harm
The active push technology on the server side, enabling the timely transmission of
PUSH Refers to data updates, which is characterized by high efficiency and low terminal energy
consumption
Material Requirement Planning, the process in which a production enterprise
gradually derives the production and procurement plans for the components, raw
MRP Mode Refers to materials, and other materials required for the production of the main product based
on the production plan, the structure of the main product, and the inventories
situation
Secure Access Module, a module used for encrypting and decrypting identity card
SAM Refers to
information
Surface Mount Technology, a circuit assembly technology used to install surface
mounted components without pins or with short leads on the surface of printed
SMT Refers to
circuit boards (PCBs) or other substrates, and then solder and assemble them through
methods such as reflow soldering or immersion soldering
PCB Refers to Printed Circuit Board, a substrate used for assembling electronic components
Printed Circuit Board Assembly, the process of soldering components onto a PCB
PCBA Refers to
substrate to form a printed circuit board (PCB)
A professional industry media company under the Messe Frankfurt Exhibition
GmbH, aiming to provide market analysis, technical information, solution
asmag Refers to
evaluation, industry forecasting, etc. for practitioners in smart security, smart life,
smart transportation, smart buildings, IT communication, and networking
AI Refers to Artificial Intelligence
AIoT Refers to The Artificial Intelligence of Things
IoT Refers to Internet of Things
NB-IOT Refers to Narrow Band Internet of Things, NB-IoT
The rebate the Company provides to dealers based on the rebate policy and the
Rebate Refers to
completion of dealer performance
SDK Refers to Software Development Kit
Optical character recognition, the process of electronic devices (such as scanners or
digital cameras) using image processing and pattern recognition techniques to
OCR Refers to
examine characters on images, bills, or certificates and translate them into computer
text
WM Refers to Warehouse Management
SAP Refers to System Applications and Products
PDA Refers to Personal Digital Assistant
AGV Refers to Automated Guided Vehicle
BioCode Refers to Biometric feature code, converted from encrypted biometric features
Two-dimensional barcode format: Quick Response Code, which can quickly read
QR code Refers to
data
Transformer Refers to Deep learning model based on attention mechanism
Note:
1.If there is a discrepancy between the total count and the sum of the sub item values in any table of this Half Year Report, it is
due to rounding reasons.
2. This report has been prepared in both Chinese and English. Should there be any discrepancies or misunderstandings between
the two versions, the Chinese version shall prevail.
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ZKTeco 2024 Half Year Report
Section II Company Profile and Key Financial Indicators
I. Company Information
Stock Abbreviation ZKTECO Stock code 301330
Stock listing exchange Shenzhen Stock Exchange
Chinese name of the
熵基科技股份有限公司
Company
Chinese abbreviation of the
熵基科技
Company (if any)
English name of the Company
ZKTECO CO., LTD.
(if any)
English abbreviation of the
ZKTeco
Company (if any)
Legal representative of the
Jin Hairong
Company
II. Contacts and Contact Information
Secretary of the board Representative on securities matters
Name Guo Yanbo Wang Jia
No.32, Pingshan Industrial Road, No.32, Pingshan Industrial Road,
Contact address Tangxia Town, Dongguan, Guangdong, Tangxia Town, Dongguan, Guangdong,
China China
Tel. 0769-82618868 0769-82618868
Fax 0769-82618848 0769-82618848
Email ir@zkteco.com ir@zkteco.com
III. Other Information
1. Company's Contact Information
Whether the registered address, office address, postal code, website, email address, etc. of the Company changed during the reporting
period?
□ Applicable Not applicable
The registered address, office address, postal code, website, email address, etc. of the Company have not changed during the reporting
period, as detailed in the 2023 Annual Report.
2. Information Disclosure and Place of the Report
Whether the information disclosure and place of the report changed during the reporting period?
□ Applicable Not applicable
The website and media name and website of the stock exchange where the Company disclosed its Half Year Report. The filing location
of the Company's Half Year Report remains unchanged during the reporting period, as detailed in the 2023 Annual Report.
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ZKTeco 2024 Half Year Report
3. Registration Change
Whether the registration changed during the reporting period?
□ Applicable Not applicable
The Company's registration remained unchanged during the reporting period, as detailed in the 2023 Annual Report.
4. Other Relevant Information
Whether other relevant information changed during the reporting period?
Applicable □ Not applicable
During the reporting period, due to the completion of the first attribution period of the Restricted Share Incentive Plan in 2022, the
registered capital of the Company was changed from RMB 193,039,666 to RMB 194,679,508. Please refer to the "Announcement on
Completing Industrial and Commercial Change Registration" (Announcement No. 2024-003) disclosed by the Company on January
24, 2024 for details.
IV. Main Accounting Data and Financial Indicators
Does the Company need to retroactively adjust or restate accounting data from previous years
□ Yes No
YoY change during the
Current reporting period The same period last year
reporting period
Operating income (RMB) 903,103,158.77 937,182,670.00 -3.64%
Net profit attributable to
shareholders of listed 78,637,727.33 88,754,335.62 -11.40%
companies (RMB)
Net profit attributable to
shareholders of listed
companies after deducting 67,172,205.06 94,476,476.50 -28.90%
non-recurring profits and
losses (RMB)
Net cash flows from operating
66,632,321.85 130,730,027.12 -49.03%
activities (RMB)
Basic EPS (RMB/share) 0.4070 0.4598 -11.48%
Diluted EPS (RMB/share) 0.4050 0.4579 -11.55%
Weighted average return on
2.42% 2.85% -0.43%
net assets
Increase or decrease at the
At the end of this reporting end of this reporting period
At the end of 2023
period compared to the end of the
previous year
Total assets (RMB) 3,798,491,466.69 3,923,900,732.70 -3.20%
Net assets attributable to
shareholders of listed 3,200,457,211.25 3,265,413,589.20 -1.99%
companies (RMB)
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ZKTeco 2024 Half Year Report
V. Differences in Accounting Data between Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable Not applicable
During the reporting period, there were no differences in net profit and net assets between the financial reports disclosed in accordance
with international accounting standards and Chinese accounting standards.
2. Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting
standards and Chinese accounting standards
□ Applicable Not applicable
During the reporting period, there were no differences in net profit and net assets between the financial reports disclosed in accordance
with foreign accounting standards and Chinese accounting standards.
VI. Items and Amounts of Non-recurring Gains and Losses
Applicable □ Not applicable
Unit: RMB
Item Amount Remarks
Losses and gains from disposal of non-current assets
(including the offsetting portion of the provision for losses -143,955.56
from impairment of assets)
Government subsidies included in current profits and losses
(except those closely related to the normal business of the
Company, which are in line with national policies and
5,030,462.88
regulations, enjoyed according to determined standards,
and have a continuous impact on the Company's profits and
losses)
Profits and losses from fair value changes arising from the
holding of financial assets and financial liabilities by non-
Mainly due to investment income
financial enterprises, as well as the gains and losses arising
6,105,510.00 and fair value changes generated
from the disposal of financial assets and financial liabilities
by financial products
except for effective hedging business related to the normal
operation of the Company
Capital occupancy fees charged to non-financial enterprises
21,195.11
included in current profits and losses
Reversal of the provision on receivables with impairment
170,000.00
test conducted on an individual basis
Other non-operating income and expenses other than the
1,468,131.14
above items
Less: income tax impact 1,278,125.03
Minority interest impact (after tax) -92,303.73
Total 11,465,522.27
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable Not applicable
The Company has no specific situation of other profit and loss items that meet the definition of non-recurring profits and losses.
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ZKTeco 2024 Half Year Report
Description on defining the non-recurring profit and loss items listed in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" as recurring profit and loss items
□ Applicable Not applicable
The Company has no situation where the non-recurring profit and loss items listed in the "Explanatory Announcement for Information
Disclosure by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" are defined as recurring profit
and loss items.
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ZKTeco 2024 Half Year Report
Section III Management Discussion and Analysis
I. Main Businesses Engaged by the Company During the Reporting Period
(I) Basic situation of the Company's main businesses and products
The Company is an international enterprise in the field of multimodal "Computer Vision and Biometrics" (BioCV), and is a
national high-tech enterprise specializing in providing smart entrance and exit management, smart identity verification, smart office
products, smart retail products and solutions. The Company is mainly committed to integrating core multimodal biometric technologies
such as fingerprints, palm veins, palmprints, facial features, finger veins, and iris with computer vision, radio frequency, IoT, cloud
computing and other technologies. It provides smart terminals, industry application software, and platforms with object detection,
identity recognition and verification functions to multiple fields such as commerce, transportation, finance, education, healthcare,
government affairs and retail.
Relying on the global ecosystem of R&D, manufacturing, and sales services, the Company actively deploys the field of smart
retail cloud services while deeply cultivating the three major business sectors of smart entrance and exit, smart identity verification,
and smart office, providing digital products and services for users in the public service field, enterprises, and personal users.
From the perspective of the main application scenarios of the product, the Company's main business during the reporting period
mainly covered three major areas: smart entrance and exit management, smart identity verification, and smart office.
The main business income obtained from the three major scenarios of the Company during the reporting period is as follows:
Unit: RMB '0,000
January-June 2024 January-June 2023
Item
Amount Proportion Amount Proportion
I. Smart entrance and exit
69,918.32 77.75% 68,498.68 73.34%
management products
II. Smart identity verification
4,590.20 5.10% 7,693.09 8.24%
products
III. Smart office products 15,421.29 17.15% 17,199.26 18.42%
Total 89,929.81 100.00% 93,391.03 100.00%
1. Smart entrance and exit management
(1) Smart terminal products and functions
During the reporting period, the Company's smart terminal products for smart entrance and exit management mainly include
access control management, pedestrian channels, vehicle channels, security inspection products, intelligent videos, smart locks,
elevator control, charging piles, and self-service visitor services.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
The access control is a smart terminal that
achieves single door access control
permission verification and logical judgment
through biometric information verification or
other verification methods. According to
different biometric verification methods, it
can be divided into fingerprint, facial, palm
vein, and palmprint recognition access
Access control integrated machines, equipped with
control RFID cards, passwords, and other verification
methods. The device supports unified
management on the software platform.
During the reporting period, the Company
launched a new generation of multimodal
biometrics product zFace series, which is
equipped with wireless doorbells and visual
intercom functions, accelerating the
implementation of technology products.
The access controller is a smart terminal used
to receive data from biometrics card readers,
radio frequency card readers, and access
control, and perform access permission
Access verification and logical judgment. It is mainly
control used in large and medium-sized project
products locations with a large number of access points
and high security requirements. Accessible
Access collection methods include facial features,
controller fingerprints, RFID cards, QR codes and
passwords. The device has professional
access control function and supports unified
management on the software platform.
The Company actively deploys advanced
access controllers and multiple-step
controllers and cabinet controllers for large
and medium-sized enterprises and public
sector applications.
The InBioP3000 series is an intelligent
recognition access controller launched by
ZKTeco, with four door and eight door
options available. It is used in conjunction
with the DM20 access control magic box. The
DM20 device at the front of the door only
requires one POE network cable to achieve
data transmission from the controller. At the
Rack same time, power can be supplied to devices
mounted such as the reader, electric lock, exit switch,
controller alarm, etc. through the DM20, without the
need for external power supply, resulting in
lower cost. The status of the controller and
door can be viewed in real time through the
device's own LED lights, PC, web, and
mobile devices, making installation,
debugging, and maintenance more
convenient. The device is designed according
to the 1U standard and adopts SGCC (hot-dip
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
galvanized low carbon steel) processing
technology. The body is wear-resistant and
durable, compact and generous, with two
installation methods: wall mounted and rack
mounted. It is easy to install, manage and
maintain, making it an ideal choice for many
enterprises. This controller is designed
specifically for medium to large-scale
projects, covering various scenarios such as
factories, companies, schools, buildings,
office buildings, apartments, etc.
DM20 is an access controller magic box
launched by ZKTeco, which is used in
conjunction with the InBioP3000 series
controllers. The controller is connected to the
DM20 via a PoE network cable, automatically
assigning an IP address to the DM20 without
the need for any network configuration
settings, greatly reducing the workload of
debugging personnel and significantly
improving work efficiency. DM20 supports
the access of ZKTeco products such as card
readers, fingerprint readers, QR code readers,
exit switches, electric locks, etc., and has
expanded auxiliary input and output
interfaces. DM20 provides direct power
supply to the connected devices without the
need for a separate external power source,
effectively reducing the construction and
wiring workload on the project site and
lowering project costs.
Facial recognition card readers are mainly
used to collect and verify facial and card
information of personnel, and transmit the
comparison results to the access controller
through Wiegand for access permission
verification and logical judgment. Dual
Facial
verification can greatly improve the security
recognition
of the control area. With a 2 million pixel
card reader
binocular live detection camera, it accurately
resists various 2D and 3D simulation image
and model attacks. By outputting data through
Wiegand, most access controllers can be
directly upgraded to facial verification
methods, which has strong compatibility.
RF card
The RF card reader is mainly used for the
reader
collection and transmission of RFID
(including
technologies and passwords, and can send the
national
collected data to the access controller for
security
comparison and verification. The data
card reader
information whose collection is supported
and key
includes RFID cards, passwords, etc.
issuer)
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
The elevator controller supports two modes of
online and offline operation, controlling a
maximum of 128 floors. It has multiple
verification methods such as face, fingerprint,
Elevator RFID card, QR code, etc. and can accurately
controller identify elevator user instructions without the
need for buttons, directly reaching the target
floor. In addition, it also supports seamless
integration with the visitor system, achieving
one code interconnection for visitors.
The multimodal acquisition terminal is an
Elevator inductive terminal used to collect information
control such as the cardholder's face, fingerprint, QR
code, RFID card, password, etc., and transmit
it to the access controller and elevator
controller. It is used in conjunction with
Multimodal software to achieve single or multiple door
acquisition access control permission verification. The
terminal multimodal acquisition terminal is equipped
with a high-definition binocular camera,
configured with a facial liveness algorithm,
which can quickly capture faces and has
strong anti-counterfeiting ability. The
dustproof and waterproof level can reach
IP65.
The pedestrian gate is an intelligent device
used to control the entry and exit of personnel.
With the rapid development of digital
technology, the application of intelligent
pedestrian gates is becoming increasingly
widespread. At present, schools, high-end
residential areas, scenic spots, stations,
customs, airports, terminals, office buildings,
sports venues, and other places that require
pedestrian flow management, identity
recognition, and self-service fee management
are all provided with automated channel gates
instead of traditional manual ticket or
admission verification. The Company's
pedestrian gate products support the
integrated integration of multimodal
biometrics and radio frequency identification,
and support various infrared passage
detection functions for human and object,
Pedestrian Pedestrian
enabling intelligent control and management
channel gate
of the channel.
With the extension of the Company's core
technologies in video detection, image
recognition, behavior analysis, and feature
matching, and combined with the
characteristics of various scenarios in
pedestrian channels, the Company has
developed self-service settlement and passage
products and solutions that can meet the usage
needs of multiple scenarios such as libraries,
unmanned supermarkets, communities,
schools, airports, subways, and stations,
promoting convenient travel in the above
passage scenarios. The video passage
detection algorithm and device independently
developed by the Company use AI technology
to detect, alarm, and dissuade abnormal
behaviors such as tailgating, intrusion,
shoulder to shoulder, and hugging. This not
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
only reduces the work pressure of staff, but
also greatly improves the safety of control and
the accuracy of passage data.
During the reporting period, the Company
promoted the integration and application of
technologies such as pedestrian gates,
multimodal recognition, holographic
projection and smart commercial display
according to the needs of high-end
commercial scenarios.
The license plate recognition all-in-one
machine is mainly used to obtain and
recognize license plate information such as
license plate number, license plate color, and
license plate logo type. The Company's
license plate recognition all-in-one machine
License adopts an integrated structure of license plate
plate recognition camera, control panel, display
recognition screen, fill light, automatic barrier, etc. It can
all-in-one realize voice broadcasting in local language
machine and display information such as license plate
numbers. The license plate recognition
parking lot management system can help car
owners to park automatically, support various
mobile payment functions, and can set
flexible and diverse charging rules to meet the
needs of different scenarios.
Vehicle
channel
The automatic barrier can be independently
controlled to lift and lower the pole, or it can
be accessed through the parking lot
management system to lift and lower the pole.
The Company's gate is composed of a
reducer, motor, balancing device, chassis,
gate pole support, gate rod and other parts.
Automatic
According to the application location of the
barrier
gate, its gate poles can be divided into straight
poles, 90° curved arm poles, fence poles, anti-
collision round poles, and other pole types.
The gate with license plate recognition all-in-
one machine is suitable for entrance and exit
management of parking lots in different
scenarios.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
New energy vehicle charging piles can be
fixed on the ground or walls, installed in
public buildings (buildings, shopping malls,
public parking lots, etc.), residential parking
lots, and dedicated charging stations to
provide charging and energy replenishment
services for electric vehicles and hybrid
vehicles. According to the output power of the
charging pile, it is generally divided into
various different power charging methods
such as AC slow charging, DC fast charging,
and overcharging to meet the charging needs
of new energy vehicles in different scenarios.
The Company's new energy vehicle charging
piles currently include 7kW AC slow
charging piles, 30kW/60kW/120kW/160kW
Charging
DC charging piles, and other series of
pile
products. On this basis, the Company has
added 20kW and 240kW DC charging pile
series to improve the product array layout.
The main focus is on application scenarios
that require fast charging and energy
replenishment, such as administrative
agencies, enterprises and institutions,
industrial parks, shopping centers, scenic
spots, communities, public charging stations,
etc. It supports functions such as card swiping
charging, QR code scanning charging, mobile
payment, self-service, online monitoring,
cloud management, OTA remote upgrade, etc.
(integrated management and service of
charging and parking can be achieved with
the Company's smart parking business).
Intelligent walk through metal detector is a
security inspection terminal that integrates
identity verification, personnel access and
metal detection. It is applied in public places
with high pedestrian flow, such as stations,
factories, public service departments and
large conferences, for personnel identity
verification, personnel access, and inspection
of metal items carried by personnel.
Walk
Security According to usage requirements, the product
through
inspection integrates multiple functions such as metal
metal
products detection, thermal imaging temperature
detector
measurement, real-time monitoring, channel
management, real name verification, and
environmental gas detection. It is equipped
with a 29 inch 21:9 ultra wide screen.
Through a brand new software UI
visualization platform and the integration of
multiple functions and visualized display of
data, the product has a wider range of
applications.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
The intelligent data walk through metal
detector integrates weak signal detection
technology and intelligent classification
algorithm applications internally, classifying
and detecting metal items carried by passing
personnel. It integrates electronic products,
all-metal detection, and user-defined multiple
detection modes, making the product
versatile. Among them, in the electronic
product detection mode, the mobile phone can
be accurately detected after filtering out daily
Intelligent
metal items (such as keys, jewelry, belts,
data walk
cigarettes, lighters, glasses, stationery,
through
umbrellas, water bottles, and other small
metal
metal objects). The all-metal mode is the
detector
basic metal detection function of the product.
The user defined mode selects prohibited
metal items for pre-set product categories to
meet the detection needs of different
locations. The walk through metal detector is
suitable for various entry and exit security
inspection places, such as campuses,
examination places, public service
departments, public resource trading centers,
confidential entities, rail transit, scenic spots,
etc.
The walk through metal detector is an ultra
high sensitivity metal classification detector.
Its internal detection system adopts the latest
eddy current signal detection and processing
technology developed by ZKTeco, forming a
multi-energy metal detection mode
combining non-ferrous metals and ferrous
metals. In the non-ferrous metal mode, the
product can accurately detect metal objects
carried by people with copper and aluminum
as the main materials. The detection accuracy
Walk can reach and exceed the level of metal
through detectors in the same category on the market.
metal It is widely suitable for manufacturers who
detector use copper and aluminum as raw materials for
production and processing, supervise and
eliminate personnel's carrying of such objects
in the premises, and protect the economic
interests of enterprises. The product can also
be freely switched in all-metal mode, giving
it a very high level of micro metal detection
capability. In this mode, it can accurately
detect other precision small and micro metal
items such as paper clips, 1 cent coins, pins,
etc., meeting the confidentiality requirements
of some high-level security inspection sites.
The X-Ray Scanner is a detection device used
to detect whether packages and other items
contain specific prohibited items. This series
of X-Ray Scanners integrates intelligent
recognition, people and bag association,
X-Ray video capture, platform management and
Scanner other functions, which can better solve the
problems of missed inspections caused by
low concentration of security inspection
personnel and excessive security inspection
pressure during peak hours. This series of X-
Ray Scanners adopts new imaging
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
technology, with high display image
resolution, stronger penetration and
resolution, and can quickly and effectively
detect various dangerous categories, drugs,
and high-density substances. It is widely used
in public service departments, embassies,
factories, schools, hospitals, sports centers,
exhibition halls, entertainment venues, and
other scenarios, and can be used for security
inspections of briefcases, postal parcels, hand
luggage, small luggage bags, etc.
Intelligent video cameras have advanced
intelligent algorithms and can use intelligent
analysis functions to meet the entrance and
exit management for people and vehicles
(non-motor). They can also meet meet the
Smart
requirements of complex modern urban scene
camera
deployment, as well as the increasingly wide
device
and in-depth analysis of target objects,
promoting the era of visual intelligence in
intelligent video. They are suitable for various
entrance and exit scenarios such as residential
areas, campuses and enterprises.
Video Smart NVR (Network Video Recorder) is an
surveillance advanced security device that integrates high-
definition video recording, intelligent
analysis, and remote monitoring and
management. It supports multiple high-
definition video inputs, ensuring clear and
smooth images. Smart NVR also has cloud
Smart
connectivity capabilities, supporting remote
video
viewing and control through mobile APPs,
recorder
allowing for real-time monitoring of
device
monitoring dynamics anytime, anywhere. Its
efficient data storage and retrieval function
makes historical video playback more
convenient. Smart NVR is an indispensable
intelligent hub in modern security systems,
providing powerful technical support for
security protection.
Smart locks are mainly used for opening and
closing control of doors in homes, hotels,
offices, and other areas. The Company's
biometrics smart lock products have the
function of extracting and comparing various
information such as fingerprints, faces, RFID
Biometrics
Smart lock cards, etc. They can be managed through
smart lock
software, smart speakers, or apps, and are
compatible with lock bodies in line with
national standards, American standards,
European standards, and Korean standards.
They support WiFi, NB IoT, ZigBee, and
Bluetooth communication methods.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
Cooperating with the One Card Solution
Cube Visitor Management System, it can
achieve "real name" + "real person" visitor
authentication; support CTID trusted identity
Intelligent authentication; support mobile visitor
Visitor
visitor appointment, dual screen display, QR code
Terminal
terminal and OCR certificate scanning, barcode
printer, and other functions. SDKs can be
provided for customers to conduct secondary
development to meet the visitor management
needs of users in different industries.
(2) ZKBio Intelligent Integrated Management Platform V6600
ZKBio V6600, based on multimodal BioCV technology, focuses on intelligent integrated entrance and exit management, and
provides an integrated management platform that integrates "pedestrian, vehicle, and object inspection". With the help of machine
vision intelligent analysis technology, the platform realizes intelligent analysis and safety supervision to meet the needs of users for
diversified and fragmentation application scenarios based on facial recognition, vehicle recognition, intelligent scene algorithm and
IoT perception technology, combined with business subsystems such as attendance, access control, visitors, consumption, patrol,
parking, elevator control, channel, information screen, smart scenarios, and visual intercoms.
During the reporting period, the Company released the ZKBio Intelligent Integrated Management Platform V6600 4.2.0 of
ZKTeco, which expanded and upgraded six major functions including hybrid cloud, ZKBio APP, visual intercom, smart scenario center,
intelligent elevator dispatching, and access control.
(3) Shang'an Yuntong Smart Park Integrated Management Platform V8800
The ZKBio V8800, based on multimodal BioCV technology, provides an integrated park management platform that integrates
pedestrian, vehicle, and object inspection. The platform adopts a micro-service development framework, which has the characteristics
of high system performance, high service availability, module scalability, high communication security, and strong third-party
integration scalability. With the Company's long-term experience and user needs in the field of smart parks, we will comprehensively
integrate intelligent video applications to empower entrance and exit businesses, providing comprehensive and security guarantees and
office convenience for the production and life of the park.
2. Smart identity verification
(1) Smart terminal products and functions
During the reporting period, the Company's smart terminal products of smart identity verification mainly included multimodal
biometrics products, card recognition and reading products, and industry smart terminals.
Product Product
Product Description Product Image
Category Name
Fingerprint scanner has the characteristics of
large capture area, high fingerprint image
pixels, and good imaging effects for dry and
wet fingerprints. It supports the
Multimodal
Fingerprint development and use of systems such as
biometrics
scanner Windows, Android, Linux, and domestic
products
operating systems (KylinOS, NeoKylin),
and Uniontech OS (Kunpeng, Loongnix,
PHYTIUM, Hygon, and Zhaoxin
platforms).
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
The specialized fingerprint scanner of the
resident ID cards complies with the
"Technical Specifications for Fingerprint
Acquisition and Comparison of Resident
Identity Card" (GA/T 1012-2019) and the
"General Technical Requirements for
Fingerprint Scanner of the Resident ID
Card" (GA/T 1011-2012). The device is
Fingerprint
small and exquisite in appearance.
scanner of the
Combined with high-performance
resident ID
processors and international semiconductor
card
fingerprint sensors, it has the characteristics
of fast capture speed and excellent image
quality. It supports the development and use
of systems such as Windows, Android,
Linux, and domestic operating systems
(KylinOS, NeoKylin), and Uniontech OS
(Kunpeng, Loongnix, PHYTIUM, Hygon,
and Zhaoxin platforms).
It can simultaneously collect fingerprint and
finger vein information. Fingerprint and
finger vein two-factor authentication can
Finger vein improve the anti-counterfeiting ability, and
capture device is mostly used in scenarios with high
security requirements. It supports the
development and use of systems such as
Windows, Android, and Linux.
The biometrics reader is a smart terminal
used to collect human biological
characteristics, mainly used in access
control systems. It can send the collected
Biometrics
biometrics information to the access
reader
controller for comparison and verification.
The data information whose collection is
supported includes fingerprints, faces, RFID
cards, etc.
The palm information capture device adopts
high-definition near-infrared dedicated lens
and visible light camera, supporting near-
infrared fill light monocular in-vivo
Palm
detection and binocular in-vivo detection,
information
and can obtain clear palm print and vein
capture device
images. It supports high angle visible light
palmprint recognition and palm vein hybrid
recognition.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
A hardware level module designed for
various application scenarios of CTID
authentication certificates and a product
shortlisted in the "Recommended List of QR
QR code Code Modules of CTID Terminal", fully
module of supporting the recognition and reading of
CTID terminal CTID authentication certificate QR codes,
mainstream QR codes, and one-dimensional
barcodes, with strong decoding and code
verification capabilities for CTID
authentication certificate.
The built-in ID card reader complies with
the "General Technical Requirements for
Desktop Readers of the Resident ID Card"
(GA 450-2013), and can support the
recognition and reading of the 2nd-
generation ID Card, Foreign Permanent
Trusted
Resident ID Card, and Residence Card for
Digital
Hong Kong, Macao and Taiwan Residents.
Identity
In addition, it supports recognition and
Authentication
reading of CTID authentication certificate
Terminal
QR codes, mainstream QR codes, and one-
Card dimensional barcodes through docking, as
recognition well as SIM digital identity recognition and
and reading reading, with strong CTID authentication
products certificate decoding, code verification, and
other capabilities.
It complies with "General Technical
Requirements for Desktop Readers of the
Resident ID Card" (GA 450-2013),
"Technical Specifications for Fingerprint
Acquisition and Comparison of Resident
Identity Card" (GA/T 1012-2019), and
"General Technical Requirements for
Fingerprint Capture Device of the Resident
ID Card" (GA/T 1011-2012). It is an ID card
reader with fingerprint verification function,
and can support the recognition and reading
ID card reader of the 2nd-generation ID Card, Foreign
Permanent Resident ID Card and Residence
Card for Hong Kong, Macao and Taiwan
Residents. According to different
application scenarios, the ID card reader can
be divided into three types: desktop, built-in,
and handheld. Desktop ID card reader can be
directly connected to a computer for use,
built-in ID card reader can be integrated into
various terminal devices to achieve ID card
machine reading function, and handheld ID
card reader can be directly used offline.
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ZKTeco 2024 Half Year Report
Product Product
Product Description Product Image
Category Name
A dual screen smart government terminal
that integrates basic functions such as ID
card recognition and reading, fingerprint
collection and verification, and facial
recognition. It is designed with dual screens
Smart
and supports handwritten electronic
Government
signatures and supports optional QR code
Terminal
and receipt printing function. Equipped with
a built-in high-definition camera, it supports
shooting up to A4 format and can capture
and retain documents, certificates, invoices,
etc., achieving paperless office.
A Smart Human Certificate Verification
Terminal that integrates functions such as
portrait collection, fingerprint collection,
and 2nd-generation ID card reading. It can
also support the recognition and reading of
various documents such as 2nd-generation
Resident ID Card, Foreign Permanent
Resident ID Card, and Residence Card for
Hong Kong, Macao and Taiwan Residents.
Human
According to different application scenarios,
Certificate
it can be divided into four types: wall
Verification
mounted, handheld, desktop, and floor
Terminal
mounted. The Company's Human
Certificate Verification Terminal is pre-
installed with One Card Solution Cube
Identity Authentication Software, which can
be used in conjunction with the certificate
One Card Solution Cube Backend
Management System for unified use, with
Industry optional CTID trusted identity
Smart authentication function.
Terminal A desktop device that integrates various
functions such as social security card, ID
card reading, contact/non-contact smart card
recognition and reading, one-
dimensional/QR code electronic voucher
recognition, fingerprint comparison
recognition, etc. The built-in ID card reader
meets the requirements of " General
Medical
Technical Requirements for Desktop
Insurance
Readers of the Resident ID Card" (GA450-
Identity
2013) and supports reading smart cards such
Verification
as social security cards and bank cards. The
Terminal
device supports 4 sets of PSAM cards, has a
multi-platform SDK, and supports USB
(drive free). This product is suitable for
scenarios in fields such as social security,
health, medical insurance, pharmacies,
industry and commerce, taxation, electricity,
telecommunications, hotels, transportation,
banking, insurance, and fast payment.
(2) One Card Solution Cube Identity Authentication Management System
The One Card Solution Cube Identity Authentication Management System is a "real person system" identity verification system
independently developed by the Company based on multimodal biometric technology for "the integration of people and certificates".
It consists of two parts: the Human Certificate One Card Solution Cube Terminal Software (APP) and the Identity Authentication
Management Platform, integrating the Company's ZKLiveFace facial recognition algorithm and ZKFinger V15.0 ID card fingerprint
comparison algorithm. The software can read 2nd-generation ID cards, Hong Kong and Macao resident residence permit, foreign
permanent residence permit and other certificate information, compare the fingerprint or face of the holder on the spot for the
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ZKTeco 2024 Half Year Report
"integration of people and certificates", and accurately and quickly verify user identity information. One Card Solution Cube Identity
Authentication Management Platform has functions such as intelligent device management, personnel management, and black/white
list monitoring, which can achieve real-time and comprehensive multi-dimensional monitoring and analysis of devices, personnel, and
data. Moreover, the One Card Solution Cube Identity Authentication Management System supports access to large capacity facial
recognition servers, CTID Platform (Trusted Identity Authentication Platform), and million-level large capacity facial backend
verification and trusted identity authentication capabilities, providing authoritative, reliable, stable and secure identity authentication
services for customers in different vertical fields, and providing a one-stop industry solution of "core algorithm+smart
terminal+software platform+scenario application" for the identity authentication industry chain.
The system topology diagram is as follows:
Third party
Visitor end
Visitor appointment Visitor QR code Other functions system
Scan the QR code Manual Scan the QR Message
QR code sign in QR code sign off Visitor's record Account
for appointment appointment code for passage notification cancellation
Data
Mobile
end APP
Management end
WeChat Scan QR code for Scan QR code to sign Docking ERP system
Data dashboard
invitation follow-up off
Appointment Message Reception Access QR code
approval notification records
Third party
Data management device
Device management Personnel management management
system
Original Statistical Regional Device Advertising Ordinary Department
Whitelist Blacklist
records report settings management management personnel management
Application layer
Visitor management Identity authentication
Visitor's Traffic Visitor Visitor Mini program Human
Large capacity OA system
Identity
record records devices settings management comparison server
Authentication
One Card Solution Cube Management System
System settings
Basic Change User Database Command Operation HTTPS Dictionary Standard
settings password management backup monitoring log configuration configuration interface
API interface
Busines
s
Docking
Nacos Application layer
Service Register Config Register Basic framework Business services
Basic components
Service layer
Redis PostgreSQL MQ CMD Option
Public Service
Message Push Service Scheduled Tasks Service
Data Personnel Server
Whitelist Blacklist
management management connection
Equipment Product
Perception
layer
Authentication Verification Advertising Visitor function Adaptation
Visitor settings
method function management
(3) Biowhois CTID Platform
Biowhois CTID Platform is an identity authentication SaaS service platform launched by the Company based on multimodal
biometric technology and an "Internet+" CTID Platform. It can provide developers and industry users with multimodal biometrics,
online identity authentication, real name offline identity authentication and other open, scalable, cross-platform multi-dimensional
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ZKTeco 2024 Half Year Report
identity verification services. The data interconnection between Biowhois CTID Platform and "Internet+" CTID Platform can provide
users with authoritative, reliable, stable and secure online identity authentication services such as two real names, two real people, four
real names, four real people, etc., which can not only intelligently upgrade the existing offline identity authentication scenarios in
finance, medical care, government affairs, transportation, education, etc., but also is suitable for internet identity authentication
scenarios such as e-commerce, online games, social networking sites, online education, online healthcare, and online live streaming in
the digital economy.
The system topology diagram is as follows:
(4) Scenario solutions
During the reporting period, based on the existing rich identity verification products, the Company deeply integrated specific
segmentation scenarios and incubated identity verification solutions for three major segmentation scenarios: "smart examination, smart
healthcare, and smart welcoming". In terms of intelligent examination, solutions based on the needs of candidate identity verification
can cover the entire business scenario of candidate information collection, candidate identity verification, and examination data analysis
before, during and after the examination. The solutions can not only be self-contained and directly implemented, but also seamlessly
connect with third-party standardized examination site construction plans, with competitive advantages such as intelligence,
convenience and flexible deployment. In the medical field, the Company has launched a smart medical identity verification solution
for identity verification scenarios such as newborn birth medical certificates and assisted reproductive management. The solution not
only meets the information collection and identity verification needs of various windows in the hospital, but also can be securely
integrated with the hospital and third-party systems to achieve the embedding of identity verification function modules, helping major
medical institutions provide patients with high-quality and caring medical services. The related products have been put into use in
hospitals in multiple provinces and cities in China, providing effective assistance for standardized hospital services. In terms of smart
welcoming, it has driven the entire process with the core business of new student enrollment and registration, and created an integrated
smart welcoming management solution that combines the new student Human Certificate Verification Terminal and the management
platform of the new student enrollment and registration. This solution comprehensively solves the vertical connection of affairs and
data between departments before, during, and after the new student enrollment in universities, improves the overall efficiency and
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ZKTeco 2024 Half Year Report
quality of the new student enrollment work, and can meet the identity verification and management needs of different universities for
new student enrollment.
3. Smart office
(1) Smart terminal products and functions
During the reporting period, the Company's smart terminal products of smart office mainly included attendance products and
consumer products.
Product Product
Product Description Product Image
Category Name
A self service attendance terminal, mainly
registering and comparing biometrics
information, recording personnel attendance
time data, and cooperating with backend
software to scientifically and effectively manage
enterprise personnel. The Company's biometrics
Attendance attendance terminal can support multiple
Attendance
Smart verification methods such as fingerprint, face,
product
Terminal palm, RFID card, and password, and has
personnel management functions such as self-
service scheduling and report generation.
The product has desktop and wall mounted
forms, combined with wireless communication
technology, suitable for a wide range of
application scenarios.
Support face, RFID card, QR code and other
verification methods; mainly used in
consumption scenarios such as internal canteens,
Consumer gyms, and schools within enterprises, supporting
Consumer
Smart various consumption modes such as free amount
product
Terminal deduction, count deduction, and fixed value
deduction. The system can be equipped with
mini programs to achieve convenient and
intelligent consumption management.
(2) E-ZKEco Pro Time & Security Refined Service Platform
The E-ZKeco Pro Time & Security Refined Management Platform focuses on enterprise time and security management,
combining the three core elements of internet applications: time, computing, and storage. It integrates multimodal BioCV, IoT
perception technology, and connectivity into software and hardware to achieve standardization, modularization, and platformization of
functions such as personnel, attendance, consumption, access control, visitors, meetings, assets, and salaries, and assists in the digital
upgrading of enterprise management. Through the intelligent application of the E-ZKeco Pro Platform, enterprises can standardize
their management processes, significantly improving their level of time and security refined management, while reducing the burden
of tedious work such as human resources, administration, and finance, and helping enterprises reduce operating costs and improve
operational efficiency.
（3）ZKBioTime
ZKBioTime is an independently developed attendance management software platform that supports remote, multi-branch, and
multi-site attendance management based on the needs and characteristics of overseas markets. ZKBioTime can be stably connected to
standard attendance PUSH devices of the Company. At the same time, employees perform various self-service office operations such
as check-in, check-out, out of office check-in, leave approval, and self query reports through mobile apps and browsers. The platform
can ultimately record employee attendance status and output attendance reports based on attendance rules. In addition, the software
has gradually been localized in more than ten countries around the world, including localized language, attendance rules, attendance
reports, and payroll rules. The interface between localization and third-party social security, tax, banking, and other institutions is
seamlessly connected, greatly improving the efficiency of enterprise office operations and receiving high praise.
(4) ZKTeco Interconnection Smart Office Digital Assistant
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ZKTeco 2024 Half Year Report
ZKTeco Interconnection Smart Office Digital Assistant is a lightweight SaaS application for end customers in office scenes.
Mobile end is a lightweight software application based on WeChat mini programs and mobile Apps, providing small and medium-sized
enterprises (SMEs) with functions such as venue management, personnel management, attendance management, access control
management, visitor management, device management, video management, etc. It accompanies micro and small enterprises from basic
software to standardized software development, and creates a simple and easy-to-use digital assistant for micro and small enterprises.
The ZKTeco Interconnection Platform leverages the front-end intelligent hardware product matrix of ZKTeco, the Paas base
capability of the back-end ZKTeco IoT cloud platform MinervaIoT, and the comprehensive three-dimensional advantages of various
Saas applications to provide "business premise management, comprehensive service management" solutions for SME customers.
(II) The Company business model
1. Procurement model
(1) Procurement execution
In order to fully leverage the advantages of centralized procurement, reduce procurement costs, improve operational efficiency,
and optimize procurement resources, the Company has a Procurement Center that manages the procurement of electronic materials,
structural components, and other materials required in the production process.
The Procurement Center consists of three departments: Resource Development Department, Executive Procurement Department,
and Comprehensive Procurement Department. Among them, the Resource Development Department is mainly responsible for
developing and managing supplier resources, following up on samples, and conducting business negotiations during the sampling
period. The Executive Procurement Department is mainly responsible for executing purchase orders and following up on material
delivery and reconciliation and payment request. The Comprehensive Procurement Department is mainly responsible for administrative,
office, and fixed asset procurement, except for production materials.
The Company mainly uses SAP system for sales forecasting and actual orders, combined with MPS/MRP calculation logic, and
based on production plans, analyzes raw material usage and formulates priority levels, allocates materials based on inventories, and
gradually deduces the raw material procurement plan required for the production of the product. For some general materials, the
Company has set up a minimum safe stocking point for inventories warning and replenishment.
(2) Supplier selection and management
The Company has established strict supplier selection and management measures. For newly introduced suppliers who need to
develop new products, expand supply resources, and reduce costs, after the supplier submits basic information, the Resource
Development Department of the Company's Procurement Center will organize the Material Certification Department, the Executive
Procurement Department, the Manufacturing Center, and the R&D Center to conduct on-site reviews of the supplier. For suppliers who
pass the assessment, formal certification will be carried out for storage.
In the daily procurement process, in order to ensure the quality of the Company's raw material supply, except for the SAM (security
module) involved in the card business, which can only be purchased from Xingtang Communication Technology Co., Ltd., the only
supplier selected by the Ministry of Public Security, the Company usually selects two or more suppliers that meet the Company's
certification standards for the main raw materials for supply. The Company will also strengthen the management of suppliers by signing
relevant "Supply Quality Agreement" and conducting monthly and annual reviews. Suppliers with scores below 60 for three consecutive
months will be disqualified from being suppliers.
2. Production model
From the perspective of process characteristics, the Company's smart terminal products are mainly produced by the production
methods of processing and assembly. According to the different production planning methods, the production method can be divided
into two production models: Make to Stock (MTS) and Make to Order (MTO). The MTS of the Company mainly combines historical
sales data and the Company's sales strategy to predict and produce standardized products, and meets market demand in a timely manner
by maintaining a certain amount of finished product inventories. The MTO is a production method according to personalized needs
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ZKTeco 2024 Half Year Report
such as variety, model specifications, and performance based on customer orders. Once the product is produced, it can be directly sent
to customers without the need to maintain finished product inventories.
After successful development and testing, the Company's application software and platform products are delivered to users through
CD or website distribution and download. Both the basic version software and the advanced version software and platform provide
users with free trials. The basic version software provides free activation, while the advanced version software and platform require
users to pay a software license fee before activation and use. For large-scale engineering projects, the Company will assign engineering
personnel to the user's site for installation, debugging, and training services. The application software and platforms released by the
Company are locally deployed, used, and managed by users. The Company does not provide operation services, but only provides
necessary after-sales services according to the sales contract.
3. Marketing and management models
The Company adopts a sales model that combines distribution and direct sales.
(1) Distribution model
In the distribution model, the Company's customers are mainly dealers, and the relationship between the Company and dealers
belongs to a purchase and sales relationship, adopting a buyout sales method.
(2) Direct sales model
The Company's direct sales customers mainly include system integrators, engineering contractors, end users, etc. On the one hand,
the Company can provide smart terminal devices and application software platforms to system integrators and engineering contractors,
which can integrate or include the aforementioned products in products, systems, or engineering services sold to downstream end users.
On the other hand, the Company can also directly sell to end users through offline direct sales or online self operated platforms.
Normally, the Company's direct sales business can be divided into two categories based on whether installation and O&M are
required: product sales and project implementation. For project implementation related businesses, the Company will customize its
own smart terminals and application software platforms based on different engineering project requirements and provide O&M services.
(III) Market position of the Company's products during the reporting period
The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for four consecutive years from 2020
to 2023. In 2023, it ranked 14th on the list and was awarded awards such as "Top 50 Innovation", "Top 10 Brands in Smart Parks", and
"Top 10 Brands in Smart Office" in 2023 Global Industry Digital Innovation Ranking by asmag. It was selected by the organizing
committee and relevant institutions of the 19th Security China as the "DC World - Top Enterprise of the DC World Awards", "3rd China
Security Innovation Enterprise in 2023", and "11th China Intelligent Transportation Construction Recommended Brand in 2023". It
was selected by the organizing committee of the Huicong Brand Festival as the "AIoT Innovation Enterprise" and "Leading Brand in
Access Control" of the 20th China IoT Industry Conference and Brand Festival in 2023. It won the second place in the "2023 Top 10
Access Control Brands Award" awarded by Qianjia Smart Tech and other entities, It ranked first on the "Top 15 Access Control Brands"
list by the Latin American security technology media SecuriTIC in 2023. It received the "Technology Innovation Award" in the field
of physical security at the 2023 Security FESTA in South Korea. It was also selected as one of the "Top 100 Global Security Enterprises
in 2023" by BOANEWS and Security World magazines. In 2023, the Company's trusted digital identity QR code module ZKB10M
was successfully shortlisted for the "Trusted Digital Identity Ecological Product Recommendation List" of Beijing Zhongdun Security
Technology Development Co., Ltd. The Company's ZKTeco perception data gate was awarded the "Excellent Innovative Product
Award" at the 16th China International Public Safety Products Expo. Internationally, the Company has won 6 industrial design industry
awards, including 2 German Red Dot Awards and 4 iF Design Awards. In addition, since 2016, the Company has been awarded the title
of "Top 500 Manufacturing Enterprises in Guangdong Province" by Guangdong Manufacturers Association and other entities for 8
consecutive years. In 2023, the Company was rated by the General Administration of Customs of the People's Republic of China as a
"Sample Enterprise of China Customs Trade Prosperity Survey (Export)". In 2023, the Company also joined industry organizations
such as the Guangdong Chain Operations Association (GDCOA), the E-paper Industry Alliance (EPIA), and the China Chain-Store &
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ZKTeco 2024 Half Year Report
Franchise Association (CCFA), becoming a new retail technology and service provider in the retail industry. Guangdong Zkteco has
been rated as a "SRDI small and medium-sized enterprise (SME)" by the Department of Industry and Information Technology of
Guangdong Province.
During the reporting period, the Company was awarded the title of "Top 10 Brands of China's Intelligent Import and Export
Industry Channel Gates in 2023" by www.86crk.com. Guangdong Zkteco has been recognized by the Department of Science and
Technology of Guangdong Province as the Guangdong Multimodal Computer Vision and Biometric Engineering Technology Research
Center, XIAMEN ZKTECO has obtained the "ITSS Information Technology Service Standard Compliance Certificate" issued by the
China Electronics Standardization Association. The "ZKTeco Cloud IoT Platform" (Minerva IoT Platform) developed by XIAMEN
ZKTECO has been rated as "Information System Security Level Protection Filing Certificate (Level 3)". The Company has been
recognized as one of the "Top 30 Intelligent Transportation Enterprises in ITSMRS 2023" by the Shenzhen ITS Association and China
Intelligent Transportation Systems Association.
(IV) Key performance drivers
1. Accelerated development of multimodal biometric technology
In recent years, biometrics products have mainly focused on single biometrics recognition. In many application scenarios, a single
biometric technology (such as fingerprint recognition) can meet the needs of most customers, and many single biometric technology
products have price advantages and can be easily installed. Although the accuracy and anti-counterfeiting performance of a single
biometric technology have gradually improved, with the continuous development and evolution of deep learning algorithms and big
data technologies, the importance of information security has become increasingly prominent, and higher requirements have been
placed on the security and accuracy of identity recognition information. The development of multimodal biometric technology utilizing
multiple biometric technologies has become a new trend in the field of biometrics.
Multimodal recognition technology has better recognition performance than single biometric technology, greatly improving
product security. Multimodal biometric technology is not a simple superposition of biometric technologies, but rather the R&D of new
algorithms based on the characteristics of different biometrics to improve computational efficiency and accuracy. This requires
enterprises to have a deep understanding of different biometric technologies and be able to innovate products through algorithm
optimization. At present, multimodal biometrics, which integrates multiple biometric technologies, will become more flexible. Suitable
fusion methods and weight decisions can be selected based on different application needs and scenario changes, which becomes a
development trend in the biometric market.
2. The rise of non-contact biometric technology applications
With the development of biometric technology, non-contact biometric technology has gradually matured. Due to its non-contact
characteristics, which can avoid physical contact between users and machines, and have efficient and hygienic characteristics, its
application in the global market has gradually emerged. In recent years, it has been further accepted by the market with market-oriented
applications.
Non-contact biometric technology mainly includes facial recognition, palm recognition, and iris recognition. With the
development of big data and AI technologies, facial recognition has become increasingly mature in terms of recognition accuracy, and
is applied in many scenarios such as real name verification. Its characteristic is that it does not require active cooperation from the
recognition object, and the difficulty of information collection is low. The recognition accuracy can reach the same level as fingerprint
recognition in specific situations. The palm and finger vein recognition technology currently mainly focuses on applications in medium
and small scenes, such as ATM systems. With the development of wide dynamic image acquisition technology, the palm recognition
technology has also entered a growth period, and its non-contact and concealment characteristics can avoid the risk of information
leakage. Iris technology has the characteristics of high accuracy and high difficulty in information collection, and is generally applied
in situations with high security requirements. Due to its high accuracy, it is also suitable for unified and standardized identity
authentication and recognition at the national level.
The Company promotes the application of non-contact palm recognition technology in financial and other fields by participating
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ZKTeco 2024 Half Year Report
in the development of group standards related to non-contact palm recognition technology, and promotes the patent and technical layout
of non-contact fingerprint capture devices. Non-contact fingerprint recognition has become an important development direction of
traditional fingerprint recognition, and its non-contact characteristics will bring more security and better user experience.
3. The rise of mobile terminal biometric technology applications
In recent years, the application of biometric technology on mobile terminal devices has gradually emerged. For example,
fingerprint recognition, facial recognition, palm recognition, and iris recognition technologies are gradually used on mobile terminal
devices to generate BioCode from these biometric methods and are integrated into entrance and exit access control, smartphones,
tablets and other mobile devices in the form of QR codes, to provide convenient identity authentication, and improve the high security
application functions such as users' independent storage of biometric templates.
4. National industrial policies provide a favorable development environment for industry development
The "Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development and Vision 2035 of the
People's Republic of China" (hereinafter referred to as the "Outline of the 14th Five-Year Plan") released in March 2021 clearly states
that new types of infrastructure will be an important component of China's modern infrastructure system, and the construction of
traditional and new types of infrastructure will be promoted in a coordinated manner to create a complete, efficient, practical, intelligent,
green, safe and reliable modern infrastructure system. In the "Outline of the 14th Five-Year Plan", the entire section of "Construction
of new types of infrastructure" proposes requirements for the construction and development of new types of infrastructure: With the
aim of strengthening the support for digital transformation, intelligent upgrade, and integrated innovation, we will build new types of
infrastructure in such areas as information technology, integration, and innovation, and provide guidance on the development of
industries such as intelligent home appliances, intelligent lighting, intelligent security, and intelligent video surveillance systems. In
the context of new types of infrastructure, the Company will adhere to innovation driven and long-term principles, continue to
strengthen multimodal BioCV core technology and precise investment in R&D, and enhance the core competitiveness of products and
solutions. In addition, the Company will work with partners to promote global leadership and commercial scale applications and
enhance customer value based on multimodal BioCV technology according to customer needs.
5. Digital China construction provides new development opportunities for the Company
On February 27, 2023, the CPC Central Committee and the State Council issued the "Overall Layout Plan for the Construction of
Digital China" (hereinafter referred to as the "Plan"), pointing out that building a digital China is an important engine to promote
Chinese path to modernization in the digital era and a strong support to build a new competitive advantage of the country. The "Plan"
will propose to ensure capital investment, innovate funding support methods, strengthen the overall guidance of various funds, play
the role of the national industry finance cooperation platform, guide financial resources to support digital development, encourage and
guide capital in the construction of digital China in a standardized manner, and build an investment and financing system with effective
participation of social capital. By 2025, the digital economy will enter a period of comprehensive expansion, with the added value of
core industries in the digital economy accounting for 10% of GDP. According to the CAICT, the scale of China's digital economy is
expected to reach RMB 56.1 trillion in 2023 and RMB 70.8 trillion in 2025. The digital economy policies, including the "Plan", will
catalyze the further development of new smart city projects. In the wave of digital economy, the Company, as the driver and practitioner
of digitalization and intelligence, actively explores, builds and improves the computer vision field, multi-dimensional perception smart
terminals, scene interactive robots, scene cloud service software, AR digital twins, digital identity cards and other track industry chains,
forms a digital ecosystem integrating upstream, downstream and cross industries, and works with Xingniu Fund to jointly establish an
ecological innovation fund to accelerate product incubation, and assist in the ecological construction of the digital industry.
6. The driving force of AI technology on company business development
With rapidly changing technologies today, AI technology, with its unique charm and unparalleled potential, is causing profound
changes worldwide. The large language model represented by ChatGPT of OpenAI reveals that algorithm models with Transformer as
the core architecture are steadily moving towards the direction of Artificial General Intelligence (AGI). This transformation not only
promotes the depth and breadth of AI research in theory, but also demonstrates enormous potential and value in practical applications.
Multimodal large models have become an important means for AI to perceive and understand the real world by integrating natural
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ZKTeco 2024 Half Year Report
language, images, speech and various other signals. This integration approach not only improves the understanding ability of AI, but
also endows it with stronger adaptability and wider application scope. It can be used in multiple fields such as image recognition,
speech recognition, natural language processing, etc., greatly improving the practicality and efficiency of AI. Moreover, AIhas
demonstrated its important application value in fields such as smart security and smart office. It implements automatic monitoring
through image recognition technology to improve security efficiency. By using natural language processing technology, it achieves
automated office work and improves work efficiency. In addition, AI is also highly valuable for the Company's smart business scenario
based applications. By using AI technology, deep mining and analysis of business data can be achieved, thus providing more accurate
basis for company decision-making. Through speech recognition, speech synthesis and Large Language Model (LLM), Q&A robots
that interact with natural language can be developed to achieve intelligent frontend, intelligent customer service and other services.
The Company has been committed to conducting in-depth research in the field of AI and has made significant breakthroughs in multiple
directions. This includes continuous iteration and frontier tracking of the BioCV LLM and the BioCV VLM multimodal large model.
Moreover, the Company actively leverages the power of the open source technology community to maintain synchronous development
with the latest global technologies. These technological breakthroughs have provided strong impetus for the Company's new business
development. Through continuous technological innovation and business expansion, the Company will be able to achieve greater
breakthroughs in the field of AI, thus injecting stronger vitality into its development.
II. Analysis of Core Competitiveness
1. Technological and R&D advantages
(1) Mastering the core algorithms of biometrics, leading the industry in multimodal biometric technology
After years of technological accumulation, the Company has built a core technology system focusing on single biometric
technology and multimodal biometric technology. In the field of single biometric recognition, the Company has successfully developed
biometric technologies such as fingerprints, palm veins, palmprints, facial features, finger veins and irises. Among them, the Company's
resident ID card fingerprint recognition algorithm has been recognized by regulatory agencies and is listed in the "Qualified List of
Quality Consistency Evaluation and Inspection of Resident ID Card Fingerprint Application Algorithms". The Company has become
one of the seven recognized manufacturers.
In the field of multimodal biometrics, the Company continues to innovate and has launched various multimodal biometric
technologies such as "fingerprint+facial recognition", "facial+palm vein recognition", "palm+finger vein recognition",
"fingerprint+finger vein recognition", "facial+iris recognition", and "fingerprint+palm+facial recognition". It has obtained 18 invention
and utility model patents in the field of multimodal biometric technology. The Company will continue to innovate in the field of
multimodal biometrics, providing users with more innovative products.
The Company possesses core algorithms in the field of biometrics and has a strong competitive advantage. In addition, the
Company also has a comprehensive industry incubation ability to combine various application technologies with biometric technology,
providing support for the development of various industries.
The Company combines basic R&D of biometrics with application R&D. As of June 30, 2024, the Company has obtained a total
of 901 patents, including 160 invention patents and obtained a total of 715 computer software copyrights and 67 work copyrights.
(2) The Company's unique ultra short delay supercomputing technology provides innovative solutions for the deployment of edge
and end devices in biometric technology, with three prominent advantages:
Firstly, this technology is deployed on edge and end devices without being constrained by network quality and stability. This
provides a more stable environment for applications and ensures efficient operation.
Secondly, it can run on mid to low frequency chips (such as the ARM9 with 1GHz main frequency), which can effectively reduce
power consumption and costs, and avoid high requirements for chip manufacturing processes. In the current fierce "chip war"
environment, it has achieved the freedom of independent R&D.
Most importantly, this technology minimizes the transmission and centralized storage of sensitive information, effectively
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ZKTeco 2024 Half Year Report
avoiding the risk of leakage and malicious attacks and ensuring data security.
In summary, the Company's ultra short latency supercomputing technology provides revolutionary advantages for the practical
application of biometric technology, maximizing the performance of edge and end devices while ensuring data privacy and security.
(3) Deep research on multimodal BioCV AI technology
The Company has evolved from a single biometric technology to a pioneer in computer vision and biometric multimodal BioCV
AI technology. It is no longer just about identifying "I'll tell you who you are", but about combining computer vision and biometrics to
realize the multimodal AI attribute: "Who are you? What kind of service should I provide for you?" as well as the empathetic experience
ecology of scene interaction. Minerva, an AIoT platform based on smart retail scenarios and independent intellectual property rights,
has launched a ZKDIGIMAX Level 3 digital marketing solution for traditional small and medium-sized retailers. This solution provides
five core services, including Minerva IoT platform, machine vision analysis platform, big data analysis platform, AIGC platform,
advertising production and distribution platform, as well as corresponding smart terminals. Relying on the IoT, big data and cloud
computing technologies, the Company has delved into the field of smart retail and utilized machine vision analysis technology to
integrate the interactive value of people and scenarios and the empowering value of scenarios into innovative value. The Company is
committed to building a multi-dimensional intelligent business analysis platform based on the data lake, and creating a new service
provider of boundless all-round, full scene and full chain retail platform.
(4) Technological accumulation of computer vision AI technology and smart retail scenarios
Computer vision, as an important branch of AI, has been widely applied in various industries. In the retail industry, computer
vision technology has multiple functions such as supervising shelves, identifying and recommending products, analyzing passenger
flow density, and supporting unmanned retail stores. The Company launched the research on BioCV LLM3.0 large model project
through the research on the layout of large models, which is mainly used for the simulation and enhancement of small models and
enables the smart retail scene on the edge computing side. Large model technology has emerged in recent years as a promising field
that can be applied to smart shopping guidance, product advertising content generation, and online and offline interaction experiences.
With the widespread application of large models in smart retail scenarios, they have gradually become an indispensable component
in the field of AI. The Company closely tracks the latest development of large model technology and has achieved key technological
reserves in lightweight and edge local deployment, which have been applied in multiple pilot projects. The Company has successfully
implemented programming and validation of algorithms such as GPT and BERT, and trained them on medium-sized open corpus data,
achieving the best level of advanced open source projects currently available. In the era of AI, the Company continuously innovates
product service interaction experiences and enhances competitiveness.
The application of digital humans in intelligent access control products is mainly reflected in providing more intelligent and
interactive management methods. Based on advanced AI technology, digital human access control devices can recognize, verify and
manage access of personnel, while providing customized virtual images and voice interaction functions. This application makes access
control management more convenient and efficient, and provides enterprises with a more intelligent service experience. With the
continuous development of technology, the application of digital humans in intelligent access control products will continue to expand
and optimize, bringing richer functions and services to enterprises.
(5) Advantages of R&D team and extension cooperation
The biometric industry belongs to a technology intensive industry, and the R&D strength and industrialization ability largely
determine whether the Company can occupy a commanding position in future market competition. Therefore, the Company attaches
great importance to R&D investment. As of June 30, 2024, the Company has 1,181 global R&D and engineering technicians, with
R&D Centers in Dongguan, Shenzhen, Xiamen, Dalian, and India.
The Company has been approved by the People's Government of Guangdong Province to establish the Guangdong Biometrics
and Security Technology Engineering Technology Research Center, strengthen the introduction and training of biometrics engineering
technicians, and improves the efficiency of technology transformation. The Guangdong Biometrics and Security Technology
Engineering Technology Research Center is the only provincial-level engineering center in the biometric industry in Guangdong
Province. Relying on the talent team and research equipment of ZKTeco, the center accelerates the transformation of scientific research
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ZKTeco 2024 Half Year Report
achievements into real productivity with the goal of building a provincial-level first-class research platform for deep integration of
biometrics by researching and developing key common technologies in the industry, thereby promoting industrial technological
progress.
The Company and Dongguan Institute of Optoelectronics, Peking University jointly established the Dongguan Key Laboratory of
Multimodal Computer Vision and Biometric Recognition. Taking advantage of the advantages of both parties in cooperation, we
actively carry out research on multimodal computer vision and biometric related technologies, timely realize the industrialization
transformation of research results, provide a platform for the development dynamics of industry technology, and cultivate talents for
enterprises.
(6) Actively participate in the formulation of industry standards and norms, occupying the industry's commanding heights
Participating in the formulation of industry standards and norms can enable the Company to grasp the forefront of industry
development direction and carry out technology development and product layout in advance. Since its establishment, the Company has
been focused on the R&D of biometric technology, and is one of the main participants in drafting and revising multiple technical
standards and specifications in the industry. As of the end of the reporting period, the Company and its related subsidiaries have
participated in the formulation of 28 national and local industry standards.
2. Product array advantages
The Company's products include hardware and software products, connecting different product combinations through
digitalization and intelligence, and creating diversified smart solutions to meet the needs of numerous industries. With the increasing
demand for downstream fragmentation, the Company continues to expand a rich product array, which can provide a full range of
product services in various segmentation scenarios such as smart entrance and exit management, smart identity verification, smart
office and smart retail.
In terms of smart terminals, the Company can provide various products in the field of smart entrance and exit management, such
as access control management, pedestrian channels, vehicle channels, security inspection products, intelligent videos, smart locks,
elevator controls, charging piles, and self-service visitors; products in the field of smart identity verification, such as Human Certificate
Verification Terminal, biometrics capture devices, biometrics modules, and card readers; products such as employee attendance, smart
consumption, and smart conferences in the field of smart office. The field of smart retail focuses on chain customers in various
industries, providing smart terminal, business system development, and people, goods, and venue data analysis services for their digital
construction.
In terms of smart retail products, the Company provides LCD and LED products of different sizes and application scenarios in
visual marketing, as well as supporting content distribution platforms and content production and design tools. It provides a full range
of e-ink screens in electronic price tags, and a matching price adjustment system that supports integration with mainstream ERP systems
to achieve real-time, fully automatic price refresh in conjunction with marketing pricing. With the support of AI and big model
technology, the Company provides customers with shopping scenario interest preference data analysis services, and provides marketing
managers with product selection, display, and activity strategy data support. Its core lies in empowering technology to improve sales
efficiency, enhance consumer experience and loyalty, reduce operating costs and risks, thereby achieving sustainable growth in the
retail industry.
In terms of software systems and platforms, the Company has always attached great importance to the development and design of
software and hardware linkage, focusing on building an AIoT ecosystem that integrates software and hardware. The Company can
provide diversified, personalized and customized system software and platforms for different users, application scenarios, and vertical
fields. On the one hand, the Company has laid out the ZKTeco cloud IoT platform Minerva IoT based on Amazon cloud technology as
the technical foundation, providing deployment-free SaaS application products for smart office scenarios, smart entrance and exit
scenarios, and smart home scenarios. Moreover, for system integration customers, the Company can provide ZKTeco Biowhois CTID
Platform. For large park type enterprise customers, the Company can provide ZKBio Smart Park Integrated Management Platform
V8800, and ZKTeco ZKBio Intelligent Integrated Management Platform V6600. For medium to large enterprise customers, the
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ZKTeco 2024 Half Year Report
Company can provide E-ZKEco Pro Time & Security Refined Service Platform. For overseas customers, the Company can provide
ZKTeco Cloud Attendance and Access Control Management System such as BioTime 8.0; on the other hand, the Company combines
the mature technical modules and software middleware of the aforementioned platforms for application, providing users with flexible
platform function customization and development services, thereby meeting their personalized needs and forming a good brand
awareness.
The Company's main products rely on multimodal BioCV technology. In the future, as the boundaries of user application scenarios
continue to expand and extend, the Company will continue to enrich and improve its diversified product array to meet the needs of
users in the field of multimodal BioCV applications and provide customers with comprehensive, professional and high-quality solutions.
3. Global marketing service network and localized service advantages
After years of development, the Company has accumulated rich experience in operating channel products, has a large number of
customer resources, and has established a relatively complete global marketing service network system. Sales channels and service
networks cover major cities in China and in multiple countries and regions around the world. Moreover, the Company actively expands
its online sales channels and has established a comprehensive online marketing network on major e-commerce platforms and self built
shopping malls. The integration and complementarity of international, domestic, online, and offline channels have formed a strong
marketing service network advantage.
As of June 30, 2024, the Company has established 28 branches, 14 subsidiaries, and 193 service outlets across China mainland,
with a sales and service system covering the whole country. The Company has established a total of 49 controlling subsidiaries overseas,
located in 31 countries and regions worldwide, with product sales covering over 100 countries and regions.
During the reporting period, the Company continued to implement regional expansion and market lead strategies in China, worked
together with core partners and distributor customers to continuously promote terminal image construction mainly focused on
lightboxes, doors, car stickers, outdoor advertising, etc., actively participated in regional industry exhibitions and forums, and expanded
precise brand coverage in multiple dimensions; accelerated the establishment of marketing service centers of ZKTeco and the
establishment of digital marketing service platforms, and accelerated the sinking of marketing and service networks to county-level
cities around the third, fourth and fifth tier cities in the region and core cities. The Company has deeply explored the innovative
marketing model of "short video+live streaming+e-commerce". In the future, the Company will continue to develop the market in the
third, fourth and fifth tier cities to build marketing and service outlets, and simultaneously promote the integration of online and offline
channels.
The Company always adheres to the concept of localized services in the process of developing global markets. During the reporting
period, the Company continued to expand its marketing and service network to second and third tier cities in medium-sized and large
countries. The Company has resident business, technical service personnel and marketers in the global market, which can provide
customers with comprehensive pre-sales, in-sales, and after-sales support and services. The localized service system helps the Company
quickly understand the personalized needs of local users based on factors such as local economic development level, social stability,
religion, and culture, providing flexible software and hardware personalized customization services, thereby improving customer
satisfaction and brand awareness, and enhancing customer viscosity. Based on a localized service team, the Company actively guides
some overseas subsidiaries to transform from traditional channel sales to value-added development, expanding vertical and deep
projects, and thereby improving the Company's sales revenue and profit level.
4. Production and manufacturing advantages
(1) Integrated production process chain configuration
The Company's rich product array benefits from its integrated production process chain and high-quality production supporting
facilities. The Company has a complete process chain for injection molding, laser cutting, optical processing, sheet metal processing,
SMT, plug-in welding, algorithm burning program, PCBA production, final assembly, testing, and packaging programs required for
various products. The complete process depth provides favorable conditions for the Company to achieve pull production based on
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ZKTeco 2024 Half Year Report
market demand. The Company's various process flows are closely connected, with smooth coordination between production capacity
and production pace, and the Company has a strong competitive advantage in the industry.
(2) Customized and flexible production capacity
The Company can provide comprehensive product services in segmented scenarios such as smart entrance and exit management,
smart identity verification, and smart office, and has the ability to quickly respond to customized needs in mass production. The
Company's customized and flexible production capacity benefits from a professional R&D and engineering technical team, diverse
product component production capabilities, and flexible product component coupling characteristics. The Company has achieved
SMED in the production process, from SMT to injection molding, which can achieve rapid exchange of production equipment. In
addition, the refined material supply system and lean line design in the assembly workshop can meet the flexible production needs of
customers from different countries for small batches, multiple varieties, and customization.
(3) Advantages of lean production
The Company has achieved industry-leading lean production model in multiple production lines through overall planning of
various processes in the product production process, and optimization of process flow. The lean production model can effectively
reduce waste throughout the entire production and manufacturing process, reduce workers, improve labor productivity, improve output
and product quality, shorten delivery cycles, and quickly meet customer needs while reducing manufacturing costs.
(4) Advantages of automation and informatization
The Company continues to promote and improve the automation and informatization of production processes, introducing the
WM module of SAP system, achieving automatic posting of warehouse raw materials and finished products through PDA scanning,
and utilizing AGV to achieve automatic handling function. Meanwhile, automation technology on the production line has also been
widely applied, including automatic dispensing, locking screws, stacking and other processes. The combination of automation and
informatization in the entire production process improves production efficiency and can quickly meet customer delivery needs.
5. Brand advantages
The Company is committed to creating a high-quality brand image and always regards brand strategy as a systematic project.
After years of deep cultivation, the Company's brand has been highly recognized by customers both domestically and internationally,
and has received numerous honors both domestically and internationally.
The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for four consecutive years from 2020
to 2023. In 2023, it ranked 14th on the list and was awarded awards such as "Top 50 Innovation", "Top 10 Brands in Smart Parks", and
"Top 10 Brands in Smart Office" in 2023 Global Industry Digital Innovation Ranking by asmag. It was selected by the organizing
committee and relevant institutions of the 19th Security China as the "DC World - Top Enterprise of the DC World Awards", "3rd China
Security Innovation Enterprise in 2023", and "11th China Intelligent Transportation Construction Recommended Brand in 2023". It
was selected by the organizing committee of the Huicong Brand Festival as the "AIoT Innovation Enterprise" and "Leading Brand in
Access Control" of the 20th China IoT Industry Conference and Brand Festival in 2023. It won the second place in the "2023 Top 10
Access Control Brands Award" awarded by Qianjia Smart Tech and other entities, It ranked first on the "Top 15 Access Control Brands"
list by the Latin American security technology media SecuriTIC in 2023. It received the "Technology Innovation Award" in the field
of physical security at the 2023 Security FESTA in South Korea. It was also selected as one of the "Top 100 Global Security Enterprises
in 2023" by BOANEWS and Security World magazines. In 2023, the Company's trusted digital identity QR code module ZKB10M
was successfully shortlisted for the "Trusted Digital Identity Ecological Product Recommendation List" of Beijing Zhongdun Security
Technology Development Co., Ltd. The Company's ZKTeco perception data gate was awarded the "Excellent Innovative Product
Award" at the 16th China International Public Safety Products Expo. Internationally, the Company has won 6 industrial design industry
awards, including 2 German Red Dot Awards and 4 iF Design Awards. In addition, since 2016, the Company has been awarded the title
of "Top 500 Manufacturing Enterprises in Guangdong Province" by Guangdong Manufacturers Association and other entities for 8
consecutive years. In 2023, the Company was rated by the General Administration of Customs of the People's Republic of China as a
"Sample Enterprise of China Customs Trade Prosperity Survey (Export)". In 2023, the Company also joined industry organizations
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ZKTeco 2024 Half Year Report
such as the Guangdong Chain Operations Association (GDCOA), the E-paper Industry Alliance (EPIA), and the China Chain-Store &
Franchise Association (CCFA), becoming a new retail technology and service provider in the retail industry. Guangdong Zkteco has
been rated as a "SRDI small and medium-sized enterprise (SME)" by the Department of Industry and Information Technology of
Guangdong Province.
During the reporting period, the Company was awarded the title of "Top 10 Brands of China's Intelligent Import and Export
Industry Channel Gates in 2023" by www.86crk.com. Guangdong Zkteco has been recognized by the Department of Science and
Technology of Guangdong Province as the Guangdong Multimodal Computer Vision and Biometric Engineering Technology Research
Center, XIAMEN ZKTECO has obtained the "ITSS Information Technology Service Standard Compliance Certificate" issued by the
China Electronics Standardization Association. The "ZKTeco Cloud IoT Platform" (Minerva IoT Platform) developed by XIAMEN
ZKTECO has been rated as "Information System Security Level Protection Filing Certificate (Level 3)". The Company has been
recognized as one of the "Top 30 Intelligent Transportation Enterprises in ITSMRS 2023" by the Shenzhen ITS Association and China
Intelligent Transportation Systems Association.
6. Advantages of management team and mechanism
The core team of the Company has over two decades of industry experience, and has a deep understanding of the development
trends of biometrics related technologies and products. They have a clear understanding of the Company's development strategy,
product direction, technology roadmap, and marketing strategy. From user needs to solutions, from product architecture to software
and hardware development, from product trial production to standardized mass production, from large-scale production organization
to improved quality assurance system, from model market creation to global sales service network construction, the Company has
accumulated rich operational management experience, laying a solid foundation for the Company's subsequent sound and rapid
development. The core management team of the Company is stable, and currently, core team members and key employees also directly
or indirectly hold shares in the Company. The Company will combine equity incentive policies in the future to achieve coordinated
development between the Company and the management team.
7. Quality control advantages
Leading quality management level is an important factor for the Company to gain customer recognition. Since its establishment,
the Company has always attached great importance to product quality control, adhered to the close integration of quality management
and production management, established a complete and strict product quality control system, and formed the advantage of product
quality control. The Company has passed multiple management system certifications.
The Company strictly adheres to the requirements of the quality system and the close integration of quality management and
production management, implements the guiding ideology of management informatization, standardized process systems, professional
personnel, and stable personnel in key positions, and comprehensively promotes quality management. The Company has established
quality management systems including the "Design and Development Management Control Procedure", "Production Process Control
Procedure", "Nonconforming Product Management Control Procedure", "Nonconformance Correction and Prevention Control
Procedure", "Continuous Improvement Control Procedure", and "Change Management Control Procedure". The Quality Management
Department strictly controls product quality throughout the entire process, including project approval review, development process,
trial production review, design verification, material selection, production process, and after-sales service, to ensure product quality
and meet customer needs.
III. Main Business Analysis
Overview
See relevant contents of "I. Main Businesses Engaged by the Company During the Reporting Period".
YoY Changes in Major Financial Data
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ZKTeco 2024 Half Year Report
Unit: RMB
Current reporting The same period YoY
Reasons for changes
period last year change
Operating income 903,103,158.77 937,182,670.00 -3.64%
Operating cost 454,301,823.55 488,923,174.83 -7.08%
Selling expenses 216,506,500.22 196,138,701.98 10.38%
Administrative
53,529,882.13 60,476,345.47 -11.49%
expenses
Mainly due to a decrease in interest income
and an increase in exchange losses for the
Financial expenses -18,782,120.79 -34,623,511.50 45.75%
current period (compared to exchange gains
in the same period last year)
A decrease in income tax for the current
period caused by the write off of bad debts
Income tax expenses 4,902,747.31 9,350,242.66 -47.57%
and a decrease in the total profit of some
subsidiaries
R&D investment 105,650,008.20 100,984,101.72 4.62%
Mainly due to the increase in cash
payments for goods purchased and labor
Net cash flows from
66,632,321.85 130,730,027.12 -49.03% services received in the current period, as
operating activities
well as the increase in taxes and fees paid in
the current period
Mainly due to the payment for the
construction project of the Multimodal
Biometrics Digitalization Industrial Base
Construction Project, the construction of
Net cash flows from
-246,130,434.93 -99,684,331.48 -146.91% the Thai factory, and the purchase expense
investing activities
of real estate (employee dormitories) in the
current period, as well as the increase in
financial management purchases in the
current period
Mainly due to the increase in dividend
Net cash flows from
-173,208,004.79 -76,269,456.65 -127.10% distribution and payment of share
financing activities
repurchase expenses in the current period
Mainly due to a decrease in net cash flow
Net increase in cash
-350,550,464.30 -37,683,116.58 -830.26% from investing activities and financing
and cash equivalents
activities in the current period
Cash received from Mainly due to the high amount of interest
other operating 42,692,501.49 23,184,790.91 84.14% received on time deposits from the previous
activities year in the current period
Payments of all types Mainly due to the increase in overseas taxes
50,283,470.29 35,397,636.97 42.05%
of taxes and fees paid in the current period
Mainly due to the increase in investment
Cash received from
3,280,492.40 1,864,089.86 75.98% and wealth management income in the
investment income
current period
Net cash received from
disposal of fixed assets, Mainly due to the disposal of fewer assets
64,151.25 280,330.67 -77.12%
intangible assets and in the current period
other long-term assets
Mainly due to the payment for the
Cash paid to acquire
construction project of the Multimodal
and construct fixed
Biometrics Digitalization Industrial Base
assets, intangible assets 122,974,400.98 54,738,953.74 124.66%
Construction Project, the construction of
and other long-term
the Thai factory, and the purchase of real
assets
estate (employee dormitories) in the current
36
ZKTeco 2024 Half Year Report
period
Mainly due to the expenses for absence of
Cash paid for other
0.00 2,046,795.00 -100.00% forward foreign exchange settlement and
investing activities
sales in the current period
Cash received from Mainly due to the absence of loans in the
0.00 3,700,000.00 -100.00%
borrowings current period
Cash paid for debt 1,734.56 Mainly due to the repayment and payment
494,458.32 26,952.47
repayments % of loans and interest in the current period
Cash paid for
distribution of Mainly due to the increase in dividends
97,339,032.69 64,829,721.10 50.15%
dividends and profits distributed in the current period
or payment of interest
Cash paid for other Mainly due to the payment of repurchased
78,886,895.58 16,527,983.10 377.29%
financing activities shares in the current period
Major changes in the composition or source of profits of the Company during the reporting period
□ Applicable Not applicable
There have been no major changes in the composition or source of profits of the Company during the reporting period.
Products or services accounting for more than 10%
Applicable □ Not applicable
Unit: RMB
YoY change of YoY change of
Operating Gross profit YoY change of
Operating cost operating gross profit
income margin operating costs
income margin
By products or services
Smart office
154,212,896.36 57,143,168.43 62.95% -10.34% -22.61% 5.88%
products
Including:
attendance 80,542,416.04 32,311,287.31 59.88% -28.77% -41.90% 9.07%
products
Other products 73,670,480.32 24,831,881.12 66.29% 25.03% 36.25% -2.78%
Smart entrance
and exit
699,183,231.38 364,622,186.25 47.85% 2.07% -0.50% 1.35%
management
products
Including:
access control 452,480,273.18 221,379,728.66 51.07% 6.21% 4.75% 0.68%
products
Other products 246,702,958.20 143,242,457.59 41.94% -4.73% -7.66% 1.84%
Smart identity
verification 45,901,956.71 31,715,882.83 30.91% -40.33% -34.77% -5.89%
products
Including:
biometrics 16,104,056.56 6,936,485.58 56.93% -41.82% -43.65% 1.40%
sensor products
Card products 26,455,313.67 23,749,101.65 10.23% -25.42% -25.99% 0.69%
Other products 3,342,586.48 1,030,295.60 69.18% -75.74% -75.62% -0.14%
Other products 3,805,074.32 820,586.04 78.43% 16.28% -21.57%
By region
Domestic sales 278,001,949.77 186,993,704.51 32.74% -9.32% -12.28% 2.27%
Overseas sales 625,101,209.00 267,308,119.04 57.24% -0.87% -3.07% 0.97%
By sales model
Distribution 625,828,126.21 347,508,041.35 44.47% -1.75% -4.10% 1.36%
Direct sales 273,469,958.24 105,973,196.16 61.25% -7.91% -16.27% 3.87%
Others 3,805,074.32 820,586.04 78.43% 16.28% -21.57%
37
ZKTeco 2024 Half Year Report
R&D investment
1. R&D investment table
Amount in the Current Amount in the Same Period of
Change
Period (RMB) Previous Year (RMB)
R&D investment amount
105,650,008.20 100,984,101.72 4.62%
(RMB)
Ratio of R&D investment to
11.70% 10.78% 0.92%
operating income
Amount of R&D expenditure
- - -
capitalization (RMB)
Ratio of capitalized R&D
expenditure to R&D 0.00% 0.00% -
investment
Proportion of capitalized R&D
expenditure to current net 0.00% 0.00% -
profit
2. Status of ongoing projects
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
With the rapid
1. To ensure that the
development of computer
Company remains at the 1. Enhancing the
vision and natural
forefront of multimodal Company's technological
language processing,
visual model technology, strength in the field of
multimodal vision model
we will continue to track computer vision, improving
has become a research
the latest technological the intelligence level of
direction of great concern
developments in this field products, providing
and one of the most
and continuously customers with better and
promising and potential
optimize and improve more efficient solutions,
fields in recent years.
BioCV VLM 3.0. and consolidating the
The innovative model
2. Based on this model, Company's competitive
combines computer vision
we are committed to advantage in the industry.
and natural language
improving the accuracy 2. Promoting the
processing capabilities,
of biometrics algorithms Company's innovation and
BioCV VLM and can process images,
and maintaining the development in the field of
3.0 Multimodal videos and text
1 Completed sustained competitiveness AI, and providing strong
Computer information at the same
of our products. technical support for the
Vision Model time to achieve more
3. Based on this model, Company's long-term
efficient and intelligent
we will improve strategic goals.
image and video
computer vision 3. Accelerating the
recognition and
algorithms to further Company's technological
understanding.
enhance their accuracy iteration and innovation in
The objective of this
and reliability. the field of computer
project is to develop
4. We will explore the vision, improving the
advanced multimodal
application of multimodal application ability of
visual representation
vision models in various computer vision algorithms
techniques, train universal
fields, such as security in various scenarios, and
base models, track the
monitoring, smart home, laying a solid foundation
latest developments in
office automation, etc., to for business expansion in
NLP model technology,
provide technical support the global market.
and prepare relevant
for the Company to
technical reserves.
38
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
We will use this model as expand into new business
a basis to improve the areas.
accuracy of current
computer vision
algorithms and biometrics
algorithms.
The Supermarket
Customer Flow Attribute 1. We will implement
Analysis Project aims to counting and analysis of
achieve a comprehensive supermarket customer 1. Being expected to attract
understanding and groups, as well as age and more supermarkets and
accurate analysis of gender attribute analysis, retail enterprises to adopt it,
supermarket customer optimize algorithms to thereby helping the
flow through in-depth ensure considerable Company expand its
mining of customer accuracy, and reach the market share.
attribute data, providing forefront level of similar 2. The Company can
Supermarket
strong decision support for products currently. promote the system to a
Customer Flow
supermarkets, optimizing 2. We will achieve wider range of fields by
2 Attribute Under researching
operational management, convenient and efficient expanding into
Analysis SDK
improving customer customer flow statistics international markets or
2.0
satisfaction, and ultimately and analysis for collaborating with other
achieving better supermarket stores, industries.
performance. It achieves a thereby guiding them to 3. Expanding market share
transition from "rough" to develop more scientific, can help improve the
"refined" management for reliable, and targeted Company's profitability and
supermarket stores, operational strategies, make it more influential in
enabling users to directly empowering offline the industry.
benefit from fierce scenarios, and improving
commercial retail business efficiency.
competition.
Multimodal AI intelligent 1. We will upgrade 1. To further enhance the
products are the third- traditional single access Company's brand image,
generation intelligent control devices to the Company has carefully
device terminal products intelligent interactive crafted a series of family
created, relying on terminals to expand more style intelligent product
multimodal algorithms, application scenarios and terminal designs, aimed at
ChatGPT, audio and video, enhance overall showcasing the Company's
artificial intelligence (AI), functional experience. innovation strength and
R&D of a cloud services and other 2. Multimodal AI technological leadership.
Communication technologies. The product intelligent product series, 2. With the help of the
Platform Based integrates information covering different sizes cutting-edge technologies
on Multimodal publishing, professional and appearances, provide of multimode, AI, audio,
3 Under researching
AI Audio and access control, visual comprehensive solutions video and cloud
Video intercom and digital for different levels of broadcasting, combined
Technology human interaction customer groups, with the advantages of the
Fusion functions. including low-end, mid- IoT and the Internet, we
Its core purpose is to range, and high-end can accelerate the
provide comprehensive markets, to meet the deployment of the
scenario solutions for needs of a wide range of Company's cloud strategy,
enterprises, leveraging users. accelerate the
diverse online and offline 3. The multimodal implementation of
system applications as well intelligent product commercial closed-loop,
as intelligent hardware terminal uses advanced and improve the Company's
devices, to promote the IoT and Internet overall competitiveness.
39
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
smooth transformation of technology to realize the 3. The Company's
enterprise users from seamless connection with multimodal AI intelligent
traditional business models ZKTeco Interconnection products can seamlessly
to digital business models. and ZKBio, and provides integrate with the ZKBio
convenient solutions for platform and Minerva IoT
various channels and platform, providing project
project implementation. level solutions for different
At the same time, the customer groups while also
terminal can connect with supporting lightweight
mobile APPs, which not applications in the pure
only improves the cloud. This innovative
efficiency of enterprise design enables the system
digital collaboration, but solution to cover a wider
also serves as a small range of customers and
security guard for scenarios, creating more
enterprises, providing value for customers and
comprehensive protection further consolidating and
for enterprise security. enhancing the Company's
leadership position in the
market.
ZKBio V6600 Wide 1. We innovate the
Access IoT Perception traditional entrance and
1. The application of the
Application Platform exit mode by utilizing
platform will assist the
V3.0, with multimodal smart entrance and exit,
Company in providing
BioCV technology as its intelligent video, and IoT
more comprehensive and
core, combines years of intelligent perception
intelligent solutions for
experience in entrance and technology, endowing it
medium and large-scale
exit management and with intelligent video
security projects, accurately
intelligent video analysis and IoT device
meeting the diversified
technology to perception capabilities.
needs of customers for
comprehensively achieve This not only achieves a
security management and
security protection and comprehensive upgrade
monitoring, thereby
intelligent monitoring of security management,
significantly enhancing the
management of project but also realizes
Company's market
scenarios. This platform intelligent management of
competitiveness in the
ZKBio V6600 deeply integrates multiple time, fully meeting the
security field.
Wide Access business subsystems, diverse and fragmented
2. By effectively solving
4 IoT Perception including personnel, Under researching application needs of
the problem of independent
Application access control, attendance, users.
management of equipment
Platform V3.0 consumption, visitors, 2. We focus on
by branch offices and
parking, elevator control, perception and data
unified supervision of
patrol, channels, storage empowerment, and
resources by the central
cabinets, intrusion alarms, through technological
group in cross regional and
monitoring centers, innovation and modular
multi-organizational
intelligent scenarios, and design concepts, create a
projects, the Company will
system management. standardized and unified
be able to integrate internal
Through the intelligent platform to continuously
and external resources
perception capabilities of promote innovation and
more efficiently,
security entrances and development in industry
significantly improve
exits, intelligent video, and applications.
operational efficiency and
IoT technology, the ZKBio 3. We are committed to
management level, and
V6600 platform can continuously improving
create more value for the
monitor, intelligently the base capacity of
Company.
identify, and analyze the ZKBio and integrating it
management of entrance into various industries,
40
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
and exit situations in real providing high-quality
time. By utilizing big data services for ecological
analysis and AI partners, and
algorithms, the platform continuously refining
can automatically identify excellent solutions to
abnormal behavior, meet the ever-changing
achieve pre-warning, in- needs of the market.
process handling, and post 4. Based on the ZKTeco
analysis, ensuring timely IoT platform foundation,
detection and handling of we have built a hybrid
safety hazards. cloud platform that solves
In addition, through the challenge of
seamless integration with independent management
IoT devices, the ZKBio of devices by branch
V6600 platform can offices and unified
achieve intelligent control supervision of resources
and management of by the central group in
entrances and exits, cross regional and multi-
significantly improving the organizational projects.
operational efficiency and This innovative measure
convenience of entrances provides strong support
and exits. This innovative for the digital
platform not only enhances transformation of
the security management enterprises.
level of enterprises, but 5. Through in-depth
also brings users a more mining and precipitation
intelligent, efficient, and of user scenario data, we
convenient entrance and provide value-added
exit experience. services to existing
ZKBio users and future
project clients, achieving
maximum conversion of
commercial value and
creating more business
opportunities for
enterprises.
Based on the Company's 1. Based on a deep 1. Based on the new
BioCV biometric core foundation of customer integrated model of
technology capabilities, we data, we provide more Android intelligent
are committed to comprehensive integrated hardware+software+cloud
optimizing the underlying support, empower services, we aim to connect
infrastructure services of customer innovation, and cloud business customers,
Android, achieving clear help customers quickly promote the
Low Code
separation of business launch localized new implementation of more
Android
functions, and providing products. By cloud intelligent solutions,
Development
5 customers with more Under researching implementing a business and create a new
Platform V2.0
efficient and flexible localization strategy, we performance growth model.
based on
solutions. By providing aim to accurately meet 2. We assist the Company
BIOCV
rich underlying services, market demands, in its efforts in the Android
we offer EDK services continuously strengthen integration market by
(Embedded Development our close ties with providing one-stop
Kit) aimed at supporting customers, and achieve integration business
customers in achieving mutual growth. support, continuously
efficient application 2. Leveraging the cloud consolidating existing
development on Android capabilities of the customer relationships, and
41
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
hardware. Minerva IoT platform, we attracting numerous new
At the same time, through aim to build efficient customers to increase the
close integration with the cloud communication Company's market share in
Minerva IoT platform, we bridges for our customers, the integration market.
provide our customers promote the flourishing 3. In numerous cooperation
with ADK (Application development of cloud cases, we deeply explore
Development Kit), services, and assist in the advantages and
enabling third-party enterprise cloud requirements of customer
integration customers to transformation. This products, and expand into
easily integrate devices strategy will greatly new business areas. We
and related data into their expand the application bring more growth
software, promoting the areas of our products and opportunities to the
intelligence of 3rd services, provide Company.
business software. customers with more
In this process, we fully comprehensive and
leverage the cutting-edge solutions,
comprehensive advantages and attract more like-
of ZKTeco intelligent minded partners.
hardware, BioCV 3. By closely
recognition capabilities, collaborating with
and Minerva IoT platform integrated clients and
to provide powerful continuously
integrated business support incorporating innovative
for enterprises, system features and business
integrators, and solution concepts from third-party
providers. Our goal is to clients, we lay a solid
help these partners achieve foundation for the
breakthroughs and development of
innovations in areas such mainstream and new
as smart office and smart projects in the Company,
entrance and exit enhancing the overall
management, and jointly competitiveness of our
build a smarter and more products.
efficient business
ecosystem.
Based on the Company's 1. Based on the base 1. Assisting the Company
core business of "smart capacity of Minerva IoT, in leveraging its customer
office, smart entrance and and focusing on the base in the long tail market,
exit, and smart identity terminal needs of IoT and creating a new
recognition", focusing on scenario solutions and performance growth model
the SMB small and SME digital and reality focusing on the needs of
medium-sized enterprise integration, we serve as small and medium-sized
ZKTeco customer group, serve the the SME cloud scenario enterprise customer base
Interconnection long tail market, leverage linker. based on cloud service
Cloud Scenario the comprehensive three- 2. Through ZKTeco scenarios and the digital
6 Under researching
Service dimensional advantages of Interconnection (for small and reality integration;
Platform ZKTeco frontend and medium-sized 2. By utilizing a digital and
V3.0.0 intelligent enterprise users) and intelligent scenario solution
hardware+backend offline ZKTeco Cloud of
smart account service Commerce (for software+hardware+cloud
system+Minerva IoT intermediate service services, laying out a new
Platform PaaS+SaaS provider users), we track in advance to meet
application, provide a jointly establish a the needs of the post-90s
"business premises comprehensive operation and post-00s for enterprise
management system for IoT product management and business
42
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
scenario+business research, sales, operation, management;
management and service through end- 3. Driving the sales of
scenario+service scenario" edge-management-cloud- hardware or scenario
solution for the small and use-service-operation; solutions through cloud
medium-sized enterprise 3. Based on the services, and bringing
customer group, precipitation of user about changes in business
accompany SMEs in the scenario data, we provide models such as operational
growth, and provide a market soil for model validation through
multiple digital and commercial verification cloud service subscription
intelligent "assistants" for of customer foundation models;
enterprises from "rough" and operational 4. Through the
to "refined" management. transformation for SaaS precipitation of user data
subscription services. and scenario data,
4. Based on the dual providing rich product
scenario business model R&D support for
of "intelligent business commercial transformation
space+digital marketing models.
management", we will
continue to promote
product iteration and
provide rich cloud
scenario business
functions for SME users.
1. Based on the base 1. Assisting the Company
capacity of the in expanding its arsenal of
Company's IoT PaaS smart retail business,
Platform in India, and providing more powerful
focusing on the smart weapons, and creating a
This project aims to
retail scenario, we new performance growth
develop an information
provide a one-stop cloud model based on cloud
service software based on
platform information services and hosting
the L3 platform, with a
publishing solution to services around enterprise
SaaS business model.
meet the terminal needs customer groups in the
Users can continue to use
of integrating data and retail industry;
the software services
reality for small and 2. By utilizing a digital and
through subscription. The
medium-sized enterprises intelligent scenario solution
software functions focus
(SMEs), serving as the of cloud software+AI
on the "Al+Digital
ZKDIGIMAX SME cloud scenario hardware+cloud hosting
Signage" field in the retail
CMS linker. services, laying out a new
7 and catering industries, Under researching
ScreenDirect 2. Integrate the rich AIoT track in advance for smart
providing digital
v3.0 hardware ecosystem, AI, retail scenarios;
infrastructure and smart
big data, and cloud 3. Providing long-term
business cloud services for
service capabilities of O&M services to increase
front-end carriers,
ZKTeco, and provide the Company's service
accelerating the
end/edge/cloud/server attributes, driving the sales
transformation of
one-stop smart retail growth of hardware and
traditional retail industry
scenario solutions; scenario solutions through
to data-driven smart retail,
3. Based on the cloud hosting services, and
and helping global retail
perception and labeling of bringing about changes in
customers create greater
multidimensional data in business models and
commercial value.
user scenarios, we operational model
provide customers with validation through cloud
commercial advertising service subscription
operation conversion models;
value through SaaS 4. Through the
43
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
subscription services, and precipitation of user data
use digital technology to and scenario data, creating
enhance the operational richer product models for
efficiency of the retail commercial transformation
industry. models.
1. Break through the
difficulties of on-site
debugging: In response to
the complexity of on-site
1. The application of rack
debugging of existing
mounted controllers has
controller device, we are
significantly improved the
committed to developing
intelligence level of the
a new type of rack
device, making the
mounted controller.
Company's products more
Through intelligent
competitive in the market
design and functional
This project is suitable for and meeting the growing
optimization, it greatly
rack mounted controllers demand of consumers for
simplifies the debugging
in the field of smart intelligent and convenient
process, saving customers
entrances and exits, products.
a lot of time and cost, and
supporting 4-door or 8- 2. As an important part of
achieving a convenient
door control and enabling technological innovation,
plug and play experience;
centralized management. rack mounted controllers
2. Real time status
The controller is designed not only promote the
monitoring and
to be compact and can be Company's in-depth R&D
visualization operation:
easily placed in computer in fields such as AI and
Our rack mounted
rooms or cabinets, IoT, but also lay a solid
controller supports real-
seamlessly integrated with foundation for the
time viewing of the door
existing IT hardware Company to maintain its
InBIO P3000 status corresponding to
facilities, forming an technological leadership.
rack mounted each device. Through an
8 integrated smart entrance Under researching 3. With the widespread
access intuitive visualization
and exit solution. We hope application of intelligent
controller interface, customers can
to provide customers with controllers in various
easily grasp the operating
a plug and play product industries, the Company is
status of the equipment
that significantly reduces expected to further expand
and achieve efficient
the workload of on-site its market share, broaden
O&M management. This
wiring and installation its revenue sources, and
intelligent management
debugging, thereby achieve sustained growth
method not only
helping customers reduce through high-quality rack
improves work
construction wiring costs, mounted controller
efficiency, but also
improve engineering products.
enhances the stability and
efficiency, and provide 4. Rack mounted
security of the device.
customers with safer and controllers, with their
3. High performance and
more efficient access excellent stability and
flexible installation
control services. reliability, we provide
design: We create a high-
customers with a better
performance rack
service experience,
mounted controller for
significantly improving
our customers, which not
customer satisfaction and
only has excellent
loyalty, and enhancing the
performance, but also is
brand influence of the
easy to integrate with
enterprise.
other IT hardware
facilities, forming an
integrated smart entrance
and exit solution. At the
44
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
same time, the controller
supports cabinet entry
and wall mounted
installation, flexibly
adapting to various
installation environments,
meeting the diverse needs
of customers, and truly
realizing the design
concept of easy
integration and easy
maintenance.
4. Rack mounted
controllers have
comprehensive security
protection functions,
which can effectively
protect the core data and
critical equipment of
enterprises, ensure the
security of enterprise
information and stable
operation of business, and
safeguard the
development of
enterprises.
1. To further enhance the
This project aims to Company's brand image,
develop a recognition we have carefully crafted a
This project aims to
device based on series of family style
develop a hybrid
multimodal AI technology, intelligent product terminal
biometric device based on
which can achieve designs, aimed at
multimodal AI
multimodal biometrics. It showcasing the Company's
technology, which will
can realize palmprint and innovation strength and
reconstruct the ZKTeco
palm vein hybrid technological leadership.
new business model of
recognition from multiple 2. With the help of the
R&D of Hybrid hard technology, brand
angles, close range, and cutting-edge technologies
Biometric stories, and digital service
high precision, and support of multimode, AI, audio,
Access Control operations. It will
9 RFID and QR codes. It is Under researching video and cloud
Terminal Based comprehensively drive
simultaneously equipped broadcasting, combined
on Multimodal the base capacity of
with digital visual with the advantages of the
AI end/edge/cloud/service,
intercom function, IoT and the Internet, we
create multimodal AI
supporting digital service can accelerate the
attendance and AI access
operation functions such as deployment of the
control, and drive the
advertising O&M, thereby Company's cloud strategy,
overall technology and
driving the overall accelerate the
product upgrade of our
technology and product implementation of
entrances and exits in the
upgrade of our entrances commercial closed-loop,
era of cloud networking.
and exits in the era of and improve the
cloud networking. enterprise's overall
competitiveness.
R&D of The Project plans to The Project aims to 1. Meeting the general
10 Technology develop an identity Under researching implement terminal trend of the construction of
and Device for authentication terminal device equipment based a digital China; 2.
45
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
Authentication device based on the CTID on authentication and Improving the technical
Application authentication certificate verification methods such gap of digital identity card
Based on CTID recognition technology, as CTID authentication identification and
Digital Identity which can identify the certificate and physical information security
Card 2.0 information encrypted by identity card; this transmission; 3. Improving
the CTID digital identity recognition device the basic ability of digital
card and complete the supports both physical identity card application
corresponding scenario and electronic identity technology, and laying a
applications. The cards, which not only foundation for the
identification device ensures the convenience subsequent development of
supports both the physical of physical identity cards, digital identity card
ID card and the electronic but also solves the products;
identity card, which can problems of network data 4. Giving the Company a
effectively guarantee the transmission security and leading edge in the field of
network data transmission personal privacy of digital identity cards.
security of the identity identity card information.
card information.
This project aims to
develop a device for
nationwide production of
hardware, operating
system, and software,
R&D of This project aims to 1. Catering to the trend of
which can achieve
Domestic develop a multimodal ID domestication of industry
multimodal identity
Multimodal authentication device that equipment.
recognition and
Identity is expected to achieve full 2. Filling the gap in the
authentication such as
Authentication localization of software, Company's domestic
11 fingerprint, facial Under researching
Device Based hardware, and system, products.
recognition, card swiping,
on Smart effectively addressing 3. Establishing a
palm recognition, and QR
Identity customer scenarios with foundation for the
code. This device can be
Verification high requirements for Company in the domestic
widely used in identity
Scenario 1.0 localization. equipment industry market.
verification scenarios such
as government affairs,
hotels,
telecommunications, and
visitors.
This project aims to 1. Leading the industry to
This project aims to
develop a multimodal non- gradually promote the
develop a multimodal,
contact palm acquisition application of new
high-precision, payment
and recognition system, biometrics in payment,
grade security level palm
which can achieve multi- smart access control, smart
R&D of Non- recognition solution. This
angle, close range, high- attendance, smart channels
contact Palm device adopts palmprint
precision palmprint and and other industries
Recognition and palm vein multiple
palm vein hydrid through the further update
Technology fusion recognition to
recognition. It of palm recognition
12 Based on Under researching improve recognition
simultaneously supports technology;
Multimodal accuracy and live
RFID and QR codes, etc. It 2. Enriching the usage
Palm recognition ability, solve
realizes cross platform scenarios of product line of
Acquisition and the problems of user
system registration and biometric modules and
Recognition height compatibility and
application, and adapts to panel machines, and
twin misidentification,
indoor, semi-outdoor and improving the core
and greatly improve
outdoor application competitiveness of the
safety, stability, and
environments, mainly used products;
usability.
for non-contact identity 3. Responding to the
46
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
recognition in various Company's strategic plan,
entrance and exit scenarios and launching a strategic
such as smart attendance deployment of intelligent
and smart access control. recognition terminals that
meet market demand based
on new platforms and
technologies.
This project aims to
develop an attendance
and access control system
device based on NFC
1. Strengthening the soft
This project aims to technology for Apple
power of enterprise brands
develop an attendance and Wallet and Google Wallet
by collaborating with
access control system virtual card technology.
leading mobile and RFID
device based on NFC The device can interact
enterprises such as Apple,
technology for Apple with the built-in wallet
Google, HID, and Legic;
Wallet and Google Wallet applications on iPhone
2. Filling in or improving
virtual card technology. and Android phones
the support of attendance
The device can obtain user through NFC
access control devices for
virtual card information communication and
R&D of Apple identity recognition based
encrypted and stored in the advanced encryption
Wallet and on mobile personal devices;
virtual card loaded by the technology to obtain
Google Wallet 3. Meeting the majority of
user in the built-in wallet encrypted user virtual
Virtual Card users' demand for using
of iPhone and Android card information stored in
Technology mobile personal devices
13 phone systems through Under researching the virtual card loaded by
Based on NFC instead of traditional
NFC communication and the user. After
Technology in physical cards, and
encryption technology. decryption, the device can
Attendance and improving the convenience
This can meet the needs of obtain the user's ID
Access Control of users in identifying and
most customers who use information and achieve
System Devices using attendance and access
their mobile phones for user identity recognition.
control devices;
attendance or access This can meet the needs
4. Realizing value-added
control, and can of most customers who
services for virtual cards,
effectively enhance the use their mobile phones
such as card counting,
user experience by for attendance or access
renewal, customization,
recognizing personal control, and can
and other services by
identities through non effectively enhance the
implementing a virtual card
biometric technology, non user experience by
issuance platform based on
RFID entity cards, etc. recognizing personal
mobile personal devices.
identities through non
biometric technology,
non RFID entity cards,
etc.
The NLP model has
become one of the most
This project achieves
promising and potential In the era of AI, continuous
efficient fine-tuning
fields in recent years. With innovation in product
training of models based
its widespread application service interaction
on application scenario
BioCV LLM in fields such as natural experience lays the
14 Under researching data and the research on
4.0 NLP Model language processing, foundation for core
related technologies in
intelligent customer technology capabilities and
engineering
service, and intelligent enhances the Company's
implementation of NLP
translation, the NLP model competitiveness.
model applications.
has gradually become an
indispensable part of the
47
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
field of AI. The Project
aims to track the latest
development of the NLP
model technology and
prepare relevant technical
reserves.
1. Conduct attribute
analysis based on an open
facial image dataset for
refined control of various
In security and attributes in digital
supermarket applications, human synthesis;
people are often the most 2. Implement augmented
concerned visual targets. reality technologies such
This project aims to as makeup and wear Meet the Company's
Research on
explore the analysis and testing to serve smart demand for digital human
Algorithms
image generation methods retail scenarios and generation technology in
15 Related to Under researching
of various facial features, enhance customer smart retail scenarios, and
Digital Human
in order to provide strong shopping experience; better support the
Generation 3.0
support for practical 3. Research on digital Company's basic business.
scenario based human generation
applications and achieve technology based on
human-oriented computer AIGC;
vision applications 4. Investigation and
research on voice driven
digital human speech
video generation
technology.
By continuously iterating 1. Improve the accuracy 1. By continuously
and improving the of biometric technology: improving biometric
biometric technology, By optimizing algorithms technology, the Company
including facial and models, we will be able to provide
recognition, palm continuously improve the more accurate and reliable
recognition, and accuracy of facial solutions in areas such as
fingerprint recognition, we recognition, palm security access control and
aim to enhance recognition recognition, and payment authentication,
accuracy, anti- fingerprint recognition to thereby enhancing the
counterfeiting accuracy, ensure more accurate market competitiveness of
and quality accuracy. For biometric results; its products;
facial recognition, we are 2. Strengthen anti- 2. Strengthening anti-
Multimodal
committed to improving counterfeiting counterfeiting capabilities
16 Biometrics Under researching
the accuracy of biometrics, capabilities: By will effectively curb false
SDK V3.0
preventing false introducing advanced authentication and
authentication, and anti-fraud technologies fraudulent behaviors,
strengthening quality and algorithms, we enhance product security
assessment. In terms of improve the anti- and credibility, and help
palm recognition, we will counterfeiting capabilities establish a good reputation
continue to optimize of identification systems, for the Company in the
algorithms to improve and effectively curb false industry;
recognition accuracy, authentication and 3. By promoting the
prevent fraud, and promote fraudulent behaviors; development of
the development of 3. Improve the accuracy engineering application
engineering application of quality assessment: We products, the Company can
products. At the same improve the quality better meet market demand
48
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
time, regarding fingerprint assessment algorithm to and provide users with
recognition, we are ensure accurate judgment safer and more convenient
concerned about the of the quality of biometric application experiences,
development of non- images, thereby thereby increasing
contact fingerprint improving the stability customer satisfaction and
recognition technology, and reliability of the loyalty.
hoping to bring higher overall recognition
security and more system;
convenient user experience 4. Promote the
through its non-contact development of
characteristics. Through engineering application
these efforts, we aim to products: We apply
promote the advancement optimized biometric
of biometric technology, technology to engineering
enhance security and user product development,
experience, and lay a solid including security access
foundation for the control systems, payment
development of authentication systems,
engineering application etc., to provide users with
products. a safer and more
convenient application
experience;
5. Pay attention to the
development of non-
contact fingerprint
recognition technology:
We continuously monitor
and research non-contact
fingerprint recognition
technology, and apply it
to practical scenarios to
enhance security and user
experience.
In the context of the IoE, 1. We will build a hybrid 1. Being committed to
the construction of ends, cloud capability for further enhancing the
edges, and clouds, as well ZKBio, which will serve Company's professional
as the large-scale layout of as the core of the Minerva level in the field of smart
points, lines, and surfaces, IoT platform service entrance and exit solutions,
have become the core middleware, to achieve we fully demonstrate the
melody of industry efficient transmission of Company's innovation and
R&D of End- development. We are data between the Intranet excellent professional
Edge-Cloud developing service ZKBio platform and capabilities by carrying out
Collaborative middleware based on the ZKBio APP. This comprehensive
Hybrid Minerva IoT platform, measure will not only construction of ends, edges,
17 Under researching
Communication aiming to seamlessly promote the sales of and clouds of the IoE. We
Application integrate the ZKBio software licenses, adhere to technology as the
Based on IoT platform with APP data, hardware devices, and driving force, constantly
Platform and achieve other system module improving service quality
comprehensive integration products, but also form a to meet the ever-changing
of "end, edge, and cloud" complete solution closed- needs of the market;
by building a cloud loop value, providing 2. Guided by the
forwarding server. The customers with Company's cloud strategy,
core goal of the project is comprehensive services we fully leverage the
to provide a flexible, and value; powerful capabilities of the
efficient, and secure 2. We are committed to Minerva IoT platform,
49
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
"online+offline" providing mobile combined with our years of
deployment solution, solutions for enterprise rich experience in the field
further improve the smart management, offering of smart entrance and exit,
space security convenient online to quickly respond to the
management solution, personnel registration and needs of enterprise
deeply understand and remote control customers. By leveraging
meet the needs of user applications for enterprise our technological
scenarios, and promote the administrators to meet the innovation advantages, we
digitalization process of growing management ensure that we always
enterprise users in needs of enterprises and maintain a leading position
complex multi-scenario improve work efficiency in the industry;
management to a higher and security control; 3. We will quickly capture
level of development. 3. We will fully utilize the growing market of
the advantages of the security software APPs.
ZKBio platform to With the continuous
promote the sales expansion of the market
conversion of products size, our solutions and
derived from this products will continue to
platform. For existing meet the growing needs of
customers, we will users, ensuring that we
actively explore maintain a leading
opportunities for sales advantage in the field of
and repurchase to achieve smart entrance and exit
sustained business mobile solutions and create
growth. more value for customers.
1. Implement a content
management business
system with market
competitiveness,
supporting advanced
layout functions, virtual
screens, and integrated
This project aims to
screen playback
develop a one-stop
functions;
management solution for Implementing the
ZKDigimax-L3 2. Provide rich external
enterprise level advertising Company's strategic layout
V3.0 (Smart interfaces to easily
operations, content in the retail scene and
18 Retail Cloud Under researching integrate key data with
marketing management, providing a comprehensive
Management POS and ERP systems;
product price management, smart retail solution with
Platform) 3. Realize the unified
and marketing data market competitiveness.
module for managing
analysis based on cloud
digital signage, electronic
architecture.
price tags and AI terminal
devices;
4. By integrating AIGC
technology, achieve rapid
deployment and
implementation of
marketing ideas.
R&D of Smart The project plans to This project aims to 1. Connect IoT devices
Office develop a smart office develop a smart office such as smart office
Terminal terminal management terminal management attendance, access control,
19 Under researching
Management platform and device based platform and device visitors, and videos to
Platform and on the Minerva IoT cloud based on the Minerva IoT provide a one-stop O2O
Device Based service platform, mainly cloud service platform. solution for enterprise
50
ZKTeco 2024 Half Year Report
Expected Impact on the
Main R&D
S/N Project Objective Project Progress Proposed Objective Company's Future
Project Name
Development
on Minerva IoT combining the ZKTeco This platform takes "time smart office. It improved
Cloud Service Minerva IoT smart office management+security the management efficiency
Platform V2.0 cloud platform, with "time management" as its core and security of the
management+security service, providing enterprise;
management" as the key enterprises with a more 2. Provide support for the
service core, cloud refined smart office Company's digital cloud
platform as the core, management model by platform strategic layout.
application as the carrier, integrating the ZKTeco
and hardware devices as Minerva IoT smart office
the foundation, archiving cloud platform,
device data on a high applications, and
security cloud platform for hardware devices. It
management, and simultaneously supports
providing a more refined intelligent O&M
enterprise smart office functions such as device
management mode; the O&M and OTA upgrade,
feature is that the terminal while transforming from
device supports various traditional O&M methods
biometric (fingerprint, to digital O&M methods.
face), RFID, QR code
information collection, and
video intercom
capabilities, and supports
intelligent O&M functions
such as device O&M,
OTA upgrade, etc.,
connecting smart office
attendance, access control,
visitors, videos, and other
IoT devices, providing a
one-stop O2O solution for
enterprise smart office. It
is mainly used in smart
office scenarios.
IV. Non-main Business
Applicable □ Not applicable
Unit: RMB
Proportion to
Amount Description of Reason Sustainable or Not
Total Profit
Mainly due to the profit and loss
generated during the holding period of
Investment income 2,900,142.97 3.23% No
the financial products purchased during
the reporting period
Mainly due to the profit and loss
Profits and losses
generated during the holding period of
from fair value 4,288,802.32 4.78% No
the financial products purchased during
changes
the reporting period
Losses from Mainly due to the provision for
-5,196,924.78 -5.79% No
impairment of inventories impairment during the
51
ZKTeco 2024 Half Year Report
assets reporting period
Mainly due to income received during
Non-operating the reporting period from litigation
2,456,249.93 2.74% No
income compensation and sales of unpaid
payables
Mainly due to expenses such as external
Non-operating donations, disposal of stagnant
1,048,561.28 1.17% No
expenditure materials, and scrapping of non-current
assets during the reporting period
Mainly due to other income generated
Other income 8,367,842.99 9.32% by government subsidies during the No
reporting period
Mainly due to the provision of bad debt
Losses from credit
-771,004.22 -0.86% reserves for accounts receivable during No
impairment
the reporting period
Mainly due to income from disposal of
Income from asset
-83,513.11 -0.09% non-current assets during the reporting No
disposal
period
V. Analysis of Assets and Liabilities
1. Significant changes of asset items
Unit: RMB '0,000
At the end of this reporting period At the end of 2023 Proportion
Description of
Proportion to Proportion to increase or
Amount Amount major changes
total assets total assets decrease
Mainly due to the
purchase of
financial products,
investment expenses
for construction
projects,
Monetary funds 131,925.76 34.73% 199,092.50 50.74% -16.01% implementation of
share repurchases,
and distribution of
profits (cash
dividends) from the
previous year in
current period
Accounts
47,031.75 12.38% 47,980.33 12.23% 0.15% No major change
receivable
Contract assets 28.22 0.01% 28.22 0.01% 0.00% No major change
Inventories 37,522.36 9.88% 37,271.48 9.50% 0.38% No major change
Investment real
2,232.49 0.59% 2,314.55 0.59% 0.00% No major change
estate
Long-term
equity 2,907.15 0.77% 2,978.19 0.76% 0.01% No major change
investment
Fixed assets 46,641.30 12.28% 47,012.18 11.98% 0.30% No major change
Mainly due to new
Construction in
21,244.06 5.59% 13,898.65 3.54% 2.05% investment in the
progress
Multimodal
52
ZKTeco 2024 Half Year Report
Biometrics
Digitalization
Industrial Base
Construction Project
and the Thai factory
construction in
current period
Right-of-use
4,333.77 1.14% 3,866.97 0.99% 0.15% No major change
asset
Contract
7,047.23 1.86% 6,533.11 1.66% 0.20% No major change
liabilities
Long-term loan 732.02 0.19% 781.04 0.20% -0.01% No major change
Lease liabilities 2,288.86 0.60% 1,971.33 0.50% 0.10% No major change
Mainly due to the
Trading
54,582.50 14.37% 8,098.02 2.06% 12.31% increase in financial
financial asset
products
2. Information on main overseas assets
Applicable □ Not applicable
Unit: RMB '0,000
Proportion
Control
of overseas Is there a
Specific measures to
Cause of Operation assets to significant
content of Asset size Location ensure Income
formation mode the impairment
assets asset
Company's risk
security
net assets
ZK Wholly-
Overseas Control by
INVESTME owned 14,979.13 America 2,205.63 4.64% No
investment subsidiary
NTS INC. subsidiary
ZK
Controlling Overseas Control by
TECHNOLO 5,139.10 America 3,194.97 1.59% No
subsidiary sales subsidiary
GY LLC
ZKTECO Wholly-
Overseas Control by
CO., owned 42,947.19 Hong Kong 371.79 13.30% No
sales subsidiary
LIMITED subsidiary
Other Note: Main overseas assets mean that the assets of overseas individual companies exceed 10% of the consolidated
explanations assets or the net profit of overseas individual companies exceeds 10% of the consolidated net profit of the Group
3. Assets and liabilities measured at fair value
Applicable □ Not applicable
Unit: RMB
Cumulativ Impairm
Profits and
e changes ent
losses from Purchase Sales amount
Beginning in fair accrued Other
Item fair value amount in the in current Ending balance
balance value in the changes
changes in the current period period
recognize current
current period
d in equity period
Financial assets
1. Trading
80,887,585.81 4,381,420.14 506,750,115.39 46,503,814.90 309,667.83 545,824,974.27
financial
53
ZKTeco 2024 Half Year Report
assets
(excluding
derivative
financial
assets)
2. Derivative
financial 92,617.82 -92,617.82
assets
Subtotal of
financial 80,980,203.63 4,288,802.32 0.00 0.00 506,750,115.39 46,503,814.90 309,667.83 545,824,974.27
assets
Total 80,980,203.63 4,288,802.32 0.00 0.00 506,750,115.39 46,503,814.90 309,667.83 545,824,974.27
Financial
0.00 0.00
liabilities
Other changes
Other changes mainly include changes in funds and exchange rates on the e-commerce platform Yu E Bao
Has there been any major change in the measurement attributes of the Company's main assets during the reporting period
□ Yes No
4. Assets right restrictions as of the end of the reporting period
Please refer to "Section X Financial Report VII. Notes to Consolidated Financial Statements 22. Assets with Restricted Ownership or
Use Rights" in this report for details
VI. Investment Analysis
1. Overall
Applicable □ Not applicable
Investment in the reporting period Investment in the same period of the
YoY
(RMB) previous year (RMB)
580,797,590.58 333,844,991.15 73.97%
2. Significant equity investments obtained during the reporting period
□ Applicable Not applicable
3. Significant non-equity investments during the reporting period
Applicable □ Not applicable
54
ZKTeco 2024 Half Year Report
Unit: RMB
Accumulated
Accumulated Reasons for
Investment Actual
Fixed Realized Not Achieving
Investment Amount Investment
Investmen Asset Source of Project Expected Income As of Planned Disclosure Disclosure
Project Name Project During the Amount As of
t Mode Assessme Funds Progress Income the End of the Progress and Date (if any) Index (if any)
Industry Reporting the End of the
nt or Not Reporting Expected
Period Reporting
Period Benefits
Period
Hybrid
Own funds,
Biometrics IoT Plant and
bank loans, Under Not
Intelligent Self-built Yes supporting 1,062,948.60 226,374,368.92 24,892,555.23 Not applicable
and raised construction applicable
Industrial Base facilities
funds
Project
Multimodal
Biometrics
Plant and Own funds
Digitalization Under Not
Self-built Yes supporting 41,840,638.72 129,258,046.42 and raised Not applicable Not applicable
Industrial Base construction applicable
facilities funds
Construction
Project
Thai factory Plant and
Under Not
construction and Self-built Yes supporting 31,143,887.87 57,354,675.27 Own funds Not applicable Not applicable
construction applicable
office buildings facilities
Not
Total -- -- -- 74,047,475.19 412,987,090.61 -- -- 24,892,555.23 -- -- --
applicable
55
ZKTeco 2024 Half Year Report
4. Financial assets measured at fair value
Applicable □ Not applicable
Unit: RMB
Profits and
Cumulative
losses from Purchase Sales amount
Initial changes in Accumulated Source
Asset fair value amount during during the Other Closing
investment fair value investment of
Category changes in the reporting reporting changes amount
outlay recognized income Funds
the current period period
in equity
period
Financial Own
0.00 -92,617.82 0.00 0.00 0.00 0.00 0.00 0.00
derivatives funds
Own
funds
Others 582,844,488.33 4,381,420.14 0.00 506,750,115.39 46,503,814.90 0.00 309,667.83 545,824,974.27 and
raised
funds
Total 582,844,488.33 4,288,802.32 0.00 506,750,115.39 46,503,814.90 0.00 309,667.83 545,824,974.27 --
5. Use of raised funds
Applicable □ Not applicable
(1) Overall use of raised funds
Applicable □ Not applicable
Unit: RMB '0,000
Total amount of raised funds 145,729.84
Total amount of raised funds used in this period 7,291.70
Accumulated total amount of raised funds used 60,194.71
Total amount of raised funds with changed purposes during the
3,548.39
reporting period
Accumulated total amount of raised funds with changed
32,085.41
purposes
Proportion of accumulated total amount of raised funds with
22.02%
change purposes
Description of the overall use of raised funds
1. According to the approval of the "Reply of CSRC to Approval for the Registration of Initial Public Offering of Stocks of ZKTECO
CO., LTD." (ZJXK [2022] No. 926), the Company has publicly issued 37,123,013 denominated ordinary shares (A shares) with a
face value of RMB 1.00 per share, an issuance price of RMB 43.32 per share, and a total amount of raised funds of RMB
1,608,168,923.16. After deducting the issuance expenses (excluding value-added tax) of RMB 150,870,545.46, the actual net
amount of raised funds is RMB 1,457,298,377.70. The receipt date of the raised funds is August 12, 2022. The availability of the
raised funds has been verified by Baker Tilly China Certified Public Accountants (Special General Partnership) and a "Capital
Verification Report" (TZYZ [2022] No. 38658) has been issued.
2. All the raised funds mentioned above have been deposited in a special account for raised funds for management, and a regulatory
agreement for raised funds has been signed with the sponsor and the commercial bank that deposited the raised funds.
3. As of June 30, 2024, the Company has invested a total of RMB 601.9471 million in raised funds, with a total of RMB 904.4263
million in unused raised funds (including interest income and deducting handling fees).
56
ZKTeco 2024 Half Year Report
(2) Committed projects with raised funds
Applicable □ Not applicable
Unit: RMB '0,000
Has the
Investment Date when Accumulated
Committed project Committed Investment Accumulated Benefits
Net Adjusted progress as the project benefits Have the Has there been a
investment projects been total Amount investment achieved
amount of total of the end reaches its achieved as of expected major change in
and the investment changed investment During the amount as of during this
raised investment of the expected the end of the benefits been the feasibility of
direction of over- (including amount of Reporting the end of the reporting
funds (1) period conditions reporting achieved the project
raised funds partial raised funds Period period (2) period
(3)=(2)/(1) for use period
changes)
Committed investment projects
1. Tangxia
Production Base Not Not Not
Yes 24,841.18 24,841.18 0 0 0 0.00% Yes
Construction applicable applicable applicable
Project
2. Hybrid
Biometrics IoT
March 31, Not
Intelligent No 43,689.94 43,689.94 43,689.94 771.64 27,329.50 62.55% 778.64 2,489.26 No
2026 applicable
Industrial Base
Project
3. American
Manufacturing
August 31, Not Not Not
Factory Yes 17,392.21 17,392.21 14,392.65 116.98 222.97 1.55% No
2026 applicable applicable applicable
Construction
Project
4. R&D Center
December Not Not Not
Construction Yes 18,240.58 18,240.58 14,692.19 302.71 10,577.06 71.99% No
31, 2025 applicable applicable applicable
Project
5. Global Marketing
Service Network August 31, Not Not Not
No 26,802.01 26,802.01 26,802.01 350.73 8,542.85 31.87% No
Construction 2025 applicable applicable applicable
Project
6. Remaining funds
after the previous
change in the Not Not Not
Yes 2,999.56 No
American applicable applicable applicable
Manufacturing
Factory
57
ZKTeco 2024 Half Year Report
Construction
Project
7. Multimodal
Biometrics
Digitalization June 30, Not Not Not
Yes 39,605.10 5,749.64 13,522.33 34.14% No
Industrial Base 2026 applicable applicable applicable
Construction
Project
8. Remaining funds
after the change in
Not Not Not
the R&D Center Yes 3,548.39 No
applicable applicable applicable
Construction
Project
Subtotal of
committed -- 130,965.92 130,965.92 145,729.84 7,291.70 60,194.71 -- -- 778.64 2,489.26 -- --
investment projects
Direction of over-raised fund investment direction
Undetermined Not Not Not
Yes 14,763.92 14,763.92 No
funds applicable applicable applicable
Subtotal of over-
raised fund Not Not
-- 14,763.92 14,763.92 -- -- -- --
investment applicable applicable
direction
Total -- 145,729.84 145,729.84 145,729.84 7,291.70 60,194.71 -- -- 778.64 2,489.26 -- --
Describe the On April 22, 2024, the Company held the Ninth Session of the Third Board Meeting and the Eighth Session of the Third Supervisory Board Meeting. On May 15, 2024, the Company held
situation and 2023 Annual General Meeting, and deliberated and approved the "Proposal on Adjusting the Implementation Method, Total Investment Amount and Delay of Part of the Raised Fund
reasons why the Investment Projects". The Company agreed to postpone the scheduled date for the "Hybrid Biometrics IoT Intelligent Industrial Base Project" and the "R&D Center Construction Project"
planned progress to reach their expected conditions for use. Based on the market environment and the actual construction situation of the investment projects, for the R&D Center Construction Project, the
and expected scheduled date for the project to reach its expected conditions for use before the adjustment is August 17, 2024, and the scheduled date for the project to reach its expected conditions for
benefits have not use after the adjustment is December 31, 2025. For the Hybrid Biometrics IoT Intelligent Industrial Base Project, the scheduled date for the project to reach its expected conditions for use
been achieved by before the adjustment is August 17, 2024, and the scheduled date for the project to reach its expected conditions for use after the adjustment is March 31, 2026.
projects (including Reason for change: (1) The R&D Center Construction Project has been affected by fluctuations in the domestic and international macroeconomic environment, changes in the market
the reason for environment, and other factors. The Company has formed a more mature consideration for project construction. In order to control project investment risks, the procurement research,
selecting "not equipment selection, project construction and other aspects of the investment project have gradually been carried out cautiously, resulting in a delay in the implementation progress of the
applicable" for project compared to the original plan, and it is unable to reach the expected conditions for use within the original schedule. Therefore, the Company has postponed the scheduled date for
"whether the the expected conditions for use of the "R&D Center Construction Project" to December 31, 2025. (2) The Hybrid Biometrics IoT Intelligent Industrial Base Project has been actively
expected benefits promoting the implementation of the investment project since the funds were received. However, due to changes in terminal demand and external objective environmental factors, the
have been equipment and material procurement and overall construction progress of the investment project have been delayed compared to the original plan. In order to safeguard the interests of all
58
ZKTeco 2024 Half Year Report
achieved") shareholders and the Company, and considering the prudence of the raised funds, while ensuring the effectiveness of the investment and avoiding additional resource waste, the Company
will steadily promote the implementation of this project based on its medium - and long-term development strategy, without changing the investment content, total investment amount, and
implementation subject of the project, under the principle of gradually laying out the project. The Company reasonably arranges production capacity construction based on customer orders
to ensure the smooth implementation of the project. Therefore, after careful consideration, the Company has decided to extend the deadline for the project to reach its expected conditions
for use until March 31, 2026. This adjustment aims to ensure the effective implementation of the project and is also in line with the Company's long-term development vision. For details,
please refer to the "Announcement on Adjusting the Implementation Method, Total Investment Amount and Delay of Part of the Raised Fund Investment Projects" (Announcement No.
2024-020) disclosed by the Company on CNINFO (http://www.cninfo.com.cn) on April 24, 2024.
The American Manufacturing Factory Construction Project and Multimodal Biometrics Digitalization Industrial Base Construction Project are in the construction stage and have not yet
generated benefits. The R&D Center Construction Project and Global Marketing Service Network Construction Project are pure investment projects and do not generate benefits.
Description of
significant changes Not applicable
in project feasibility
The amount,
purpose, and
Not applicable
progress of the
over-raised funds
Changes in the
implementation
location of projects Not applicable
invested with raised
funds
Applicable
Adjustment of Occurred during the reporting period
implementation On April 22, 2024, the Company held the Ninth Session of the Third Board Meeting and the Eighth Session of the Third Supervisory Board Meeting. On May 15, 2024, the Company held
methods for 2023 Annual General Meeting, and deliberated and approved the "Proposal on Adjusting the Implementation Method, Total Investment Amount and Delay of Part of the Raised Fund
projects invested Investment Projects". The Company agreed to change the construction of Tangxia R&D Center in the investment project "R&D Center Construction Project" from self building to utilizing
with raised funds existing site. Due to the adjustment of the above implementation method, the corresponding total project investment has been adjusted from RMB 182.4058 million to RMB 146.9219
million, a decrease of RMB 35.4839 million.
Applicable
The Company held the 19th Session of the Second Board Meeting and the 13th Session of the Second Supervisory Board Meeting on September 29, 2022, and deliberated and approved
the "Proposal on Using Raised Funds to Replace Self Raised Funds for Pre-invested Raised Investment Projects and Paid Issuance Expenses". It is agreed that the Company will use the
Advance
raised funds to replace the self raised funds of RMB 358.6078 million invested in the raised investment project and paid issuance expenses as of August 21, 2022, as well as the pre-paid
investment and
issuance fees of RMB 13.8425 million (excluding value-added tax) with the self raised funds.
replacement of
raised funds for
On September 16, 2022, the Company held the 18th Session of the Second Board Meeting and the 12th Session of the Second Supervisory Board Meeting, and deliberated and approved
investment projects
the "Proposal on Using Its Own Funds and Foreign Exchange to Pay for Part of the Funds Raised for Investment Projects and Exchanging Them with the Raised Funds in Equal Amounts".
On January 18, 2023, the Company held the 23rd Session of the Second Board Meeting and the 17th Session of the Second Supervisory Board Meeting. On February 6, 2023, the Company
held the Second Extraordinary General Meeting, and deliberated and approved the "Proposal on Changing the Investment Projects of Raised Funds, Changing the Special Account for
59
ZKTeco 2024 Half Year Report
Raised Funds, Increasing Capital and Providing Loans to Subsidiaries to Implement Investment Projects". The salaries, social insurance premiums, housing provident fund, utilities, etc.
of domestic personnel of the Company in implementing the investment projects "Hybrid Biometrics IoT Intelligent Industrial Base Project", "R&D Center Construction Project", "Global
Marketing Service Network Construction Project" and the "Multimodal Biometrics Digitalization Industrial Base Construction Project" are planned to be paid by the Company or its
subsidiary implementing the investment projects in advance with their own funds. The Company collected and calculated the aforementioned advance expenses incurred by each investment
project on a monthly basis, and then transferred an equal amount of funds from the special account for investment to the Company's or its subsidiary's own fund account for implementing
the investment projects. The implementation location of the Company's investment project "American Manufacturing Factory Construction Project" is in the United States, and the
investment project construction funds need to be paid in USD. The Company's investment projects "Global Marketing Service Network Construction Project" and "R&D Center
Construction Project" include overseas construction content, and the operability of paying funds required for overseas construction directly from the special account for raised funds is
poor. Therefore, the Company plans to use its own foreign exchange to pay the required funds for the overseas parts of the "Global Marketing Service Network Construction Project",
"American Manufacturing Factory Construction Project", and "R&D Center Construction Project". Subsequently, the amount of advance payments will be calculated monthly, and equal
amounts will be transferred from the special account for raised funds to the Company's own fund account.
As of June 30, 2024, the Company has used its own funds and foreign exchange replaced with the raised funds to pay a portion of the funds raised for the investment project, totaling RMB
52.6348 million.
Temporary
replenishment of
working capital Not applicable
with idle raised
funds
The amount and
reasons for the
surplus of raised Not applicable
funds during project
implementation
The purpose and
destination of the As of June 30, 2024, the balance of the Company's unused IPO raised funds is RMB 904.4263 million (including interest income and deducting handling fees), including RMB 128.3363
raised funds that million of demand deposit in the special account for raised funds and RMB 776.09 million of time deposit and other financial products. The above financial products have high safety,
have not been used meet the requirements of capital preservation, and have good liquidity, which does not affect the normal operation of the investment plan for raised funds.
yet
Problems or other
situations in the use
Not applicable
and disclosure of
raised funds
(3) Change in the use of raised funds
Applicable □ Not applicable
Unit: RMB '0,000
60
ZKTeco 2024 Half Year Report
Actual
The total amount Actual Investment Date when the Benefits
Corresponding accumulated Have the Has there been a
of raised funds investment progress as of project reaches achieved
Changed original investment expected significant change in the
to be invested in amount during the end of the its expected during this
project committed amount as of the benefits been feasibility of the project
the project after this reporting period conditions for reporting
projects end of the period achieved after the change
the change (1) period (3)=(2)/(1) use period
(2)
R&D Center R&D Center
December 31, Not Not
Construction Construction 14,692.19 302.71 10,577.06 71.99% No
2025 applicable applicable
Project Project
Not
Total -- 14,692.19 302.71 10,577.06 -- -- -- --
applicable
On April 22, 2024, the Company held the Ninth Session of the Third Board Meeting and the Eighth Session of the Third Supervisory
Board Meeting. On May 15, 2024, the Company held 2023 Annual General Meeting, and deliberated and approved the "Proposal on
Adjusting the Implementation Method, Total Investment Amount and Delay of Part of the Raised Fund Investment Projects". The
Company agreed to change the construction method of the Tangxia R&D Center in the investment project "R&D Center Construction
Project" from self building to utilizing the existing site for construction. Due to the adjustment of the above implementation method, the
corresponding total project investment has been adjusted from RMB 182.4058 million to RMB 146.9219 million, a decrease of RMB
Description of reasons for changes, decision-making
35.4839 million.
procedures, and information disclosure (by specific
Reason for change:
project)
In the implementation process of the investment project, the Company adheres to the principles of rationality, efficiency, and economy,
scientifically and prudently uses the raised funds based on the actual needs of the project, fully utilizes the existing site of the Company,
and strengthens the supervision and control of project costs while ensuring the quality of project construction and controlling risks,
effectively reducing project implementation costs. The adjustment of the above implementation methods and the reduction of the total
investment amount of the project due to the adjustment of the implementation methods will not have a substantial impact on the investment
project.
The situation and reasons for not achieving the planned
None
progress or expected benefits (by specific project)
Description of major changes in project feasibility after
None
the change
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ZKTeco 2024 Half Year Report
6. Entrusted financial management, derivative investment and entrusted loans
(1) Entrustment of financial management
Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: RMB '0,000
Provision for
Source of funds
Amount of Overdue impairment
for entrusted Outstanding
Specific types entrusted financial uncollected amount of overdue
financial balance
management amount uncollected
management
financial assets
Bank financial
Own funds 3,280.01 3,280.01 0 0
products
Bank financial
Own funds 1,964.02 1,964.02 0 0
products
Bank financial
Own funds 113.75 11.45 0 0
products
Bank financial
Own funds 77.58 77.58 0 0
products
Bank financial
Own funds 3,000.00 3,000.00 0 0
products
Other categories Own funds 80.39 67.15 0 0
Bank financial
Fundraising 37,500.00 32,965.16 0 0
products
Bank financial
Own funds 712.70 712.70 0 0
products
Bank financial
Own funds 10,000.00 10,000.00 0 0
products
Bank financial
Fundraising 2,000.00 2,000.00 0 0
products
Total 58,728.45 54,078.07 0 0
Specific situation of high-risk entrusted financial management with significant individual amounts, low safety, and poor liquidity
□ Applicable Not applicable
Expected inability to recover principal or other situations that may lead to impairment in entrusted financial management
□ Applicable Not applicable
(2) Derivative investment
Applicable □ Not applicable
1) Derivative investments for hedging purposes during the reporting period
Applicable □ Not applicable
Unit: RMB '0,000
Profits and Cumulative Purchase Sales Ratio of ending
Types of Initial losses from changes in amount amount investment
Opening Closing
derivative investment fair value fair value during the during the amount to the
amount amount
investments amount changes in recognized in reporting reporting Company's net
the current equity period period assets at the
62
ZKTeco 2024 Half Year Report
period end of the
reporting
period
Forward foreign
exchange
824.27 824.27 -9.26 0 0 824.27 0 0.00%
settlement and
sales
Total 824.27 824.27 -9.26 0 0 824.27 0 0.00%
Accounting
policies and
specific
accounting
principles for
hedging business
during the
reporting period,
as well as No major change
description on
whether there
have been
significant
changes
compared to the
previous
reporting period
Description of
actual profit and During the reporting period, the Company obtained investment income of RMB 68,200 through forward foreign
loss during the exchange settlement and sales, and generated profits and losses from fair value changes of RMB -92,600.
reporting period
In the daily operation process of the Company, foreign currency transaction is involved. In order to prevent exchange
rate fluctuation risks, it is necessary for the Company to carry out foreign exchange derivative trading business related
Description of to daily operation needs according to specific circumstances to reduce the risk of exchange rate or interest rate
hedging effect fluctuations that the Company continues to face. The Company's forward foreign exchange settlement and sales business
can achieve the goal of locking in business contract profits at most time points, without significant risks, which achieves
the purpose of hedging.
Source of
funding for
Own funds
derivative
investment
I. Risk analysis of the Company's hedging business
Forward foreign exchange settlement and sales business can reduce the impact of exchange rate fluctuations on the
Company's production and operation in the event of significant fluctuations in exchange rates, but there are still certain
Risk analysis and
risks in conducting forward foreign exchange settlement and sales transactions:
control measures
1. Exchange rate fluctuation risk: In cases of significant fluctuations in exchange rate courses, exchange losses may occur
of derivatives
when the exchange rate of the forward foreign exchange settlement and sales agreed in the confirmation letter for the
positions during
forward foreign exchange settlement and sales is lower than the real-time exchange rate.
the reporting
2. Risk of payment collection prediction: Business departments make payment prediction based on customer orders and
period (including
expected orders. During the actual execution process, customers may adjust their own orders and predictions, resulting
but not limited to
in inaccurate company payment prediction and the risk of delayed delivery of forward exchange settlement.
market risk,
3. Internal control risk: Forward foreign exchange settlement and sales transactions are highly specialized and complex,
liquidity risk,
which may result in risks due to imperfect internal control systems.
credit risk,
4. Customer default risk: If the customer's accounts receivable are overdue and the payment cannot be collected within
operational risk,
the predicted payment period, it will cause a delay in forward exchange settlement and result in losses to the Company.
legal risk, etc.)
5. Transaction performance risk: Conducting financial derivative trading business carries the risk of default caused by
the inability of counterparties to perform when the contract expires.
II. Preparation work and risk control measures for hedging by the Company
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ZKTeco 2024 Half Year Report
The Company follows the principle of hedging when conducting forward foreign exchange settlement and sales
transactions, and does not engage in speculative arbitrage transactions. The main risk control measures are as follows:
1. When signing forward foreign exchange settlement and sales contracts, transactions are carried out in strict accordance
with the Company's predicted collection amount, and all forward foreign exchange settlement and sales businesses have
a true trade background.
2. The Company has formulated the "Management System for Forward Foreign Exchange Settlement and Sales of
ZKTECO CO., LTD.", which clearly stipulates the amount, variety, approval authority, internal audit process, information
disclosure, and other aspects of forward foreign exchange settlement and sales. Moreover, the Company has strengthened
the business training and professional ethics of relevant personnel, improved the quality of relevant personnel, and
established a timely reporting system for abnormal conditions to avoid the occurrence of operational risk to the maximum
extent.
3. To prevent the delayed delivery of forward foreign exchange settlement and sales, the Company will attach great
importance to the management of foreign currency accounts receivable, avoid the phenomenon of overdue accounts
receivable, and strive to improve the accuracy of payment collection prediction and reduce prediction risks. Meanwhile,
the Company has purchased credit insurance for some export products, thus reducing the customer default risk.
4. To control transaction performance risks, the Company carefully selects counterparties engaged in financial derivatives
business. The Company only conducts financial derivative trading business with legally qualified large commercial banks
and other financial institutions, and carefully reviews the contract terms signed with the counterparties to prevent credit
and legal risks.
Changes in
market price or
fair value of
products during
the reporting
period of the
invested
The Company's accounting for the fair value of derivatives mainly focuses on the unexpired contracts for forward foreign
derivatives. The
exchange settlement and sales transactions signed between the Company and banks during the reporting period. Trading
analysis of the
financial assets or trading financial liabilities are recognized based on the difference between the quoted price of the
fair value of
unexpired forward foreign exchange settlement and sales contract at the end of the period and the forward foreign
derivatives shall
exchange price.
disclose the
specific methods
used and the
setting of
relevant
assumptions and
parameters
Litigation
situation (if Not applicable
applicable)
2) Derivative investments for speculative purposes during the reporting period
□ Applicable Not applicable
There were no derivative investments for speculative purposes during the Company's reporting period.
(3) Entrusted loan
□ Applicable Not applicable
There were no entrusted loans during the reporting period of the Company.
64
ZKTeco 2024 Half Year Report
VII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable Not applicable
There is no disposal of significant asset for the Company during the reporting period.
2. Disposal of significant equity
□ Applicable Not applicable
VIII. Analysis of Major Holding and Joint-stock Companies
Applicable □ Not applicable
Major subsidiaries and joint-stock companies with an impact on the Company's net profit of over 10%
Unit: RMB
Princip
Company Compan al Registered Operating Operating
Total assets Net assets Net profit
Name y type activiti Capital income profit
es
ZKTECO Sales
Subsidia
CO., of 15,000,000.001 429,471,931.09 274,158,713.49 187,631,983.80 4,341,347.81 3,717,936.21
ries
LIMITED goods
ZK Sales
Subsidia
TECHNOL of Not applicable 51,390,961.41 22,559,198.67 56,247,880.47 32,407,288.67 31,949,659.82
ries
OGY LLC goods
Invest
ZK
Subsidia ment
INVESTME 100.001 149,791,273.04 149,555,691.96 0.00 27,736,198.11 22,056,287.91
ries Busine
NTS INC.
ss
R&D,
product
ion,
XIAMEN and
Subsidia
ZKTECO sales of 100,000,000.00 171,682,256.55 142,381,854.84 49,236,535.23 9,582,936.18 9,318,180.79
ries
CO., LTD. product
s and
softwar
e
ZKTeco Sales
Subsidia
Sales Co., of 50,000,000.00 32,640,266.79 15,802,546.35 144,107,886.23 1,424,637.73 1,426,142.70
ries
Ltd. goods
R&D,
product
ion,
ZKTECO
and
(GUANGD Subsidia
sales of 800,000,000.00 1,196,969,733.29 904,805,798.31 293,643,947.31 26,922,107.95 24,864,838.39
ONG) CO., ries
product
LTD
s and
softwar
e
Note 1: USD.
65
ZKTeco 2024 Half Year Report
Acquisition and disposal of subsidiaries during the reporting period
Applicable □ Not applicable
Method of acquiring and disposing of Impact on overall production, operation,
Company Name
subsidiaries during the reporting period and performance
New establishment, with no significant
ZKTECO BUSINESS SOLUTIONS impact on the overall production,
New establishment
COMPANY operation, and performance of the
Company;
New establishment, with no significant
impact on the overall production,
ZKTECO EGYPT LLC New establishment
operation, and performance of the
Company;
With no significant impact on the overall
Shenzhen Zhongjiang Intelligent
Liquidation production, operation, and performance
Technology Co., Ltd.
of the Company.
Description of the main controlling and participating companies
Please refer to the relevant content of "Section X Financial Report - X. Equity in Other Entities" for details
IX. Structured Entities Controlled by the Company
□ Applicable Not applicable
X. Risks Faced by the Company and Countermeasures
1. Operational risk
(1) Market competition risk
After years of deep cultivation in the biometric industry, the Company has formed competitive advantages in the fields of smart
entrance and exit management, smart identity verification, smart office, smart retail, and computer vision applications, including
technological and R&D strength, flexible production capacity, brand influence, and marketing service network. However, in recent
years, China's access control and management, identity authentication, office and other industries have shown an increasing number of
market entities, increased industry concentration, and increasingly fierce market competition. With a large number of domestic
competitors turning to "going global", the competitive situation in overseas markets has further intensified. The Company's main
business products are facing competition pressure from various aspects such as quality, price, service and brand. Other competitors
may compete for market share through different market positioning, strategies or cost controls, making the competition more intense.
In order to maintain the Company's leading position in the industry, the Company has continuously increased its R&D investment in
recent years, insisting on developing and optimizing single and multimodal biometrics and computer vision technology, continuously
expanding and enriching the types of biometric and computer vision products and services, and paying more attention to the overall
linkage design of product software and hardware, and strengthening competitiveness of multiple categories, thus consolidating the
Company's leading position in the industry. However, with the increasing market competition, if the Company cannot continuously
optimize product design, improve production quality, enhance brand competitiveness, expand and consolidate sales network, and
Improve market penetration, the Company's existing industry and market position will be affected, and the Company will face the risk
of declining market share and profitability.
(2) Overseas business operational risks
In the first half of 2024, the Company's overseas sales revenue from countries and regions was RMB 624.4464 million, accounting
for 69.44% of the Company's main business income. The Company's overseas business income accounted for a relatively large
proportion.
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ZKTeco 2024 Half Year Report
In recent years, the international market has been facing changes in trade policies of major economies, the rise of international
trade protectionism, the deterioration of local economic environments, geopolitical conflicts and maritime restrictions caused by
geopolitical conflicts, the currency depreciation of many countries due to the strong USD, insufficient maritime transport capacity
caused by the impact of the new energy industry, and rising freight rates, resulting in strong uncertainty in global trade policies. The
Company's international sales business may face international trade friction, especially the risk of Trade disputes between China and
the United States. Although China and the United States are still constantly trying to find solutions, if trade disputes between China
and the United States worsen in the future, it may have a certain adverse impact on the Company's product sales, which in turn will
affect the Company's future business performance. In addition, the Company's international business accounts for a relatively large
proportion of exports to developing countries such as India, Mexico, and Indonesia. Although the overall political, financial, and
economic systems of relevant countries are currently relatively stable, the economic development momentum is good, their
infrastructure is relatively weak, and government efficiency is relatively inefficient, compared to developed countries, which poses
potential social instability factors. If major changes occur in its political environment, economic environment, geopolitics, trade policies
with China, tariff and non-tariff barriers, and industry standards in the future, it will have a negative impact on the Company's export
business.
In addition to the risks of economic and political environment changes and trade frictions that the Company may face, the
multinational enterprise business model of the Company will increase the difficulty of operating, financial management, and personnel
management, and the operation will be influenced by the legal and regulatory environments and business environments of different
countries and systems. Although the Company has accumulated rich experience in international business development, if the
Company's management personnel and various systems cannot meet the requirements of global operation, cross regional management,
and standardized operation, it will also affect its operational efficiency and profitability.
(3) Tax compliance risks caused by transfer pricing arrangements between various tax entities within the Company both
domestically and internationally
As of June 30, 2024, the Company has a total of 49 overseas holding subsidiaries located in countries and regions such as Hong
Kong, the United States, Mexico, the United Arab Emirates, and India. During the reporting period, there were cases where the
Company sold products to overseas subsidiaries and sold them locally through these subsidiaries due to business needs between the
Company and some overseas subsidiaries. There was a situation of transfer pricing in the above-mentioned transaction links. According
to the Company's self inspection, there were no cases of the Company or its overseas subsidiaries being punished by the tax department
due to transfer pricing issues during the reporting period. From the perspective of its own compliance, the Company regularly hires
professional consulting agencies to analyze and demonstrate the transfer pricing strategies involved in the operation of the Company
and some overseas subsidiaries, and issues special reports.
If there are major changes in the tax policies of the Company in different tax jurisdictions in the future, or if the Company fails to
be correctly or timely informed of the changes in tax policies, or if there are cases of tax recovery and fines due to the re-approval of
transaction prices by the competent tax authorities, it may lead to adverse effects on the Company's operations.
(4) Legal risks of the impact of industry regulatory policies related to personal information protection and data protection on
company operations
Laws, regulations, and industry norms such as the "Civil Code of the People's Republic of China", the "Cybersecurity Law of the
People's Republic of China", the "Data Security Law of the People's Republic of China", the "Personal Information Protection Law of
the People's Republic of China", and the "General Data Protection Regulation" all stipulate the collection and use of personal
information by citizens, as well as the compliance obligations of personal information controllers, and emphasizes the legal liability
for violating personal information protection and data security has been strengthened. The "Provisions of the Supreme People's Court
on Several Issues concerning the Application of Law in the Trial of Civil Cases Relating to Processing of Personal Information by
Using the Facial Recognition Technology" (FS [2021] No. 15) provides detailed provisions on the behavior and civil liability of
information processors who violate the personal rights and interests of natural persons by processing facial information in violation of
regulations.
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ZKTeco 2024 Half Year Report
In recent years, personal information protection and data security have become regulatory priorities in various countries around
the world, and regulatory policies related to them have been increasingly strengthened. If the Company fails to make timely and
effective adjustments and responses to relevant policies and regulations in its future business operations, there may be potential legal
risks in data compliance caused by changes in legislation or regulatory policies. Meanwhile, if the Company is unable to strictly comply
with the relevant laws, regulations, and industry norms mentioned above in the future, and if employees violate the Company's internal
regulations, or data collaborators, customers, etc. violate agreements or cause improper use or leakage of data due to other personal
reasons, it/they may be subject to administrative penalties from relevant departments or complaints from users, and even lead to disputes
such as litigation or arbitration, which may have adverse effects on the Company's reputation and business.
2. Technology and product innovation risks
Driven by market demand and technological development, biometric technology has achieved rapid development globally.
Biometric technology is gradually iterating towards non-contact and multimodal biometrics. In addition, with the development of
cutting-edge technologies such as cloud computing, the IoT, and AI, users' personalized needs for smart terminal products and even
ecological platforms are constantly increasing in the fields of biometric technology applications such as smart entrance and exit
management, smart identity verification, and smart office where the Company is located. Industry technology is updated and iterated
quickly, requiring industry enterprises to have strong technological innovation capabilities to adapt to the rapid development of the
industry. The continuous innovation ability of products and technologies is increasingly becoming an important component of the core
competitiveness of related product and solution suppliers. The Company always attaches great importance to technological innovation
and new product R&D. In the first half of 2024, the Company's R&D expenses were RMB 105.65 million, accounting for 11.70% of
operating income.
As of June 30, 2024, the Company has obtained 901 patents, including 160 invention patents and obtained 715 computer software
copyrights and 67 work copyrights, with strong ability for continuous innovation. However, if the Company cannot keep up with the
development trends of domestic and foreign biometric technology and related application products, and fully pay attention to the diverse
individual needs of customers, and the subsequent R&D investment is insufficient, resulting in the Company's technology development
and product upgrading not being able to adapt to industry technology iterations and market demand changes in a timely manner, it will
face the risk of declining market competitiveness due to the inability to maintain sustained innovation capabilities.
3. Internal control risk
(1) Management risks caused by future expansion of the Company's scale
With the construction and production of investment projects, the Company's scale has rapidly expanded, and the number of sales,
R&D, and management personnel has increased significantly, posing higher requirements for the Company's management level and
system. Although the Company has established a series of relatively complete enterprise management systems, such as clear
institutional processes in procurement, production, sales, R&D, and service, to ensure the competitiveness and reliability of the
Company's products and services, if the Company's management ability cannot be further effectively improved, it may trigger
corresponding management risks, hinder the Company's future development, and have a negative impact on the overall profitability of
the Company.
(2) Dealer management risk
During the reporting period, the Company mainly adopted a sales model that combines distribution and direct sales, and the
proportion of distribution was relatively high. In the first half of 2024, the Company achieved a revenue of RMB 625.8281 million
through the distribution model, accounting for 69.59% of the Company's main business income in the first half of 2024.
Except for business cooperation, each dealer is independent of the Company, and its business plan is determined independently
based on its own business goals and risk preferences. Although the Company has established strict dealer management systems and
effective and reasonable rebate policies, and maintains good cooperative relationships with major dealers, the coverage area of
marketing and service networks will continue to expand in the future with the rapid development of the Company, and the difficulty
68
ZKTeco 2024 Half Year Report
of training, organizing, and risk management for dealers will also continue to increase. If the Company is unable to improve its
management capabilities for dealers in a timely manner, and if dealers engage in disorderly management, poor management, illegal or
irregular behavior, or if the Company cannot maintain good relationships with dealers in the future, resulting in dealers ceasing to
cooperate with the Company, and the Company is unable to quickly obtain orders from other channels in the short term, or the incentive
effect of the rebate policy decreases, it may lead to a regional decline in the sales of the Company's products, and have a negative
impact on the Company's market promotion.
4. Financial risk
(1) Risk of bad debt losses on accounts receivable
At the end of the reporting period, the book balance of the Company's accounts receivable was RMB 505.2424 million, accounting
for 55.95% of the current operating income. With the further expansion of the Company's business scale, the amount of accounts
receivable may continue to increase. If there are changes in the economic environment, customer operating conditions, etc., and
accounts receivable cannot be recovered in a timely manner, resulting in bad debt losses, the Company's operating results may be
adversely affected.
(2) Inventories depreciation risk
With the growth of the Company's business scale, the inventories scale has been increasing year by year. At the end of the reporting
period, the book value of the Company's inventories was RMB 375.2236 million, accounting for 13.35% of the total current assets at
the period end. During the reporting period, the Company comprehensively considered factors such as expected selling price and
inventories age, and made sufficient provision for inventories impairment. At the end of the reporting period, the provision ratio for
inventories impairment was 4.73%. The Company's inventories mainly consist of raw materials, inventory goods, etc. The Company
has always maintained a good cooperative relationship with raw material suppliers and customers, and reasonably arranged the
inventories of raw materials and inventory goods. However, with the further growth of the Company's sales revenue and asset size, the
Company's inventories also increase accordingly, which may lead to a decline in price, backlog, and unsold inventories due to market
changes, resulting in the risk of deteriorating financial position and declining profitability.
(3) Risk of RMB exchange rate fluctuations
The Company's current business layout is highly internationalized, and there are many local controlling subsidiaries and
participating companies in the overseas export market. The majority of export sales are settled in USD or EUR, resulting in significant
exchange rate fluctuations in production and operation. On the one hand, the fluctuations of the RMB exchange rate will directly affect
the sales prices of the Company's exported products, thereby affecting the price competitiveness of the Company's products; on the
other hand, fluctuations of the RMB exchange rate may also affect exchange gains and losses of the Company. If the RMB appreciates
in the future, it will have a significant adverse impact on the Company's operating performance.
(4) Risk of exchange rate fluctuations in mainstream countries
Due to the high degree of internationalization of the Company, with the increase in interest rates in the United States in recent
years, currencies in many countries have depreciated, and countries with weak industrial capabilities may even implement foreign
exchange controls, which will lead to longer payment collection times for downstream customers and increased risks. Although the
Company has effectively reduced this risk through measures such as Sinosure in the past year, and global expectations of a US interest
rate cut have increased, the unpredictability of future policies will still bring related collection risks to the Company.
5. Risks related to raising funds to invest in projects
(1) The risk of raising funds to invest in projects that do not yield expected returns
The investment projects with raised funds are a prudent decision and planning made by the Company based on a thorough analysis
of the current market situation, development speed, industrial environment, and future development trends of the industry, as well as
the Company's existing technological level, management ability, and expected future customer needs combined with development
prospects of the biometric industry and related application fields, as well as the expected changes in the international trade environment.
69
ZKTeco 2024 Half Year Report
However, if there are significant changes in the future market demand, industry structure, industrial policies or the economic and
political situation, it may prevent the smooth implementation of investment projects with raised funds as planned or prevent them from
achieving expected returns.
(2) The risks of cross-border implementation of investment projects
The American Manufacturing Factory Construction Project, R&D Center Construction Project, and Global Marketing Service
Network Construction Project among these investment projects with raised funds all involve overseas investment. Although the
Company has accumulated rich experience in cross-border operations and management in overseas markets, including the United States,
through various overseas subsidiaries, the construction progress of the Company's American Manufacturing Factory Construction
Project, R&D Center Construction Project, and Global Marketing Service Network Construction Project may be affected by multiple
factors considering the international market situation and the complex diversity of policies and cultures in various countries. Operations
in various countries also face certain uncertainties. In addition, during the implementation process of the overseas investment projects,
there may be a risk of delaying the implementation of the investment projects due to the need to increase or re-fulfill the filing or
approval procedures due to subsequent needs, policy changes, and other reasons. The Company reminds investors to pay attention to
the risks of cross-border investment projects.
XI. Reception of Activities including Research, Communication and Interviews During the
Reporting Period
Applicable □ Not applicable
The main
content of the Index of basic
Reception Reception Reception
Reception location Reception methods discussion and information of
time object type object
the materials research
provided
CNINFO
http://www.cninfo.co
Investors
m.cn, Announcement
participating in
Value Online Online See CNINFO date: May 7, 2024,
the Company's
May 7, 2024 (https://www.ir- Communication on Others (http://www.cni Investor Relations
2023 annual
online.cn/) Online Platforms nfo.com.cn) Activity Record
performance
Form of ZKTECO
briefing online
CO., LTD. (No.
2024-01)
XII. Implementation of the Action Plan for "Double Improvement of Quality and Return"
Has the Company disclosed an action plan announcement for "dual improvement of quality and return".
□ Yes No
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ZKTeco 2024 Half Year Report
Section IV Corporate Governance
I. Annual General Meetings and Extraordinary General Meetings Convened During the
Reporting Period
1. General Meetings convened during this reporting period
Proportion
Meeting of Convening Disclosure
Meeting Resolution of the Meeting
Type participating Date Date
investors
(I) Deliberation and approval of the "Proposal on
Changing the Registered Capital, Amending the Articles
of Association, and Handling the Procedures for
Changing Industrial and Commercial Registration";
(II) Deliberation and approval of the "Proposal on
Revising and Adding Relevant Governance Systems"
item by item:
1. "Rules of Procedure for Shareholders' Meeting of
The 1st
ZKTECO CO., LTD.";
Extraordinary Extraordin
2. "Rules of Procedure of the Board of Directors of
General ary January 8, January 8,
70.34% ZKTECO CO., LTD.";
Meeting of General 2024 2024
3. "Independent Director System of ZKTECO CO.,
Shareholders Meeting
LTD.";
in 2024
4. "Related Party Transaction Management System of
ZKTECO CO., LTD.";
5. "Fundraising Management System of ZKTECO CO.,
LTD.";
6. "External Guarantee Management System of
ZKTECO CO., LTD.";
7. "Selection System for Accounting Firms of ZKTECO
CO., LTD.".
(I) Deliberation and approval of the " 2023 Annual
Report and Its Abstract";
(II) Deliberation and approval of the "2023 Work Report
of the Board of Directors";
(III) Deliberation and approval of the "2023 Work
Report of the Board of Supervisors";
(IV) Deliberation and approval of the " 2023 Annual
Financial Settlement Report";
(V) Deliberation and approval of the "Proposal on the
Annual
Annual 2023 Profit Distribution Plan";
General May 15, May 15,
General 71.15% (VI) Deliberation and approval of the "Proposal on
Meeting of 2024 2024
Meeting Applying for Comprehensive Credit Line from Banks
2023
and Handling Bank Loans, and Providing Guarantee
Limit for Holding Subsidiaries";
(VII) Deliberation and approval of the "Proposal on
2024 Compensation Plan for Directors";
(VIII) Deliberation and approval of the "Proposal on
2024 Compensation Plan for Supervisors";
(IX) Deliberation and approval of the "Proposal on
Adjusting the Implementation Method, Total Investment
Amount and Delay of Part of the Raised Fund
71
ZKTeco 2024 Half Year Report
Investment Projects";
(X) Deliberation and approval of the "Proposal on Using
Idle Self-owned Funds to Purchase Financial Products".
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed Voting
Rights
□ Applicable Not applicable
II. Changes of Directors, Supervisors and Senior Management of the Company
□ Applicable Not applicable
There were no changes in the Company's directors, supervisors, and senior management during the reporting period, as detailed in the
2023 Annual Report.
III. Profit Distribution and Conversion of Capital Reserve to Share Capital during the
Reporting Period
□ Applicable Not applicable
The Company plans not to distribute cash dividends, issue bonus shares, or distribute shares from capital reserve during the current
reporting period.
IV. Implementation of the Company's Equity Incentive Plans, Employee Stock Ownership
Plans, or Other Employee Incentive Plans
Applicable □ Not applicable
1. Equity incentives
The equity incentive plan currently being implemented by the Company is the 2022 Restricted Share Incentive Plan, which has not
made any progress during the reporting period. The specific implementation of the 2022 Restricted Share Incentive Plan can be found
in the 2023 Annual Report.
2. Implementation of employee stock ownership plan
□ Applicable Not applicable
3. Other employee incentive plans
□ Applicable Not applicable
72
ZKTeco 2024 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 entities published by the environmental
protection department
□ Yes No
Administrative penalties for environmental problems during the reporting period
The impact on the
Rectification
Name of company production and
Reason for penalty Violations Penalty results measures of the
or subsidiary operation of listed
Company
companies
Company and
Not applicable Not applicable Not applicable Not applicable Not applicable
subsidiaries
Refer to other environmental information disclosed by key pollutant discharge units
The Company and its subsidiaries are not listed as key pollutant discharge units by the environmental protection department. The
Company and its subsidiaries conscientiously implement environmental protection laws and regulations such as the "Environmental
Protection Law of the People's Republic of China", the "Law of the People's Republic of China on Prevention and Control of Water
Pollution", the "Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution", the "Law of the
People's Republic of China on Prevention and Control of Environmental Noise Pollution", and the "Law of the People's Republic of
China on Prevention and Control of Environmental Pollution by Solid Waste" in their daily production and operation. The production
and operating activities of the Company and its subsidiaries comply with the relevant national environmental protection requirements,
and there are no cases of being punished for violations of laws and regulations.
The Company has developed and implemented systems such as the "Environmental Management Manual", "Environmental Factor
Identification and Evaluation Procedure", "Environmental Operation Control Procedure", and "General Solid Waste and Hazardous
Waste Management". The Company and Guangdong Zkteco have passed ISO 14001:2015 Environmental Management System
Certification, ISO 45001:2018 Occupational Health and Safety Management System Certification, and ISO 9001:2015 Management
System Certification.
Measures taken to reduce carbon emissions during the reporting period and their effects
□ Applicable Not applicable
Reasons for not disclosing other environmental information
Not applicable
II. Social Responsibilities
(I) Protection of rights and interests of investors
The Company strictly shall fulfill its information disclosure obligations in accordance with regulatory requirements, truthfully,
accurately, completely, and timely disclosing all company information to ensure that investors can fully understand the Company's
operating conditions, financial position, risk profile, and development prospects through Shenzhen Stock Exchange, CNINFO, the
Company's official website, etc., and also release the latest company information on the Company's official website, WeChat official
account and other windows to facilitate the stakeholders to understand their concerns in a timely and comprehensive manner.
73
ZKTeco 2024 Half Year Report
The Company attaches great importance to communication with investors and has established rich communication and feedback
channels with investors. The Company responded to the concerns of investors through its official website, investor relation email,
investor hotline and other means, focusing on protecting the legitimate rights and interests of investors such as the right to know and
vote, and maintaining a good trust relationship between the Company and investors.
(II) Protection of employee rights and interests
The Company has formulated multiple management systems in strict accordance with the "Labor Law of the People's Republic of
China" (hereinafter referred to as the "Labor Law"). Adhering to the principles of "respect, fairness, and impartiality" and "efficient
identification, scientific evaluation, personnel position matching, and selective recruitment", the Company standardizes the recruitment
and entry process of employees, eliminates all forms of discrimination and prejudice, and ensures that recruitment work is fair, just and
orderly. The Company adheres to the principles of legality, compliance, and fair respect, and explicitly prohibits the transmission of
discriminatory concepts such as geography, race, and gender in the "Recruitment Behavior Operation Standards", respecting and
protecting the rights and interests of employees in all aspects.
The Company establishes the trade union in accordance with relevant laws and regulations, regularly holds employee congresses,
facilitates communication channels, and safeguards the legitimate rights and interests of employees, such as the right to know and
participate. The Company also establishes equal and democratic diverse communication methods, and sets up employee suggestion
boxes so that employees can raise questions and provide feedback in a timely manner.
The Company focuses on employee development, formulates career development paths and promotion channels based on actual
situations, provides diversified career development directions and opportunities for employees, actively carries out employee training,
formulates the "Training Management System", creates rich and diverse online and offline learning environments and training
opportunities, establishes talent training mechanisms such as on-the-job training and professional technical training, accelerates
employee career growth, and broadens employee development channels.
The Company adheres to the concept of "safety first, prevention first", pays attention to the occupational health of employees, and
has formulated occupational health and safety management systems such as the "Occupational Health and Safety Management Manual"
and "Occupational Disease Management System". It follows the occupational health and safety policy of "preventing, controlling, and
eliminating occupational hazards, preventing and controlling occupational diseases, and protecting the health of workers", and has
established a sound occupational health and safety management system. ZKTeco and Guangdong Zkteco have passed ISO 45001:2018
Occupational Health and Safety Management System Certification. The Company has formulated the "Work Safety Responsibility
System", regularly conducts safety hazard inspections, strengthens work safety risk management, develops the "Emergency Rescue
Plan for Work Safety Accidents", and conducts work safety fire drills. In addition, the Company conducts annual occupational hazard
factor testing in the workplace, implements a rotation and job change mechanism for occupational disease risk personnel, regularly
conducts occupational health examinations, and conducts occupational health education and training.
The Company adheres to the talent concept of "people-oriented, collaborative and win-win", pays attention to the physical and
mental health development of employees, regularly carries out rich and diverse employee activities, and strengthens humanistic care.
(III) Protection of the rights and interests of suppliers and customers
The Company's supply chain has always adhered to the principles of "transparent procurement, honesty and trustworthiness,
integrity and self-discipline", and the Company and its suppliers have signed a "CSR Agreement" with suppliers to regulate the
requirements of both parties, including labor rights, environmental protection, occupational health and safety, business ethics and other
aspects. The Company is committed to establishing clean, fair, honest and trustworthy business cooperation relationships with suppliers,
and the Company and its suppliers have signed the "Integrity Agreement" and the "Procurement Framework Agreement", advocating
mutual supervision and creating a fair competition, honest and trustworthy, and sunny and healthy business environment. At the same
time, the Company has set up a dedicated complaint channel for accepting reports of illegal and disciplinary behaviors, encouraging
74
ZKTeco 2024 Half Year Report
the reporting and exposure of behaviors that violate work integrity, such as accepting commercial bribes and transmitting improper
benefits, and protecting whistleblowers.
The Company continues to improve its customer service management system and develop different service strategies for both
domestic and overseas markets, constantly listens to the opinions of partners and customers, strives to improve product quality and
actively implements the cooperation, openness, and win-win policy. The Company conducts customer satisfaction surveys on an annual,
quarterly, or monthly basis through telephone, WeChat, QQ, questionnaire, and other survey methods, and follows up on customer
feedback or suggestions.
The Company attaches great importance to product quality management and requires all employees to establish the guiding
ideology of "quality first" and the service awareness of "customer first", ensuring product quality throughout the entire product life
cycle. ZKTeco, ZKTeco Dongguan Branch, and Guangdong Zkteco have all passed GB/T 19001-2016 and ISO 9001:2015 Quality
Management System Certification.
(IV) Environmental protection and sustainable development
The Company adheres to the ecological and environmental protection concept of "Clear waters and lush mountains are invaluable
assets", continuously improves its environmental management level, establishes a sound environmental governance system, and has
passed the ISO 14001:2015 Environmental Management System Certification. The Company focuses on the management of emissions
and waste and hires a third-party organization to professionally treat the scattered wastewater produced by Tangxia Industrial Park,
ensuring proper wastewater treatment and effectively avoiding wastewater pollution to the surrounding environment.
The Company implements the concept of sustainable development in the production and operation process, committed to reducing
resource and energy consumption and environmental costs during production and operation, and improving resource utilization
efficiency. Institutional norms have been formulated, such as the "Energy Conservation Target Management System", the "Energy
Conservation Publicity System", and the "Energy Conservation and Emission Reduction Reward and Punishment System". The
Company actively responds to various environmental protection instructions issued by the environmental protection department,
cooperates with the environmental protection department's instructions, and enhances employees' awareness of environmental
protection and energy conservation.
The Company has always been committed to integrating green technology into product R&D. According to representative
environmental requirements such as RoHS and REACH, it continuously promotes technological innovation to achieve environmental
protection and energy conservation of products. The Company has enhanced the competitiveness of products by continuously
developing energy-saving products, optimizing production processes and reducing energy consumption, contributing to the sustainable
development of society.
(V) Actively assuming social responsibility
The Company actively fulfills its social responsibility, fully leverages its own advantages, and focuses on creating value for society.
It focuses on community development and actively carries out diversified public welfare and charity projects, giving back to society
with practical actions and conveying warmth and love to society. The Company and Guangdong Zkteco actively participated in the
2024 "630" Assistance to Rural Revitalization and Dongguan Charity Day activities in Tangxia Town and Zhangmutou Town in the
reporting period, making positive contributions to consolidating and expanding poverty alleviation achievements and rural
revitalization, and promoting common prosperity.
75
ZKTeco 2024 Half Year Report
Section VI Significant Events
I. Commitments completed by actual controllers, shareholders, related parties, purchasers, or
the Company within the reporting period and commitments not fulfilled by the end of the
reporting period
□ Applicable Not applicable
There are no commitments completed by actual controllers, shareholders, related parties, purchasers, or the Company within the
reporting period and commitments not fulfilled by the end of the reporting period.
II. Non Operating Occupation of Funds by Controlling Shareholders and Other Related Parties
of Listed Company
□ Applicable Not applicable
During the reporting period, there was no non-operating occupation of funds by controlling shareholders or other related parties of
the listed company.
III. Illegal Provision of Guarantees for External Parties
□ Applicable Not applicable
There were no illegal external guarantees during the reporting period of the Company.
IV. Appointment and Dismissal of Accounting Firms
Whether the half year financial report has been audited?
□ Yes No
The Company's Half Year Report has not been audited.
V. Explanation Given by the Board of Directors and Board of Supervisors Regarding the "Non-
standard Audit Report" Issued by the CPA Firm for the Current Reporting Period
□ Applicable Not applicable
VI. Explanation Given by the Board of Directors regarding the "Non-standard Audit Report"
in the Previous Year
□ Applicable Not applicable
VII. Matters Related to Bankruptcy Reorganization
□ Applicable Not applicable
There were no bankruptcy or restructuring related matters during the reporting period of the Company.
76
ZKTeco 2024 Half Year Report
VIII. Litigation Matters
Major litigation and arbitration matters
Applicable □ Not applicable
Is there Progress
Basic Amount an of
information of involved estimate litigatio Litigation (arbitration) Execution of litigation Disclosure Disclosure
litigation (RMB d n trial results and effects (arbitration) judgments Date Index
(arbitration) '0,000) liability (arbitrati
formed on)
The Company notified
Zokon Industry and its
attorneys in March 2024
and the Shenzhen
Intermediate People's Court
in April 2024 to offset the
debt related to the
trademark infringement and
unfair competition dispute
case between Zokon
Industry and Shenzhen
Xinjiacheng Intelligent CNINFO
Unfair
The second instance Technology Co., Ltd. by (http://www.
competition
court ruled that Zokon deducting the amount that cninfo.com.
dispute filed Implem
Industry compensate the the Company should pay to April 24, cn) "2023
by the 200 No entation
Company and Shenzhen Zokon Industry based on 2024 Annual
Company stage
ZKTeco for a loss of the effective judgment of Report of
against Zokon
RMB 2 million the trademark infringement ZKTECO
Industry
and unfair competition CO., LTD."
dispute case between Zokon
Industry and Shenzhen
Xinjiacheng Intelligent
Technology Co., Ltd. from
the total amount payable to
the Company by Zokon
Industry in this case
according to the effective
judgment . As of the end of
the reporting period, this
case is still under execution.
The Company notified
Disputes filed The Company has
Zokon Industry and its
by Zokon suspended the
attorneys in March 2024
Industry over description of "Zokon"
and the Shenzhen
infringement on relevant platforms
Intermediate People's Court CNINFO
of trademark and compensated Zokon
in April 2024 to offset the (http://www.
rights and Industry with a total of
debt related to the unfair cninfo.com.
unfair Yes, it Implem RMB 600,000 for
competition dispute April 24, cn) "2023
competition 60 has been entation economic losses and
between the Company and 2024 Annual
against the offset stage reasonable expenses for
Zokon Industry in this case. Report of
Company and rights protection; the
That is, the amount payable ZKTECO
Shenzhen judgment result has no
by the Company to Zokon CO., LTD."
Xinjiacheng significant impact on
Industry in this case was
Intelligent the Company's
fully offset against the
Technology production and
amount payable by Zokon
Co., Ltd. operation
Industry to the Company
77
ZKTeco 2024 Half Year Report
based on the Company's
lawsuit against Zokon
Industry in the unfair
competition dispute case.
No judgment payment is
required in this case.
After the other party applied
for compulsory execution,
Shenzhen Zhongjiang
entered the compulsory
Lease contract liquidation procedure.
dispute Guizhou Yiyun Big Data
CNINFO
between Service Co., Ltd. has
(http://www.
Guizhou declared its creditor's rights
Shenzhen Zhongjiang, a cninfo.com.
Yiyun Big Implem to the liquidation team and
subsidiary of the August cn) "2022
Data Service 72.89 No entation received confirmation. The
Company, bears joint 30, 2022 Semiannual
Co., Ltd. and stage subsequent liquidation team
liability. Report of
Shenzhen will distribute according to
ZKTECO
Zhongjiang the actual property situation
CO., LTD."
and Guizhou of Shenzhen Zhongjiang in
Zhongjiang accordance with the law,
and the specific amount
available for distribution
will be notified by the
liquidation team.
Other
lawsuits/arbitr
ations where
the Company
(including The CNINFO
subsidiary Compan (http://www.
companies in y strictly cninfo.com.
The Company strictly
the follows April 24, cn) "2023
1,541.72 No No significant impact follows the progress of each
consolidated the 2024 Annual
case
financial progress Report of
statements) as of each ZKTECO
the plaintiff case CO., LTD."
fails to meet
the disclosure
standards for
major lawsuits
Other
lawsuits/arbitr
ations where
the Company
(including The CNINFO
subsidiary Compan (http://www.
companies in y strictly cninfo.com.
The Company strictly
the follows April 24, cn) "2023
126.02 No No significant impact follows the progress of each
consolidated the 2024 Annual
case
financial progress Report of
statements) as of each ZKTECO
the defendant case CO., LTD."
fails to meet
the disclosure
standards for
major lawsuits
78
ZKTeco 2024 Half Year Report
Other litigation matters
□ Applicable Not applicable
IX. Punishment and Rectification
□ Applicable Not applicable
There were no penalties or rectifications during the reporting period of the Company.
X. The Integrity of the Company, Its Controlling Shareholders, and Actual Controllers
Applicable □ Not applicable
During the reporting period, the Company, its controlling shareholders, and actual controllers were in good faith, and there were no
instances of failure to fulfill effective court judgments or outstanding debts of significant amounts.
XI. Significant Related-Party Transactions
1. Related-party transactions related to daily operations
□ Applicable Not applicable
There were no related party transactions related to daily operations during the reporting period of the Company.
2. Related-party transactions arising from the acquisition and sale of assets or equity
□ Applicable Not applicable
There were no related party transactions related to asset or equity acquisitions or sales during the reporting period of the Company.
3. Related-party Transactions Arising from Joint Investments on External Parties
□ Applicable Not applicable
During the reporting period, the Company did not engage in any related party transactions related to joint foreign investment.
4. Related Credit and Debt Transactions
□ Applicable Not applicable
There were no current associated rights of credit and liabilities during the reporting period of the Company.
5. Transactions with Related Financial Companies
□ Applicable Not applicable
There is no deposit, loan, credit or other financial businesses between the Company and its affiliated financial companies, the financial
companies held by the Company and related parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable Not applicable
There is no deposit, loan, credit or other financial businesses between the financial company controlled by the Company and its
affiliated parties.
79
ZKTeco 2024 Half Year Report
7. Other significant related party transactions
□ Applicable Not applicable
There were no other major related party transactions during the reporting period of the Company.
XII. Significant Contracts and Their Performance
1. Custody, contracting, and leasing matters
(1) Custody
□ Applicable Not applicable
There was no custody during the reporting period of the Company.
(2) Contracting
□ Applicable Not applicable
There was no contracting during the reporting period of the Company.
(3) Leasing
Applicable □ Not applicable
Description of leasing
During the reporting period, the Company and its subsidiaries rented offices at relevant locations for business use due to operational
needs, and both parties have signed housing rental contracts.
Projects that bring profits and losses to the Company that exceed 10% of the total profit during the reporting period
□ Applicable Not applicable
There are no leasing projects that bring profits or losses to the Company during the reporting period that exceed 10% of the total profits
of the Company during the reporting period.
2. Significant guarantee
Applicable □ Not applicable
Unit: RMB '0,000
External guarantees provided by the Company and its subsidiaries (excluding guarantees provided to subsidiaries)
Whether
Disclosure date
Name of Actual Actual Type of Counter Whether it to
of guarantee Guarantee Collatera Guarantee
guarantee occurren guarantee guarant guarantee has been guarantee
limit related amount l (if any) period
object ce date amount ee (if any) fulfilled for related
announcements
parties
Guarantee of the Company to its subsidiaries
Whether
Disclosure date
Name of Actual Actual Type of Counter Whether it to
of guarantee Guarantee Collatera Guarantee
guarantee occurren guarantee guarant guarantee has been guarantee
limit related amount l (if any) period
object ce date amount ee (if any) fulfilled for related
announcements
parties
80
ZKTeco 2024 Half Year Report
ZKTECO Joint
Decemb
(GUANG liability
April 24, 2024 25,000 er 16, 0 15 years No No
DONG) guarant
2019
CO., LTD ee
Total actual amount
Total approved guarantee
of guarantee for
amount for subsidiaries
100,000 subsidiaries during 0
during the reporting period
the reporting period
(B1)
(B2)
Total actual guarantee
Total approved guarantee
balance for
amount for subsidiaries at the
100,000 subsidiaries at the end 0
end of the reporting period
of the reporting
(B3)
period (B4)
Guarantee provided by subsidiaries to subsidiaries
Whether
Disclosure date
Name of Actual Actual Type of Counter Whether it to
of guarantee Guarantee Collatera Guarantee
guarantee occurren guarantee guarant guarantee has been guarantee
limit related amount l (if any) period
object ce date amount ee (if any) fulfilled for related
announcements
parties
Total amount of company guarantee (i.e. the total of the first three major items)
Total actual amount
Total approved guarantee of guarantees
amount during the reporting 100,000 incurred during the 0
period (A1+B1+C1) reporting period
(A2+B2+C2)
Total actual guarantee
Total approved guarantee
balance at the end of
amount at the end of the 100,000 0
the reporting period
reporting period (A3+B3+C3)
(A4+B4+C4)
Proportion of actual total guarantee amount (i.e.
0.00%
A4+B4+C4) to the Company's net assets
Including:
Balance of guarantees provided to shareholders, actual
0
controllers, and their related parties (D)
Balance of debt guarantee provided directly or
indirectly for guaranteed objects with an asset liability 0
ratio exceeding 70% (E)
Amount of the total guarantee exceeding 50% of net
0
assets (F)
Total amount of the above three guarantees (D+E+F) 0
Explanation of situations where there is a guarantee
liability or evidence indicating the possibility of
Not applicable
assuming joint and several liability for the unexpired
guarantee contract during the reporting period (if any)
Explanation of providing external guarantees in
Not applicable
violation of prescribed procedures (if any)
Explanation of the specific situation of using composite guarantee
81
ZKTeco 2024 Half Year Report
3. Significant contracts for daily operations
There were no significant contracts for daily operations during the reporting period of the Company.
4. Other significant contracts
□ Applicable Not applicable
There were no other significant contracts during the reporting period of the Company.
XIII. Explanation of Other Significant Events
□ Applicable Not applicable
There are no other significant matters that need to be explained during the reporting period of the Company.
XIV. Significant Events of the Company's Subsidiaries
□ Applicable Not applicable
82
ZKTeco 2024 Half Year Report
Section VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
Before the change Increase or decrease in this change (+, -) After this change
Share
Issue transferre
Subt Proportio
Quantity Proportion new Bonus d from Others Quantity
otal n
shares capital
reserve
I. Restricted
128,327,159 65.92% 128,327,159 65.92%
shares
1. Shares
held by State
2. Shares
held by state-
owned legal
persons
3. Shares
held by other
128,327,159 65.92% 128,327,159 65.92%
domestic
enterprises
Including:
shares held by
94,284,872 48.43% 94,284,872 48.43%
domestic legal
persons
Shares
held by
34,042,287 17.49% 34,042,287 17.49%
domestic
natural persons
4. Foreign
shareholding
Including:
shares held by
overseas legal
persons
Shares
held by
overseas natural
person
II. Shares
without trading 66,352,349 34.08% 66,352,349 34.08%
restrictions
1. RMB
denominated 66,352,349 34.08% 66,352,349 34.08%
ordinary shares
83
ZKTeco 2024 Half Year Report
2. Domestic
listed foreign
shares
3. Overseas
listed foreign
shares
4. Others
III. Total shares 194,679,508 100.00% 194,679,508 100.00%
Reasons for changes in shares
□ Applicable Not applicable
Approval of changes in shares
□ Applicable Not applicable
Transfer of changes in shares
□ Applicable Not applicable
Implementation progress of share repurchase
Applicable □ Not applicable
The Company held the 7th Session of the Third Board Meeting on November 10, 2023, and deliberated and approved the "Proposal on
Repurchasing Company Shares through Centralized Bidding Trading": it plans to use its own funds to repurchase some of the
Company's shares through centralized bidding trading, for the implementation of employee stock ownership plans or equity incentives.
The total amount of repurchase funds is not less than RMB 30 million and not more than RMB 60 million.
The above-mentioned share repurchase plan of the Company has been completed on February 1, 2024. The Company has repurchased
a total of 2,230,000 shares of the Company through a dedicated securities account for share repurchases. The cumulative number of
repurchased shares accounts for 1.1455% of the total share capital of the Company at that time, with a maximum transaction price of
RMB 31.40 per share and a minimum transaction price of RMB 23.20 per share. The total transaction amount is RMB 59,683,228.10
(excluding transaction costs).
Progress in implementing centralized bidding trading to reduce holdings and repurchase shares
□ Applicable Not applicable
The impact of share changes on financial indicators such as basic earnings per share and diluted earnings per share for the most recent
year and period, and net assets per share attributable to ordinary shareholders of the Company
□ Applicable Not applicable
Other contents deemed necessary by the Company or required to be disclosed by the securities regulatory authority
□ Applicable Not applicable
2. Changes in restricted shares
□ Applicable Not applicable
II. Issuance and Listing of Securities
□ Applicable Not applicable
84
ZKTeco 2024 Half Year Report
III. Number of Shareholders of the Company and Shareholding
Unit: share
Total number
Total number of
of
preferred shareholders
Total number of ordinary shareholders
with restored voting
shareholders at the end of the 18,381 0 holding 0
rights at the end of the
reporting period special
reporting period (if any)
voting shares
(see Note 8)
(if any)
Shareholding of ordinary shareholders holding more than 5% or particulars about the top 10 shareholders (excluding shares lent through
refinancing)
Changes Pledge, marking or frozon
in Number
Total shares increase of shares
Number of
Percenta held at the and not
Name of Nature of shares with
ge of end of the decrease subject to
shareholder shareholder trading
shares reporting during trading Share status Amount
restrictions
period the restriction
reportin s
g period
Shenzhen
Domestic
ZKTeco
non state-
Times 30.05% 58,500,000 0 58,500,000 0 Not applicable 0
owned
Investment
corporation
Co., Ltd.
Che Domestic
17.48% 34,022,300 0 34,022,300 0 Not applicable 0
Quanhong individual
Shenzhen
JYSJ Domestic
Investment non state-
7.21% 14,038,400 -69,200 10,580,700 3,457,700 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Shenzhen
JYHY Domestic
Investment non state-
7.13% 13,876,050 -45,000 10,440,787 3,435,263 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Dongguan LX
Investment Domestic
Partnership non state-
5.08% 9,880,000 0 9,880,000 0 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Shenzhen
JYLX Domestic
Consulting non state-
2.39% 4,651,886 -66,024 3,561,285 1,090,601 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Huaxin
Yuanchuang Others 0.87% 1,701,621 -40,500 0 1,701,621 Not applicable 0
(Qingdao)
85
ZKTeco 2024 Half Year Report
Investment
Management
Co., Ltd. -
Qingdao
Walden
Zhongxiang
Investment
Center
(Limited
Partnership)
Shenzhen
JYQL
Domestic
Investment
non state-
Consulting 0.85% 1,657,100 -74,200 1,322,100 335,000 Not applicable 0
owned
Enterprise
corporation
(Limited
Partnership)
Shenzhen
Gohedge
Fund
Management
Co., Ltd. - Others 0.35% 688,580 -21,000 0 688,580 Not applicable 0
Gohedge
Pearl No.1
Private Equity
Fund
Shenzhen
Fuhai
Domestic
Juanyong I
non state-
Venture 0.34% 666,138 0 0 666,138 Not applicable 0
owned
Investment
corporation
Fund (Limited
Partnership)
Strategic investors or general
legal persons become the top
10 shareholders due to the Not applicable
placement of new shares (if
any) (see Note 3)
Shareholder Che Quanhong is elder brother of shareholder Che Quanzhong from ZKTeco Times are
brothers, and son of Che Jun, partner of LX Investment.
The shareholder Che Quanhong holds 76.02% of the equity of ZKTeco Times, being the controlling
Description of the above shareholder of ZKTeco Times. Meanwhile, Che Quanhong holds 1.18% of the property share of shareholder
shareholder's association or LX Investment and 6.57% of the property share of shareholder JYLX.
concerted action Che Quanzhong, the younger brother of shareholder Che Quanhong, holds a 23.98% of the equity of
ZKTeco Times.
Che Jun, the father of shareholder Che Quanhong, holds 98.68% of the property share of LX Investment.
In addition, there is no affiliated relationship between the other shareholders of the Company.
Description of the above
shareholders' involvement in
entrusting/entrusted voting Not involved
rights and waiver of voting
rights
Special description of the
As of June 30, 2024, the Company's repurchase special securities account holds 2,230,000 A ordinary
existence of special
shares, accounting for 1.15% of the current total share capital of the Company. As required, it is not included
repurchase accounts among
in the list of the top 10 shareholders of the Company.
the top 10 shareholders (see
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ZKTeco 2024 Half Year Report
Note 11)
Particulars about the top 10 shareholders not subject to trading restrictions (excluding shares lent through refinancing and executive lockup
shares)
Number of shares without trading restrictions held at the end of the Types of shares
Name of shareholder
reporting period Types of shares Amount
Shenzhen JYSJ Investment RMB
Enterprise (Limited 3,457,700 denominated 3,457,700
Partnership) ordinary shares
Shenzhen JYHY Investment RMB
Enterprise (Limited 3,435,263 denominated 3,435,263
Partnership) ordinary shares
Huaxin Yuanchuang
(Qingdao) Investment
RMB
Management Co., Ltd. -
1,701,621 denominated 1,701,621
Qingdao Walden Zhongxiang
ordinary shares
Investment Center (Limited
Partnership)
Shenzhen JYLX Consulting RMB
Enterprise (Limited 1,090,601 denominated 1,090,601
Partnership) ordinary shares
Shenzhen Gohedge Fund
RMB
Management Co., Ltd. -
688,580 denominated 688,580
Gohedge Pearl No.1 Private
ordinary shares
Equity Fund
Shenzhen Fuhai Juanyong I RMB
Venture Investment Fund 666,138 denominated 666,138
(Limited Partnership) ordinary shares
RMB
Hong Kong Securities
535,761 denominated 535,761
Clearing Company Limited
ordinary shares
Changjiang Wealth Asset
Management - Bank of
RMB
Nanjing - Changjiang Wealth -
379,592 denominated 379,592
ZKTeco Employee Strategic
ordinary shares
Placement No.1 Collective
Asset Management Plan
Shenzhen JYQL Investment RMB
Consulting Enterprise 335,000 denominated 335,000
(Limited Partnership) ordinary shares
RMB
Zhuo Qiugang 299,790 denominated 299,790
ordinary shares
Explanations on the
association or concerted
action between the top 10
shareholders of outstanding
shares not subject to trading The Company does not know whether there is a related relationship between the top 10 shareholders of
restrictions, as well as shares without trading restrictions, as well as between the top 10 shareholders outstanding shares without
between the top 10 trading restrictions and the top 10 shareholders, or whether they belong to persons acting in concert.
shareholders of outstanding
shares not subject to trading
restrictions and the top 10
shareholders
As of the end of the reporting period, among the top 10 shareholders not subject to trading restrictions,
Explanations on shareholders
Shenzhen Gohedge Fund Management Co., Ltd. - Gohedge Pearl No.1 Private Equity Fund held a total of
participating in margin trading
688,580 A shares of the Company at the end of the reporting period, including 563,520 A shares held through
87
ZKTeco 2024 Half Year Report
(if any) (see Note 4) ordinary securities accounts and 125,060 A shares held througha margin account of CITIC Securities Co.,
Ltd. At the end of the reporting period, Zhuo Qiugang held a total of 299,790 A shares of the Company,
including 0 A share held through ordinary securities accounts and 299,790 A shares held through a margin
account of Huatai Securities Co., Ltd.
Participation of shareholders holding more than 5% of the shares, the top 10 shareholders and the top 10 shareholders of outstanding
shares not subject to trading restrictions in the lending of shares through refinancing
□ Applicable Not applicable
Changes of the top 10 shareholders and the top 10 shareholders of outstanding shares not subject to trading restrictions compared to
the previous period due to reasons related to lending/repayment through refinancing
□ Applicable Not applicable
Does the Company have voting right difference arrangements
□ Yes No
Did the top 10 ordinary shareholders and the top 10 shareholders of ordinary shares without trading restrictions engage in agreed
repurchase transactions during the reporting period
□ Yes No
The top 10 ordinary shareholders and the top 10 shareholders of ordinary shares without trading restrictions did not engage in any
agreed repurchase transactions during the reporting period.
IV. The Cumulative Pledged Shares of the Company's Controlling Shareholder or the Largest
Shareholder and Its Concerted Action Person Account for 80% of the Company's Shares Held
by Them
□ Applicable Not applicable
V. Changes in Shareholding of Directors, Supervisors and Senior Management
□ Applicable Not applicable
There were no changes in the shareholding of the Company's directors, supervisors, and senior management during the reporting period,
as detailed in the 2023 Annual Report.
VI. Changes in Controlling Shareholders and Actual Controllers
Changes in controlling shareholders during the reporting period
□ Applicable Not applicable
There was no change in the controlling shareholder of the Company during the reporting period.
Changes in actual controller during the reporting period
□ Applicable Not applicable
There has been no change in the actual controller of the Company during the reporting period.
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ZKTeco 2024 Half Year Report
Section VIII Information of Preferred Shares
□ Applicable Not applicable
There is no preferred share in the Company during the reporting period.
89
ZKTeco 2024 Half Year Report
Section IX Bonds
□ Applicable Not applicable
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ZKTeco 2024 Half Year Report
Section X Financial Report
I. Audit Report
Whether the Half Year Report has been audited
□ Yes No
The Company's Half Year financial report has not been audited.
II. Financial Statements
The unit of the financial statements in the financial notes is: RMB
1. Consolidated Balance Sheet
Prepared by: ZKTECO CO., LTD.
June 30, 2024
Unit: RMB
Item Ending Balance Beginning Balance
Current assets:
Monetary funds 1,319,257,568.19 1,990,924,954.78
Deposit reservation for balance
Lendings to banks and other financial
institutions
Trading financial assets 545,824,974.27 80,980,203.63
Derivative financial assets
Notes receivable
Accounts receivable 470,317,501.31 479,803,313.66
Receivable financing
Prepayments 26,704,423.54 23,457,907.24
Premiums receivable
Reinsurance accounts receivable
Reserves for reinsurance contract
receivable
Other receivables 38,923,993.14 32,744,574.20
Including: interest receivable
Dividends receivable
Buying back the sale of financial
assets
Inventories 375,223,613.19 372,714,784.31
Including: Data resources
Contract assets 282,186.31 282,186.31
Held-for-sale assets
Non-current assets due within one year 9,854,312.91 17,257,614.74
Other current assets 25,115,605.16 25,865,809.28
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ZKTeco 2024 Half Year Report
Total current assets 2,811,504,178.02 3,024,031,348.15
Non-current assets:
Loans and advances to customers
Debt investment 36,805,244.82 42,284,596.90
Other debt investment
Long-term receivables 3,407,924.97 2,447,228.23
Long-term equity investment 29,071,504.20 29,781,888.62
Other equity instrument investments
Other non-current financial assets
Investment real estate 22,324,902.81 23,145,488.85
Fixed assets 466,413,000.41 470,121,791.29
Construction in progress 212,440,624.60 138,986,483.73
Productive biological assets
Oil and gas assets
Right-of-use assets 43,337,741.86 38,669,718.86
Intangible assets 89,611,548.33 66,016,371.68
Including: Data resources
Development expenditures
Including: Data resources
Goodwill 507,946.85 504,803.72
Long-term deferred expenses 6,992,228.92 3,768,847.81
Deferred income tax assets 74,912,779.14 67,257,559.01
Other non-current assets 1,161,841.76 16,884,605.85
Total non-current assets 986,987,288.67 899,869,384.55
Total assets 3,798,491,466.69 3,923,900,732.70
Current liabilities:
Short-term loan
Borrowings from the Central Bank
Borrowings from banks and other
financial institutions
Trading financial liabilities
Derivative financial liabilities
Notes payable 148,568,276.33 122,573,544.09
Accounts payable 171,238,426.99 245,084,182.32
Advances from customer
Contract liabilities 70,472,302.17 65,331,106.17
Financial assets sold for repurchase
Deposit from customers and interbank
Acting trading securities
Acting underwriting securities
Payroll payable 41,775,200.44 56,630,101.98
Taxes and dues payable 16,611,951.08 28,892,229.44
Other payables 43,034,768.84 36,735,314.36
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ZKTeco 2024 Half Year Report
Including: interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance accounts receivable
Liabilities held for sale
Non-current liabilities due within one
22,626,110.87 21,094,682.36
year
Other current liabilities 11,195,334.26 16,463,934.35
Total current liabilities 525,522,370.98 592,805,095.07
Non-current liabilities:
Reserves for insurance contracts
Long-term loan 7,320,192.70 7,810,405.04
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 22,888,617.57 19,713,286.21
Long-term payables
Long-term payroll payable
Estimated liabilities 600,000.00
Deferred income 1,760,815.34 1,853,549.62
Deferred income tax liabilities 11,702,064.75 10,329,053.48
Other non-current liabilities
Total non-current liabilities 43,671,690.36 40,306,294.35
Total liabilities 569,194,061.34 633,111,389.42
Owner's equity:
Share capital 194,679,508.00 194,679,508.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2,083,108,177.74 2,075,479,375.13
Less: treasury stock 59,683,228.10 784,700.00
Other comprehensive income 22,278,858.00 28,000,959.19
Special reserve
Surplus reserves 60,455,422.50 60,455,422.50
General risk reserves
Undistributed profits 899,618,473.11 907,583,024.38
Total owner's equity attributable to the
3,200,457,211.25 3,265,413,589.20
parent company
Minority interests 28,840,194.10 25,375,754.08
Total owner's equity 3,229,297,405.35 3,290,789,343.28
Total liabilities and owner's equity 3,798,491,466.69 3,923,900,732.70
Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution:
Fang Li
2. Balance Sheet of the Parent Company
Unit: RMB
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ZKTeco 2024 Half Year Report
Item Ending Balance Beginning Balance
Current assets:
Monetary funds 753,865,026.13 997,496,318.79
Trading financial assets 121,216,474.26 888,780.80
Derivative financial assets
Notes receivable
Accounts receivable 539,694,799.79 674,768,619.85
Receivable financing
Prepayments 10,199,202.22 16,580,313.51
Other receivables 35,416,566.97 59,135,419.22
Including: interest receivable 221,017.34 192,033.24
Dividends receivable 8,000,000.00 0.00
Inventories 200,675,790.72 220,338,772.92
Including: Data resources
Contract assets 274,794.84 274,794.84
Held-for-sale assets
Non-current assets due within one year 256,494.12 11,261,761.38
Other current assets 3,401,894.12 2,221,965.93
Total current assets 1,665,001,043.17 1,982,966,747.24
Non-current assets:
Debt investment
Other debt investment
Long-term receivables 2,067,545.03 1,553,576.04
Long-term equity investment 1,324,690,055.60 1,273,046,481.87
Other equity instrument investments
Other non-current financial assets
Investment real estate
Fixed assets 59,950,555.19 62,080,079.28
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets 13,363,679.55 11,281,532.81
Intangible assets 33,331,398.37 8,193,258.13
Including: Data resources
Development expenditures
Including: Data resources
Goodwill
Long-term deferred expenses 4,963,669.77 1,314,622.72
Deferred income tax assets 45,941,326.35 39,737,047.18
Other non-current assets 15,725,991.21
Total non-current assets 1,484,308,229.86 1,412,932,589.24
Total assets 3,149,309,273.03 3,395,899,336.48
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ZKTeco 2024 Half Year Report
Current liabilities:
Short-term loan
Trading financial liabilities
Derivative financial liabilities
Notes payable 139,640,526.63 114,437,751.98
Accounts payable 181,271,165.17 293,594,334.82
Advances from customer
Contract liabilities 33,865,218.72 51,073,453.29
Payroll payable 14,762,965.28 26,129,332.92
Taxes and dues payable 1,037,578.83 4,029,704.54
Other payables 45,684,285.87 48,521,459.02
Including: interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one
6,562,630.53 6,036,995.12
year
Other current liabilities 8,923,795.64 17,818,576.02
Total current liabilities 431,748,166.67 561,641,607.71
Non-current liabilities:
Long-term loan
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 6,553,342.48 4,932,540.65
Long-term payables
Long-term payroll payable
Estimated liabilities 0.00 600,000.00
Deferred income 330,185.74 400,966.62
Deferred income tax liabilities 4,829,334.45 4,529,736.45
Other non-current liabilities
Total non-current liabilities 11,712,862.67 10,463,243.72
Total liabilities 443,461,029.34 572,104,851.43
Owner's equity:
Share capital 194,679,508.00 194,679,508.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2,091,772,687.38 2,085,198,988.61
Less: treasury stock 59,683,228.10 784,700.00
Other comprehensive income
Special reserve
Surplus reserves 60,364,126.01 60,364,126.01
Undistributed profits 418,715,150.40 484,336,562.43
Total owner's equity 2,705,848,243.69 2,823,794,485.05
Total liabilities and owner's equity 3,149,309,273.03 3,395,899,336.48
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ZKTeco 2024 Half Year Report
3. Consolidated Income Statement
Unit: RMB
Item Half Year of 2024 Half Year of 2023
I. Total operating income 903,103,158.77 937,182,670.00
Including: operating income 903,103,158.77 937,182,670.00
Interest income
Premium earned
Income from handling charges
and commissions
II. Total operating cost 824,250,410.31 820,963,431.57
Including: operating cost 454,301,823.55 488,923,174.83
Interest expenses
Expenses from handling
charges and commissions
Surrender value
Net payments for insurance
claims
Net provisions for policy
reserves
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges 13,044,317.00 9,064,619.07
Selling expenses 216,506,500.22 196,138,701.98
Administrative expenses 53,529,882.13 60,476,345.47
R&D expenses 105,650,008.20 100,984,101.72
Financial expenses -18,782,120.79 -34,623,511.50
Including: interest expenses 1,576,340.90 1,807,293.55
Interest income 23,834,740.57 31,152,457.27
Plus: other income 8,367,842.99 5,763,414.14
Investment income (loss
2,900,142.97 1,237,665.06
expressed with "-")
Including: investment
989,323.74 1,092,924.55
income in associates and joint ventures
Gains from
derecognition of financial assets
measured at amortized cost
Gains from foreign exchange
(loss expressed with "-")
Gains from net exposure hedging
(loss expressed with "-")
Gains from changes in fair value
4,288,802.32 -7,045,482.43
(loss expressed with "-")
Credit impairment loss (loss
-771,004.22 -2,759,705.20
expressed with "-")
Losses from impairment of assets -5,196,924.78 -3,693,840.00
96
ZKTeco 2024 Half Year Report
(loss expressed with "-")
Income from asset disposal (loss
-83,513.11 -245,859.71
expressed with "-")
III. Operating profit (loss expressed with
88,358,094.63 109,475,430.29
"-")
Plus: non-operating income 2,456,249.93 281,042.36
Less: non-operating expenditure 1,048,561.28 597,424.53
IV. Total profit (loss expressed with "-") 89,765,783.28 109,159,048.12
Less: income tax expenses 4,902,747.31 9,350,242.66
V. Net profit (loss expressed with "-") 84,863,035.97 99,808,805.46
(I) Classification by business
continuity
1. Net profit from continuing
84,863,035.97 99,808,805.46
operations (net loss expressed with "-")
2. Net profit from discontinued
operations (net loss expressed with "-")
(II) Classification by ownership
1. Net profit attributable to
shareholders of the parent company (net 78,637,727.33 88,754,335.62
loss expressed with "-")
2. Minority shareholders' profit and
6,225,308.64 11,054,469.84
loss (net loss expressed with "-")
VI. Other comprehensive income - after
-4,827,043.56 24,565,469.12
tax
Net of tax of other comprehensive
income attributable to the owner of the -5,722,101.19 21,315,590.14
parent company
Other comprehensive income that
cannot be transferred to profit or loss
1. Changes in re-measurement of
the defined benefit plan
2. Other comprehensive income
that cannot be transferred to profit or loss
under the equity method
3. Changes in fair value of other
equity instrument investments
4. Changes in the fair value of the
Company's own credit risk
5. Other
(2) Other comprehensive income
-5,722,101.19 21,315,590.14
that will be reclassified into profit or loss
1. Other comprehensive income
that can be transferred to profit or loss
under the equity method
2. Changes in fair value of other
debt investments
3. Amount of financial assets
reclassified into other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
6. Translation difference of
-5,722,101.19 21,315,590.14
foreign currency financial statements
7. Others
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ZKTeco 2024 Half Year Report
After-tax net amount of other
comprehensive income attributable to the 895,057.63 3,249,878.98
minority shareholders
VII. Total comprehensive income 80,035,992.41 124,374,274.58
Total comprehensive income
attributable to owners of the parent 72,915,626.14 110,069,925.76
company
Total comprehensive income
7,120,366.27 14,304,348.82
attributable to minority shareholders
VIII. Earnings per share:
(I) Basic earnings per share 0.4070 0.4598
(II) Diluted earnings per share 0.4050 0.4579
In the event of a merger of enterprise under the same control in the current period, the net profit realized by the combined party before
the merger is RMB 0.00, and the net profit realized by the combined party in the previous period is RMB 0.00.
Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution: Fang
Li
4. Income Statement of the Parent Company
Unit: RMB
Item Half Year of 2024 Half Year of 2023
I. Operating income 647,819,547.32 668,101,346.15
Less: operating cost 495,303,687.48 470,747,145.91
Taxes and surcharges 3,255,592.42 2,642,445.40
Selling expenses 75,242,858.33 86,562,114.29
Administrative expenses 24,735,982.08 32,097,381.53
R&D expenses 62,060,996.17 68,222,616.46
Financial expenses -17,528,945.14 -31,969,286.63
Including: interest expenses 278,823.58 326,423.56
Interest income 13,097,924.13 20,391,414.57
Plus: other income 1,415,280.88 1,426,313.93
Investment income (loss
16,051,868.96 22,862,372.43
expressed with "-")
Including: investment income
in associates and joint ventures
Gains from
derecognition of financial assets
measured at amortized cost
Gains from net exposure hedging
(loss expressed with "-")
Gains from changes in fair value
452,371.07 -7,049,098.87
(loss expressed with "-")
Credit impairment loss (loss
-2,701,198.72 -1,004,071.90
expressed with "-")
Losses from impairment of assets
-6,694,294.85 -449,231.75
(loss expressed with "-")
Income from asset disposal (loss
-92,272.68 -177,330.46
expressed with "-")
II. Operating profit (loss expressed with 13,181,130.64 55,407,882.57
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ZKTeco 2024 Half Year Report
"-")
Plus: non-operating income 2,032,935.23 132,788.43
Less: non-operating expenditure 126,963.88 217,320.55
III. Total profits (total losses expressed
15,087,101.99 55,323,350.45
with "-")
Less: income tax expenses -5,893,764.58 -2,969,189.55
IV. Net profit (net loss expressed with "-
20,980,866.57 58,292,540.00
")
(I) Net profit from continuing
20,980,866.57 58,292,540.00
operations (net loss expressed with "-")
(II) Net profit from discontinued
operations (net loss expressed with "-")
V. Net of tax of other comprehensive
income
Other comprehensive income that
cannot be transferred to profit or loss
1. Changes in re-measurement of
the defined benefit plan
2. Other comprehensive income
that cannot be transferred to profit or loss
under the equity method
3. Changes in fair value of other
equity instrument investments
4. Changes in the fair value of the
Company's own credit risk
5. Other
(2) Other comprehensive income
that will be reclassified into profit or loss
1. Other comprehensive income
that can be transferred to profit or loss
under the equity method
2. Changes in fair value of other
debt investments
3. Amount of financial assets
reclassified into other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
6. Translation difference of
foreign currency financial statements
7. Others
VI. Total comprehensive income 20,980,866.57 58,292,540.00
VII. EPS:
(I) Basic EPS
(II) Diluted EPS
5. Consolidated Cash Flow Statement
Unit: RMB
Item Half Year of 2024 Half Year of 2023
I. Cash flows from operating activities:
Cash received from sale of goods and
987,598,999.46 971,520,477.90
rendering of services
Net increase in deposits from
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ZKTeco 2024 Half Year Report
customers and deposits in banks and
other financial institutions
Net increase in borrowings from the
Central Bank
Net increase in borrowings from banks
and other financial institutions
Cash received from receiving
insurance premiums of original insurance
contracts
Net cash received from reinsurance
business
Net increase in deposits and
investments from policyholders
Cash received from interest, handling
fees and commissions
Net increase in borrowings from banks
and other financial institutions
Net capital increase in repurchase
business
Net cash received from vicariously
traded securities
Refund of taxes and surcharges 38,702,440.49 33,538,290.52
Cash received from other operating
42,692,501.49 23,184,790.91
activities
Subtotal of cash inflows from operating
1,068,993,941.44 1,028,243,559.33
activities
Cash paid for purchase of goods and
513,173,787.14 464,265,830.40
rendering of services
Net increase in loans and advances to
customers
Net increase in deposits in Central
Bank and other banks and financial
institutions
Cash paid for original insurance
contract claims
Net increase in lendings to banks and
other financial institutions
Cash paid for interest, handling fees
and commissions
Cash paid for policy dividends
Cash paid to and for employees 289,353,780.70 275,369,361.95
Payments of all types of taxes 50,283,470.29 35,397,636.97
Other cash payments relating to
149,550,581.46 122,480,702.89
operating activities
Subtotal of cash outflows from operating
1,002,361,619.59 897,513,532.21
activities
Net cash flows from operating activities 66,632,321.85 130,730,027.12
II. Cash flows from investing activities:
Cash received from disinvestment 522,835,114.48 509,707,506.64
Cash received from investment
3,280,492.40 1,864,089.86
income
Net cash received from disposal of
64,151.25 280,330.67
fixed assets, intangible assets and other
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ZKTeco 2024 Half Year Report
long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
68,155.00 0.00
activities
Subtotal of cash inflows from investing
526,247,913.13 511,851,927.17
activities
Cash paid to acquire and construct
fixed assets, intangible assets and other 122,974,400.98 54,738,953.74
long-term assets
Cash paid for investments 649,403,947.08 554,750,509.91
Net increase in pledge loans
Net cash paid to acquire subsidiaries
and other business units
Cash paid for other investing activities 2,046,795.00
Subtotal of cash outflows from investing
772,378,348.06 611,536,258.65
activities
Net cash flows from investing activities -246,130,434.93 -99,684,331.48
III. Cash flows from financing activities:
Cash received from investors 1,415,200.02
Including: cash received by
subsidiaries from the absorption of 1,415,200.02
minority shareholders' investments
Cash received from borrowings 3,700,000.00
Cash received from other financing
3,512,381.80 0.00
activities
Subtotal of cash inflows from financing
3,512,381.80 5,115,200.02
activities
Cash paid for debt repayments 494,458.32 26,952.47
Cash paid for distribution of dividends
97,339,032.69 64,829,721.10
and profits or payment of interest
Including: dividends and profits paid
10,655,807.14 12,806,836.00
to minority shareholders by subsidiaries
Cash paid for other financing activities 78,886,895.58 16,527,983.10
Subtotal of cash outflows from financing
176,720,386.59 81,384,656.67
activities
Net cash flows from financing activities -173,208,004.79 -76,269,456.65
IV. Effect of exchange rate changes on
2,155,653.57 7,540,644.43
cash and cash equivalents
V. Net increase in cash and cash
-350,550,464.30 -37,683,116.58
equivalents
Plus: beginning balance of cash and
1,317,020,553.02 1,077,608,258.10
cash equivalents
VI. Closing balance of cash and cash
966,470,088.72 1,039,925,141.52
equivalents
6. Cash Flow Statement of the Parent Company
Unit: RMB
Item Half Year of 2024 Half Year of 2023
I. Cash flows from operating activities:
Cash received from sale of goods and
686,692,249.18 730,327,882.57
rendering of services
Refund of taxes and surcharges 20,889,299.35 30,787,233.30
Cash received from other operating
55,574,317.42 13,045,527.91
activities
101
ZKTeco 2024 Half Year Report
Subtotal of cash inflows from operating
763,155,865.95 774,160,643.78
activities
Cash paid for purchase of goods and
454,533,033.49 471,387,756.01
rendering of services
Cash paid to and for employees 118,642,728.71 126,389,611.09
Payments of all types of taxes 3,888,977.04 2,854,237.65
Other cash payments relating to
112,488,304.96 169,870,087.91
operating activities
Subtotal of cash outflows from operating
689,553,044.20 770,501,692.66
activities
Net cash flows from operating activities 73,602,821.75 3,658,951.12
II. Cash flows from investing activities:
Cash received from disinvestment 30,000,000.00 406,011,800.00
Cash received from investment
9,155,000.00 10,743,851.37
income
Net cash received from disposal of
fixed assets, intangible assets and other 3,535.05 178,820.17
long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
68,155.00 0.00
activities
Subtotal of cash inflows from investing
39,226,690.05 416,934,471.54
activities
Cash paid to acquire and construct
fixed assets, intangible assets and other 15,884,167.26 1,659,867.55
long-term assets
Cash paid for investments 215,070,884.43 364,000,000.00
Net cash paid to acquire subsidiaries
0.00
and other business units
Cash paid for other investing activities 0.00 2,046,795.00
Subtotal of cash outflows from investing
230,955,051.69 367,706,662.55
activities
Net cash flows from investing activities -191,728,361.64 49,227,808.99
III. Cash flows from financing activities:
Cash received from investors 0.00
Cash received from borrowings 0.00
Cash received from other financing
0.00 0.00
activities
Subtotal of cash inflows from financing
0.00 0.00
activities
Cash paid for debt repayments 0.00 0.00
Cash paid for distribution of dividends
86,602,278.60 51,972,217.85
and profits or payment of interest
Cash paid for other financing activities 63,228,099.14 5,671,917.65
Subtotal of cash outflows from financing
149,830,377.74 57,644,135.50
activities
Net cash flows from financing activities -149,830,377.74 -57,644,135.50
IV. Effect of exchange rate changes on
3,239,301.33 1,493,480.05
cash and cash equivalents
V. Net increase in cash and cash
-264,716,616.30 -3,263,895.34
equivalents
Plus: beginning balance of cash and
875,420,293.96 731,506,487.43
cash equivalents
VI. Closing balance of cash and cash
610,703,677.66 728,242,592.09
equivalents
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ZKTeco 2024 Half Year Report
7. Consolidated Statement of Changes in Equity
Amount in current period
Unit: RMB
Half Year of 2024
Equity attributable to owners of the parent company
Other equity
instruments
Item Gener
Other Minority
Per Total owner's equity
Less: treasury Special Surplus al risk Undistributed
Share capital Capital reserve comprehensiv Others Subtotal interests
Prefe pet Ot
stock reserve reserves reserv profits
rred ual her e income
es
stock bo s
nds
Ending balance
194,679,508.00 2,075,479,375.13 784,700.00 28,000,959.19 60,455,422.50 907,583,024.38 3,265,413,589.20 25,375,754.08 3,290,789,343.28
of previous year
Plus: changes in
accounting
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 194,679,508.00 2,075,479,375.13 784,700.00 28,000,959.19 60,455,422.50 907,583,024.38 3,265,413,589.20 25,375,754.08 3,290,789,343.28
year
III. Amount
increase/decrease
of the current
7,628,802.61 58,898,528.10 -5,722,101.19 -7,964,551.27 -64,956,377.95 3,464,440.02 -61,491,937.93
period (decrease
expressed with "-
")
(I) Total
comprehensive -5,722,101.19 78,637,727.33 72,915,626.14 7,120,366.27 80,035,992.41
income
103
ZKTeco 2024 Half Year Report
(II) Capital
invested and
7,628,802.61 58,898,528.10 0.00 -51,269,725.49 6,999,880.89 -44,269,844.60
reduced by the
owners
1. Common
stock contributed 58,898,528.10 -58,898,528.10 0.00 -58,898,528.10
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payments 7,628,802.61 7,628,802.61 136,509.00 7,765,311.61
recognized in
equity
4. Others 6,863,371.89 6,863,371.89
(III) Profit
-86,602,278.60 -86,602,278.60 -10,655,807.14 -97,258,085.74
distribution
1. Surplus
reserves
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
owners (or -86,602,278.60 -86,602,278.60 -10,655,807.14 -97,258,085.74
shareholders)
4. Others
(IV) Internal
carryover of
owner's equity
1. Capital surplus
transfer to capital
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ZKTeco 2024 Half Year Report
(or equity
capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of 194,679,508.00 2,083,108,177.74 59,683,228.10 22,278,858.00 0.00 60,455,422.50 0.00 899,618,473.11 0.00 3,200,457,211.25 28,840,194.10 3,229,297,405.35
current period
Amount of previous year
Unit: RMB
105
ZKTeco 2024 Half Year Report
Half Year of 2023
Equity attributable to owners of the parent company
Item Other equity instruments Minority Total owner's
Less: Other General
Special Surplus Undistributed
Share capital Capital reserve treasury comprehensive risk Others Subtotal interests equity
Preferred Perpetual
Others reserve reserves profits
stock bonds stock income reserves
Ending balance
148,492,051.00 0.00 0.00 0.00 2,061,172,912.28 0.00 5,255,222.65 0.00 53,975,085.77 0.00 788,571,917.98 0.00 3,057,467,189.68 43,025,126.30 3,100,492,315.98
of previous year
Plus: changes in
accounting -1,046.84 254,641.11 253,594.27 30,716.63 284,310.90
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 148,492,051.00 0.00 0.00 0.00 2,061,172,912.28 0.00 5,254,175.81 0.00 53,975,085.77 0.00 788,826,559.09 0.00 3,057,720,783.95 43,055,842.93 3,100,776,626.88
year
III. Amount
increase/decrease
of the current
44,547,615.00 0.00 0.00 0.00 -25,540,642.17 0.00 21,315,590.14 0.00 0.00 0.00 36,782,117.77 0.00 77,104,680.74 2,939,640.76 80,044,321.50
period (decrease
expressed with "-
")
(I) Total
comprehensive 21,315,590.14 88,754,335.62 110,069,925.76 14,304,348.82 124,374,274.58
income
(II) Capital
invested and
0.00 0.00 0.00 0.00 19,006,972.83 0.00 0.00 0.00 0.00 0.00 0.00 0.00 19,006,972.83 1,442,127.94 20,449,100.77
reduced by the
owners
1. Common
stock contributed 0.00 1,415,200.02 1,415,200.02
by owners
2. Capital
invested by
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ZKTeco 2024 Half Year Report
holders of other
equity
instruments
3. Amount of
share-based
payments 18,876,651.21 18,876,651.21 26,927.92 18,903,579.13
recognized in
equity
4. Others 130,321.62 130,321.62 130,321.62
(III) Profit -
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -51,972,217.85 0.00 -51,972,217.85 -64,779,053.85
distribution 12,806,836.00
1. Surplus
reserves 0.00 0.00 0.00
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
-
owners (or -51,972,217.85 -51,972,217.85 -64,779,053.85
12,806,836.00
shareholders)
4. Others
(IV) Internal
carryover of 44,547,615.00 0.00 0.00 0.00 -44,547,615.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
owner's equity
1. Capital
surplus transfer
44,547,615.00 -44,547,615.00
to capital (or
equity capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
107
ZKTeco 2024 Half Year Report
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of 193,039,666.00 0.00 0.00 0.00 2,035,632,270.11 0.00 26,569,765.95 0.00 53,975,085.77 0.00 825,608,676.86 0.00 3,134,825,464.69 45,995,483.69 3,180,820,948.38
current period
8. Statement of Changes in Equity of the Parent Company
Amount in current period
Unit: RMB
Half Year of 2024
Other equity instruments Other
Item Less: treasury Special Surplus Undistributed Total owner's
Share capital Preferred Perpetual Capital reserve comprehensive Others
Others stock reserve reserves profits equity
stock bonds income
Ending balance
194,679,508.00 2,085,198,988.61 784,700.00 60,364,126.01 484,336,562.43 2,823,794,485.05
of previous year
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ZKTeco 2024 Half Year Report
Plus: changes in
accounting
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 194,679,508.00 2,085,198,988.61 784,700.00 60,364,126.01 484,336,562.43 2,823,794,485.05
year
III. Amount
increase/decrease
of the current
6,573,698.77 58,898,528.10 -65,621,412.03 -117,946,241.36
period (decrease
expressed with "-
")
(I) Total
comprehensive 20,980,866.57 20,980,866.57
income
(II) Capital
invested and
6,573,698.77 58,898,528.10 -52,324,829.33
reduced by the
owners
1. Common
stock contributed 58,898,528.10 -58,898,528.10
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payments 6,573,698.77 6,573,698.77
recognized in
equity
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ZKTeco 2024 Half Year Report
4. Others
(III) Profit
-86,602,278.60 -86,602,278.60
distribution
1. Surplus
reserves 0.00
withdrawal
2. Distribution to
owners (or -86,602,278.60 -86,602,278.60
shareholders)
3. Others 0.00
(IV) Internal
carryover of 0.00
owner's equity
1. Capital
surplus transfer
0.00
to capital (or
equity capital)
2. Surplus
reserve transfer
0.00
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
110
ZKTeco 2024 Half Year Report
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of 194,679,508.00 2,091,772,687.38 59,683,228.10 60,364,126.01 418,715,150.40 2,705,848,243.69
current period
Amount of previous period
Unit: RMB
Half Year of 2023
Other equity instruments Less: Other
Item Special Surplus Undistributed Total owner's
Share capital Preferred Perpetual Capital reserve treasury comprehensive Others
Others reserve reserves profits equity
stock bonds stock income
Ending balance
148,492,051.00 0.00 0.00 0.00 2,073,269,021.41 0.00 0.00 0.00 53,883,789.28 478,054,103.62 2,753,698,965.31
of previous year
Plus: changes in
accounting -39,162.22 -39,162.22
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 148,492,051.00 0.00 0.00 0.00 2,073,269,021.41 0.00 0.00 0.00 53,883,789.28 478,014,941.40 2,753,659,803.09
year
III. Amount
increase/decrease
44,547,615.00 0.00 0.00 0.00 -25,777,444.38 0.00 0.00 0.00 0.00 6,320,322.15 25,090,492.77
of the current
period (decrease
111
ZKTeco 2024 Half Year Report
expressed with "-
")
(I) Total
comprehensive 58,292,540.00 58,292,540.00
income
(II) Capital
invested and
0.00 0.00 0.00 0.00 18,770,170.62 0.00 0.00 0.00 0.00 18,770,170.62
reduced by the
owners
1. Common
stock contributed
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payments 18,770,170.62 18,770,170.62
recognized in
equity
4. Others
(III) Profit
-51,972,217.85 -51,972,217.85
distribution
1. Surplus
reserves 0.00
withdrawal
2. Distribution to
owners (or -51,972,217.85 -51,972,217.85
shareholders)
3. Others
(IV) Internal
carryover of 44,547,615.00 -44,547,615.00 0.00
owner's equity
112
ZKTeco 2024 Half Year Report
1. Capital
surplus transfer
44,547,615.00 -44,547,615.00 0.00
to capital (or
equity capital)
2. Surplus
reserve transfer
0.00
to capital (or
equity capital)
3. Surplus
reserve offsetting 0.00
losses
4. Changes in
defined benefit
plans carried 0.00
forward to
retained earnings
5. Retained
income carried
forward from
0.00
other
comprehensive
income
6. Others 0.00
(V) Special
0.00
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of 193,039,666.00 2,047,491,577.03 53,883,789.28 484,335,263.55 2,778,750,295.86
current period
113
ZKTeco 2024 Half Year Report
III. Basic Information of the Company
1. Company registration location, organizational form and headquarters address
ZKTECO CO., LTD. (hereinafter referred to as "Company" or "the Company"), formerly known as Dongguan Zhongkong
Electronic Technology Co., Ltd., was approved by the Dongguan Administration for Market Regulation on July 14, 2016. It was jointly
established by Shenzhen ZKTeco Times Investment Co., Ltd., Che Quanhong, and Che Jun. The Company was listed on the Shenzhen
Stock Exchange on August 17, 2022 and currently holds a business license with a unified social credit code of 914419006698651618.
As of June 30, 2024, the Company has issued a total of 194,679,508.00 shares of share capital after years of converting into share
capital and issuing new shares, with a registered capital of RMB 194,679,508.00. The registered address is: No. 32, Pingshan Industrial
Road, Tangxia Town, Dongguan, Guangdong, China. The parent company is Shenzhen ZKTeco Times Investment Co., Ltd., and the
actual controller is Che Quanhong.
2. Nature of business and main operating activities of the Company
The Company belongs to the computer, communication and other electronic equipment manufacturing industries, mainly engaged
in the R&D, design, production, sales and services of computer vision and biometric technology and related products.
3. Scope of consolidated financial statements
There are 62 subsidiaries incorporated in the consolidation scope of the Company in current period, as detailed in Note X "Rights
and Interests in Other Entities". Compared to the previous period, the number of entities included in the scope of consolidated financial
statements in the current period increased by 2 and decreased by 1. For specific information on the entities subject to changes in the
scope of consolidation, please refer to Note IX Changes in Consolidation Scope.
4. Approval of financial statements
This financial statement was approved by the Board of Directors of the Company on August 28, 2024.
IV. Preparation Basis for Financial Statements
1. Basis of preparation
Based on actual transactions and events, the Company recognizes and measures them in accordance with the "Accounting
Standards for Enterprises - Basic Standards" issued by the Ministry of Finance, specific enterprise accounting standards, application
guidelines for Accounting Standards for Enterprises, interpretations of Accounting Standards for Enterprises, and other relevant
regulations (hereinafter collectively referred to as "Accounting Standards for Enterprises"). On this basis, we prepare financial
statements in accordance with the provisions of the "Preparation Rules for Information Disclosure by Companies Offering Securities
to the Public No. 15 - General Provisions on Financial Reports" (revised in 2023) issued by China Securities Regulatory Commission.
2. Going concern
The Company has evaluated the going-concern ability in 12 months from the end of the reporting period, and fails to find the
significant suspicious matters or situations on going-concern ability. Therefore, the Financial Statements were prepared on the basis of
going-concern hypothesis.
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ZKTeco 2024 Half Year Report
V. Important Accounting Policies and Estimates
Tips of specific accounting policies and estimates:
The specific accounting policies and estimates formulated by the Company based on the actual production and operation
characteristics include operating cycle, recognition and measurement of bad debt reserves for accounts receivable, inventories
measurement, classification and depreciation methods of fixed assets, amortization of intangible assets, revenue recognition and
measurement, etc.
1. Declaration of compliance with Accounting Standards for Business Enterprises
The financial statement prepared by the Company meets the requirements of Accounting Standards for Enterprises, and
authentically and completely reflects financial position, business performance, cash flow and other relative information on the
Company during the reporting period.
2. Accounting period
The accounting year is from January 1 to December 31 in calendar year.
3. Operating cycle
The Company's operating cycle is 12 months.
4. Recording currency
Renminbi is adopted as the recording currency.
Overseas subsidiaries use the currency of the main economic environment in which they operate as the recording currency and
convert it into RMB when preparing financial statements.
5. Method for recognizing significance criteria and selection basis
Applicable □ Not applicable
Item Significance criteria
The amount of individual construction in progress exceeds 1%
Important construction in progress
of the total assets
The amount of individual receivables exceeds 1% of the total
Receivables with individual provision for significant items
assets
Other important payables with an aging of over one year Other individual payables exceeding 1% of total assets
The amount of individual accounts payable exceeds 1% of the
Important accounts payable with an aging of over one year
total assets
Important partly-owned subsidiaries The proportion of total revenue and total profit exceeds 10%
The amount of individual prepayments exceeds 1% of the total
Important prepayments with an aging of over one year
assets
The amount of individual contract liabilities exceeds 1% of the
Important contract liabilities with an aging of over one year
total assets
The carrying amount of long-term equity investment exceeds
Important joint ventures or associates
5% of the total assets
Significant cash flows from investing activities The amount of cash flows from individual investing activities
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ZKTeco 2024 Half Year Report
exceeds 1% of the total assets
6. Accounting treatment methods of business merger under the common control and merger under different
control
(1)The terms, conditions, and economic impact of various transactions related to the step by step implementation of
various transactions in the process of business merger in one or more of the following circumstances usually indicate that
multiple transactions shall be accounted for as a package deal
1) These transactions were entered into simultaneously or taking into account mutual influence;
2) These transactions as a whole can achieve a complete business result;
3) The occurrence of a transaction depends on the occurrence of at least one other transaction;
4) A transaction alone is not economical, but it is economic when considered with other transactions.
(2) Business merger under the common control
The enterprises involved in the combination are subject to the same party or ultimate parties before and after the merger,
meanwhile the control is not temporary, this business combination is under the same control.
The assets and liabilities obtained by the Company in the business merger shall be measured according to the book value of the
assets and liabilities of the combined party (including the goodwill formed by the acquisition of the combined party by the ultimate
controller) in the consolidated financial statements of the ultimate controller on the combination date. The stock premium in capital
reserves is adjusted according to the difference between the book value of net assets acquired through combination and the book value
of consideration paid for the combination (or total par value of shares issued). If the stock premium in capital reserves is insufficient
to cover the difference, the remaining amount will be charged against retained earnings.
If there is a contingent consideration and an estimated liability or asset needs to be recognized, the difference between the
estimated liability or asset amount and the subsequent settlement amount of the contingent consideration shall be adjusted to the capital
reserve (capital premium or share premium). If the capital reserve is insufficient, the retained earnings shall be adjusted.
Where a business merger is ultimately achieved through multiple transactions, and it belongs to a "package deal", each transaction
shall be treated as a transaction to obtain control for accounting treatment; if it does not belong to a "package deal", on the date of
obtaining control, the difference between the initial investment cost of the long-term equity investment and the sum of the book value
of the long-term equity investment before the merger plus the book value of the new payment for the shares obtained on the combination
date shall be adjusted to the capital reserve; if the capital reserve is insufficient to offset, the retained earnings shall be adjusted. For
equity investments held before the combination date, other comprehensive income recognized using the equity method or financial
instrument recognition and measurement standards will not be subject to accounting treatment until the disposal of the investment is
carried out on the same basis as the direct disposal of relevant assets or liabilities by the investee; other changes in owner's equity in
the net assets of the investee recognized using the equity method, except for net profit or loss, other comprehensive income, and profit
distribution, will not be accounted for until the investment is disposed of and transferred to the current profits and losses.
(3) Business merger not under common control
The enterprises involved in the combination are not subject to the same party or ultimate parties before and after the merger, this
business combination is not under the same control.
On the date of acquisition, the Company shall measure the assets paid, liabilities incurred or assumed as the consideration for
business combination at fair value, and the difference between the fair value and its book value shall be included in current profits and
losses.
The difference between the merger cost and the fair value of the identifiable net assets obtained from the acquiree is recognized
as goodwill by the Company. If the merger cost is less than the fair value share of the identifiable net assets obtained from the acquiree
in the merger, the fair values of the identifiable assets, liabilities, and contingent liabilities obtained from the acquiree, as well as the
116
ZKTeco 2024 Half Year Report
measurement of the merger cost, are first reviewed. After review, if the merger cost is still less than the fair value share of the
identifiable net assets obtained from the acquiree in the merger, the difference is included in current profits and losses.
If the merger under different control achieved through multiple exchange transactions in steps belongs to a "package deal", each
transaction shall be treated as a transaction to obtain control for accounting treatment. For equity investments held before the
combination date that do not belong to a package deal and are accounted for using the equity method, the initial investment cost of the
investment shall be the sum of the book value of the equity investment held by the acquiree before the date of acquisition and the new
investment cost on the date of acquisition. The other comprehensive income recognized by the equity investment held on the date of
acquisition due to the equity method is used for accounting treatment on the same basis as the direct disposal of related assets or
liabilities by the investee when the asset is disposed of. If the equity investments held before the combination date are accounted for
using financial instrument recognition and measurement standards, the initial investment cost on the combination date shall be the sum
of the fair value of the equity investment on the combination date and the new investment cost. The difference between the fair value
and book value of the originally held equity, as well as the cumulative fair value changes originally recognized in other comprehensive
income, shall be fully transferred to the current investment income on the combination date.
(4) Related expenses incurred for the merger
The agency fees for auditing, legal services, evaluation and consulting, as well as other directly related expenses incurred for the
merger of enterprises, shall be included in current profits and losses at the time of occurrence; the transaction costs of issuing equity
securities for enterprise mergers can be directly attributed to equity transactions and deducted from equity.
7. Judgment criteria for control and preparation methods for consolidated financial statements
(1) Judgment criteria for control
Control means the investor has the power over the investee and enjoys the variable return through participating in activities
related to the investee, and has the ability to the investor's return by using the power over the investee.
The Company makes a judgment on whether to control the investee based on comprehensive consideration of all relevant facts
and circumstances. Once changes in the related facts and circumstances have resulted in a variation to the relevant factors involved in
the aforesaid control definition, the Company shall perform reappraisal. The relevant facts and situations mainly include:
1) The purpose of the establishment of the investee.
2) The relevant activities of the investee and how to make decisions regarding these activities.
3) Whether the rights enjoyed by the investor currently enable them to lead the relevant activities of the investee.
4) Whether the investor enjoys variable returns by participating in related activities of the investee.
5) Whether the investor has the ability to exercise the power over the investee to affect its return amount.
6) The relationship between the investor and other parties.
(2) Consolidation scope
The consolidation scope of the Company's consolidated financial statements is determined based on control, and all subsidiaries
(including separate entities controlled by the Company) are included in the consolidated financial statements.
(3) Consolidation procedure
The Company prepares consolidated financial statements based on the financial statements of itself and its subsidiaries, and other
relevant information. The Company prepares consolidated financial statements, treating the entire enterprise group as one accounting
entity. In accordance with the recognition, measurement, and presentation requirements of relevant Accounting Standards for
Enterprises, and in accordance with unified accounting policies, we reflect the overall financial position, operating results, and cash
flows of the enterprise group.
The accounting policies and accounting periods adopted by all subsidiaries included in the scope of consolidated financial
statements are consistent with those of the Company. If the accounting policy or accounting period of any subsidiary is different from
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that of the Company, the consolidated financial statements of the subsidiary, upon preparation, will be adjusted according to the
accounting policy and accounting period of the Company.
When consolidating financial statements, we offset the impact of internal transactions between the Company and its subsidiaries,
as well as between subsidiaries, on the consolidated balance sheet, consolidated income statement, consolidated cash flow statement,
and consolidated statement of changes in shareholders' equity. If the recognition of the same transaction from the perspective of the
consolidated financial statements of the enterprise group is different from that of the accounting entity of the Company or its
subsidiaries, the transaction shall be adjusted from the perspective of the enterprise group.
The share of owners' equity, current net profit or loss and current comprehensive income of subsidiaries attributable to minority
owners are respectively and separately presented under the owner's equity in the consolidated balance sheet, the net profit in the
consolidated income statement, and the total comprehensive income in the consolidated income statement. If the current losses shared
by a minority shareholder of a subsidiary exceed the balances arising from the shares enjoyed by the minority shareholder in the owners'
equity of the subsidiary at the beginning of the period, minority shareholders' equity will be offset accordingly.
For subsidiaries acquired through a merger of enterprises under the same control, adjustments are made to their financial
statements based on the book value of their assets and liabilities (including goodwill formed by the ultimate controller's acquisition of
the subsidiary) in the ultimate controller's financial statements.
1) Increase of subsidiaries or business
During the reporting period, if a subsidiary or business is added due to a merger of enterprises under the same control, the opening
balance of the consolidated balance sheet shall be adjusted; the income, expenses, and profits of subsidiaries or businesses from the
beginning of the current period to the end of the reporting period are incorporated into the consolidated income statement; the cash
flows of subsidiaries or businesses from the beginning of the current period to the end of the reporting period are included in the
consolidated cash flow statement, and the relevant items in the comparative statements are adjusted, as if the merged reporting entity
has existed since the point when the ultimate controller began to control.
If it is possible to exercise control over the investee under the same control due to additional investment or other reasons, it shall
be deemed that the parties participating in the merger have made adjustments in their current state when the ultimate controller began
to control. Equity investments held before obtaining the control over the combined party, relevant gains or losses and other
comprehensive income recognized from the later of the date when the original equity is obtained or the date when the combining party
and the combined party are under the same control to the combination date and other changes in net assets will respectively be used to
offset the retained earnings at the beginning of period for the comprehensive financial statements or the current profit or loss.
During the reporting period, if a subsidiary or business is added due to a merger under different control, the opening balance of
the consolidated balance sheet shall not be adjusted; the income, expenses, and profits of subsidiaries or businesses from the date of
acquisition to the end of the reporting period are incorporated into the consolidated income statement; the cash flows of subsidiaries or
businesses from the date of acquisition to the end of the reporting period are included in the consolidated cash flow statement.
If the control can be exercised over the investee not under common control as a result of additional investments and other reasons,
the equity of the acquiree held before the date of acquisition will be remeasured by the Company at the fair value of such equity on the
date of acquisition, and the difference between the fair value and book value of such equity will be included in the current investment
income. If the equity of the acquiree held before the date of acquisition involves other comprehensive income accounted for under the
equity method, as well as other changes in owner's equity other than net profit and loss, other comprehensive income, and profit
distribution, the related other comprehensive income and other changes in owner's equity shall be converted into current investment
income on the date of acquisition, except for other comprehensive income arising from the remeasurement of net liability or net asset
changes of the defined benefit plan by the investee.
2) Disposal of subsidiaries or businesses
① General disposal method
During the reporting period, if the Company disposed of a subsidiary or business, the income, expenses and profits of the
subsidiary or business from the beginning of the period to the disposal date were included in the Consolidated Income Statement the
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cash flow of the subsidiary or business from the beginning of the period to the disposal date is included in the consolidated cash flow
statement.
In the event the Company loses the right of control over the investee due to disposal of partial equity investment or other reasons,
the remaining equity investment shall be re-measured at the fair value on the date of loss of control. The difference by using the sum
of value received from disposal of equity and fair value of the residual equity to deduct the difference between the share of net assets
and the sum of goodwill continually counted from the acquisition date or combination date of the original subsidiary (calculated as per
original share proportion) shall be recorded into the investment income of the current period in which the control right is lost. Other
comprehensive income related to equity investments in existing subsidiaries or changes in owner's equity other than net profit or loss,
other comprehensive income, and profit distribution shall be converted into current investment income when control is lost, except for
other comprehensive income arising from the remeasurement of net liability or net asset changes in the defined benefit plan by the
investee.
② Disposal of subsidiaries step by step
For the various deals for step-by-step equity investment disposal that lead to the loss of control over the subsidiary, the terms,
conditions, and economic impact of various transactions related to the disposal of equity investments in subsidiaries in one or more of
the following circumstances usually indicate that multiple transactions shall be accounted for as a package deal:
A. These transactions were entered into simultaneously or taking into account mutual influence;
B. These transactions as a whole can achieve a complete business result;
C. The occurrence of a transaction depends on the occurrence of at least one other transaction;
D. A transaction alone is not economical, but it is economic when considered with other transactions.
If all transactions involving the disposal of equity investment in subsidiaries until the loss of control right are treated as a package
deal, the Company shall treat each transaction as the one involving the disposal of subsidiaries and the loss of control right for
accounting treatment. However, the difference between each disposal price and the share of the subsidiary's net assets corresponding
to the investment disposal before the loss of control right shall be recognized as other comprehensive income in the consolidated
financial statements, and shall be transferred into the current profits and losses when the control right is lost.
If various transactions on disposal of the equity investment of the Company before the loss of control do not belong to a package
deal, before loss of control, accounting treatment shall be conducted as per the relevant policy of the disposal of part of equity
investment in subsidiaries without loss of control; for loss of control, accounting treatment shall be conducted as per the general disposal
method for subsidiaries.
3) Purchase of minority shares of subsidiaries
For the difference between the newly increased long-term equity investment from the acquisition of minority equity and the share
of net assets in the subsidiary calculated constantly from the date of acquisition (or combination date) as per the newly increased equity
ratio, the share premium in capital reserves in the consolidated balance sheet shall be adjusted; where such share premium is insufficient
to offset the difference, the retained earnings shall be adjusted.
4) Disposal of partial equity investment in subsidiaries without loss of control
Without losing control, the difference between the disposal price obtained from the partial disposal of long-term equity investment
in subsidiaries and the share of net assets continuously calculated by subsidiaries from the date of acquisition or the combination date
corresponding to the disposal of long-term equity investment shall be adjusted for the share premium in the capital reserve in the
consolidated balance sheet. If the share premium in the capital reserve is insufficient to offset, the retained earnings shall be adjusted.
8. Classification of joint venture arrangement and accountant treatment method of joint operation
(1) Classification of joint venture arrangements
The Company divides the joint venture arrangement into joint operation and joint venture based on factors such as the structure,
legal form, provisions stipulated in the joint venture arrangement, other relevant facts and circumstances. Joint operations refer to an
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arrangement that the joint party enjoys the assets related to such arrangement and bears the liabilities related to such arrangement. Joint
venture refers to a joint venture arrangement in which the joint venture party only has rights to the net assets of the arrangement.
(2) Accounting treatment of joint operations
The Company confirms the following items related to the share of interests in joint operations and conducts accounting treatment
in accordance with the relevant Accounting Standards for Enterprises:
1) Recognize the assets held separately and the assets held jointly according to their shares;
2) Recognize the liabilities assumed separately and the liabilities assumed jointly according to their shares;
3) Recognize the income generated by the sale of its share of joint operating output;
4) Recognize the income generated by the sale of output in the joint operation according to its share;
5) Recognize the expenses incurred separately and the expenses incurred in joint operation according to their share.
9. Recognition criteria of cash and cash equivalents
When preparing the cash flow statement, the Company recognizes the cash on hand and deposits that can be used for payment at
any time as cash. Investments with short term (generally due within three months from the date of acquisition), strong liquidity, easy
conversion to known amounts of cash and little risk of value change (four conditions) are recognized as cash equivalents.
10. Foreign currency transactions and foreign currency statement translation
(1) Foreign currency transaction
When foreign currency transaction is initially recognized, the spot exchange rate on the transaction date is used as the conversion
rate to convert the foreign currency amount into RMB for bookkeeping.
The foreign currency monetary items on the balance sheet date are translated at the spot exchange rate on the balance sheet date;
the resulting exchange differences are included in current profits and losses, except for the exchange differences arising from special
foreign currency borrowings related to the acquisition and construction of assets eligible for capitalization, which are treated in
accordance with the principle of capitalization of borrowing costs. Foreign currency non-monetary items measured at historical cost
shall still be converted at the spot exchange rate on the date of transaction, and the amount of their recording currency shall not be
changed.
Foreign currency non-monetary items measured at fair value shall be translated at the spot exchange rate on the date when the
fair value is determined. After conversion, the difference between the amount of recording currency and the amount of the original
recording currency shall be treated as a change in fair value (including changes in exchange rates) and included in current profits and
losses or recognized as other comprehensive income.
(2) Translation of foreign currency financial statements
The asset items and liability items in the balance sheet shall be translated at the exchange rate of the balance sheet date; the
owner's equity items, except for "undistributed profits", shall be translated at the spot rate when incurred. The income and expense
items in the Income Statement are translated at the average spot exchange rate. The translation difference of foreign currency financial
statements arising from the above conversion is included in other comprehensive income.
When disposing of overseas operations, the translation difference of foreign currency financial statements related to the overseas
operations listed in other comprehensive income items on the balance sheet shall be transferred from other comprehensive income
items to the current profit and loss for disposal. If the reduction of the proportion of interests held overseas but not losing control over
overseas operations is resulted from the disposing of partial equity investment or other reasons, the translation balance of foreign
currency financial statements related to such overseas operations shall be vested in minority equity and will not be transferred to current
profits and losses. When disposing of part of the equity of an overseas operation as a joint venture or associate, the conversion difference
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of foreign currency statements related to the overseas operation shall be transferred to the disposed current profits and losses according
to the proportion of the disposal of the overseas operation.
11. Financial instruments
A financial asset or financial liability is recognized when the Company becomes a party to a financial instrument contract.
The effective interest rate method refers to the method of calculating the amortized cost of financial assets or financial liabilities
and allocating interest income or interest expenses to each accounting period.
Actual interest rate refers to the interest rate used to discount the estimated future cash flows of a financial asset or financial
liability over its expected lifespan into the book balance of the financial asset or the amortized cost of the financial liability. When
determining the actual interest rate, it is necessary to estimate the expected cash flow based on all contract terms of financial assets or
liabilities (such as early repayment, extension, call options, or other similar options), but do not consider expected credit losses.
The amortized cost of a financial asset or financial liability is the accumulated amortization amount formed by deducting the
repaid principal from the initial recognition amount of the financial asset or financial liability, plus or minus the difference between
the initial recognition amount and the amount on the maturity date using the effective interest rate method, and then deducting the
accumulated provision for losses (only applicable to financial assets).
(1) Classification, recognition and measurement of financial assets
The Company categorizes financial assets into the following three categories based on their business model and contractual cash
flow characteristics:
1) Financial assets measured at the amortized cost.
2) Financial assets measured at fair value and whose changes are included in other comprehensive income.
3) Financial assets measured at fair value and whose changes are included in the current profits and losses.
Financial assets are measured at fair value upon initial recognition, but if the accounts receivable or notes receivable arising from
the sale of goods or provision of services do not include significant financing components or do not consider financing components for
a period not exceeding one year, they are initially measured at the transaction price.
For financial assets measured at fair value and whose changes are included in the current profits and losses, the related transaction
expense is directly included in current profits and losses. For other types of financial assets, related transaction costs are included in
the initial recognition amount.
The subsequent measurement of financial assets depends on their classification. All affected related financial assets are
reclassified only when the Company changes its business model of managing financial assets.
1) Classified as financial assets measured at the amortized cost
If the contract terms of a financial asset stipulate that the cash flows generated on a specific date are only payments of principal
and interest based on the unpaid principal amount, and the business model for managing the financial asset is aimed at collecting
contractual cash flows, then the Company classifies the financial asset as financial assets measured at the amortized cost. The Company
classifies financial assets as financial assets measured at the amortized cost, including monetary funds, notes receivable, accounts
receivable, other receivables, debt investments, long-term receivables, etc.
The Company recognizes interest income for such financial assets using the effective interest rate method and subsequently
measures them at amortized cost. Any gains or losses arising from impairment or derecognition or modification are included in current
profits and losses. Except for the following situations, the Company determines interest income based on the book balance of financial
assets multiplied by the actual interest rate:
① For financial assets that have been purchased or generated with credit impairment, the Company determines their interest
income from initial recognition based on the amortized cost of the financial asset and the actual interest rate adjusted by credit.
② For the financial asset purchased or originated without credit impairment but with credit impairment in the subsequent period,
the interest income shall be calculated and determined by the Company according to the amortized cost and the effective interest rate
of the financial asset in the subsequent period. If the financial instrument no longer experiences credit impairment due to an
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improvement in its credit risk in subsequent periods, the Company will calculate and determine interest income by multiplying the
actual interest rate by the book balance of the financial asset.
2) Classified as financial assets measured at fair value and whose changes are included in other comprehensive income
If the contract terms of a financial asset stipulate that the cash flow generated on a specific date is only the payment of principal
and interest based on the unpaid principal amount, and the business model for managing the financial asset is aimed at both collecting
contractual cash flow and selling the financial asset, the Company classifies the financial asset as financial assets measured at fair value
and whose changes are included in other comprehensive income.
The Company recognizes interest income for such financial assets using the effective interest rate method. Except for interest
income, impairment losses, and exchange differences recognized in current profits and losses, other fair value changes are recognized
in other comprehensive income. At the derecognition of the financial asset, the accumulated profits and losses previously included in
other comprehensive incomes are transferred and included in current profits and losses.
Notes receivable and accounts receivable measured at fair value with changes recognized in other comprehensive income are
reported as receivable financing, while other such financial assets are reported as other debt investments. Other debt investments that
mature within one year from the balance sheet date are reported as non-current assets that mature within one year, and other debt
investments that originally mature within one year are reported as other current assets.
3) Designated as financial assets measured at fair value and whose changes are included in other comprehensive income
At initial recognition, the Company may irrevocably designate non-trading equity instrument investments as financial assets
measured at fair value and whose changes are included in other comprehensive income based on individual financial assets.
The fair value changes of such financial assets are recognized in other comprehensive income and do not require provision for
impairment. At the derecognition of the financial asset, the accumulated profits and losses previously included in other comprehensive
incomes are transferred from there to the retained earnings. During the investment period of the equity instrument held by the Company,
when the right to receive dividends has been established and the economic benefits related to dividends are likely to flow into the
Company, and the amount of dividends can be reliably measured, dividend income is recognized and included in current profits and
losses. The Company reports this type of financial asset under other equity instrument investment items.
If equity instrument investment meets one of the following conditions, it belongs to financial assets measured at fair value and
whose changes are included in the current profits and losses: the main purpose of acquiring the financial asset is to sell it in the near
future; at initial recognition, it is a part of the identifiable financial asset instrument portfolio under centralized management, and there
is objective evidence to suggest the existence of short-term profit models in the near future; it belongs to derivative instruments
(excluding derivative instruments that meet the definition of financial guarantee contracts and are designated as effective hedging
instruments).
4) Classified as financial assets measured at fair value and whose changes are included in the current profits and losses
Financial assets that do not meet the criteria for classification as financial assets measured at fair value and whose changes are
included in other comprehensive income, and are not designated as financial assets measured at fair value and whose changes are
included in other comprehensive income, are classified as financial assets measured at fair value and whose changes are included in
the current profits and losses.
Financial assets that are measured at fair value and whose changes are included in the current profits and losses of the Company
will be subsequently measured at fair value; and the gains or losses resulting from changes in fair value, as well as dividends and
interest income related to the financial assets, shall be included in current profits and losses.
The Company reports such financial assets as trading financial assets and other non-current financial assets based on their
liquidity.
5) Designated as financial assets measured at fair value and whose changes are included in the current profits and losses
At initial recognition, in order to eliminate or significantly reduce accounting mismatches, the Company may irrevocably
designate financial assets as financial assets measured at fair value and whose changes are included in the current profits and losses on
an individual financial asset basis.
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If a mixed contract contains one or more embedded derivative instruments, and its main contract does not belong to the above
financial assets, the Company may designate it as a financial instrument measured at fair value with its changes included in current
profits and losses. Except for the following situations:
① Embedded derivative instruments will not cause significant changes to the cash flow of the mixed contract.
② When determining for the first time whether a similar mixed contract needs to be spun off, it is almost impossible to determine
whether the embedded derivative instruments included shall not be spun off without analysis. If embedded in the early repayment
right of a loan, the holder is allowed to repay the loan in an amount close to the amortized cost, and this early repayment right
does not need to be split.
Financial assets that are measured at fair value and whose changes are included in the current profits and losses of the Company
will be subsequently measured at fair value; and the gains or losses resulting from changes in fair value, as well as dividends and
interest income related to the financial assets, shall be included in current profits and losses.
The Company reports such financial assets as trading financial assets and other non-current financial assets based on their
liquidity.
(2) Classification, recognition and measurement of financial liabilities
The Company classifies financial instruments or their components as financial liabilities or equity instruments at initial
recognition based on the contract terms of the issued financial instruments and the economic substance reflected, rather than solely in
legal form, combined with the definitions of financial liabilities and equity instruments. Financial liabilities are classified at initial
recognition as financial liabilities measured at fair value and whose changes are included in the current profits and losses, other financial
liabilities, and derivative instruments designated as effective hedging instruments.
Financial liabilities are measured at fair value at initial recognition. For the financial liabilities measured at fair value and whose
changes are included in the current profits and losses, related transaction costs shall be directly included in current profits and losses.
For other financial liabilities, related transaction costs shall be recorded into the initially recognized amount.
The subsequent measurement of financial liabilities depends on their classification:
1) Financial liabilities measured at fair value and whose changes are included in the current profits and losses
This type of financial liability includes trading financial liabilities (including derivative instruments belonging to financial
liabilities) and financial liabilities measured at fair value and whose changes are included in the current profits and losses at initial
recognition.
If one of the following conditions is met, it belongs to trading financial liabilities: the main purpose of assuming relevant financial
liabilities is to sell or repurchase them in the near future; it belongs to part of an identifiable financial instrument portfolio under
centralized management, with objective evidence indicating that the Company has recently adopted a short-term profit model; it belongs
to derivative instruments, except for derivative instruments designated as effective hedging instruments and derivative instruments that
comply with financial guarantee contracts. Trading financial liabilities (including derivatives that are financial liabilities) are
subsequently measured at fair value. In addition to related to hedge accounting, changes in fair value are included in current profits and
losses.
At initial recognition, in order to provide more relevant accounting information, the Company irrevocably designates financial
liabilities that meet one of the following conditions as financial liabilities measured at fair value and whose changes are included in the
current profits and losses:
① It is possible to eliminate or significantly reduce accounting mismatches.
② Management and performance evaluation are conducted for the financial liability portfolio or the portfolio of financial assets
and financial liabilities based on fair value in accordance with the enterprise risk management or investment strategy specified in the
official written documents, and report to the key management personnel on this basis inside the enterprise.
The Company adopts fair value for subsequent measurement of such financial liabilities. Except for fair value changes caused by
changes in the Company's own credit risk, which are included in other comprehensive income, other fair value changes are included in
current profits and losses. Unless fair value changes caused by changes in the Company's own credit risk are included in other
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comprehensive income, which would cause or expand accounting mismatches in profit or loss, the company will include all fair value
changes (including the amount affected by changes in its own credit risk) in current profits and losses.
1) Other financial liabilities
Except for the following items, the Company classifies financial liabilities as financial liabilities measured at amortized costs,
and adopts the effective interest rate method for subsequent measurement at amortized cost. Gains or losses arising from derecognition
or amortization are included in current profits and losses.
① Financial liabilities measured at fair value and whose changes are included in the current profits and losses.
② The transfer of financial assets does not meet the conditions for derecognition or continues to involve financial liabilities
formed by the transferred financial assets.
③ Financial guarantee contracts that do not fall under the first two categories of this article, as well as loan commitments for
loans at interest rates lower than the market rate that do not fall under the first category of this article.
A financial guarantee contract refers to a contract in which the issuer is required to pay a specific amount to the contract holder
who has suffered losses when the specific debtor is unable to pay its debts at maturity in accordance with the terms of the original or
revised debt instrument. Financial guarantee contracts that do not belong to financial liabilities measured at fair value and whose
changes are included in the current profits and losses shall be measured at the higher of the loss provision amount or the initial
recognition amount minus the accumulated amortization amount during the guarantee period after initial recognition.
(3) Derecognition of financial assets and financial liabilities
1) If a financial asset meets one of the following conditions, it shall be derecognized and written off from its account and balance
sheet:
① The contractual rights for collecting the cash flow of the financial asset are terminated;
② The financial asset has been transferred and the transfer meets the requirements for derecognition of financial assets.
If the current obligation of a financial liability (or part of it) has been discharged, the recognition of the financial liability (or part
of it) shall be terminated.
If the Company signs an agreement with the lender to replace the original financial liability by assuming a new financial liability,
and the contract terms of the new financial liability are substantially different from those of the original financial liability, or if there
are substantial modifications to the contract terms of the original financial liability (or a part of it), the recognition of the original
financial liability shall be terminated, and a new financial liability shall be recognized. The difference between the book value and the
consideration paid (including non cash assets transferred out or liabilities assumed) shall be included in current profits and losses.
If the Company repurchases a portion of its financial liabilities, the overall book value of the financial liability shall be allocated
based on the proportion of the fair value of the continuously recognized part and the derecognized part on the repurchase date to the
overall fair value. The difference between the book value distributed to the derecognized part and the consideration paid (including
non-cash assets transferred out or liabilities undertaken) shall be included in current profits and losses.
(4) The recognition basis and measuring method for transfer of financial assets
When the Company transfers financial assets, it evaluates the degree of risk and reward in retaining ownership of the financial
assets, and treats them separately in the following situations:
1) If almost all risks and rewards related to the ownership of financial assets have been transferred, the recognition of the financial
asset shall be terminated, and the rights and obligations arising or retained during the transfer shall be separately recognized as assets
or liabilities.
2) If almost all risks and rewards related to ownership of financial assets are retained, the recognition of the financial asset will
continue.
3) If there is neither transfer nor retention of almost all risks and rewards related to the ownership of financial assets (i.e. other
situations except for (1) and (2) of this article), the following situations shall be treated based on whether the control over the financial
assets has been retained:
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① If control over the financial asset is not retained, the recognition of the financial asset shall be terminated, and the rights and
obligations arising or retained in the transfer shall be separately recognized as assets or liabilities.
② If control over the financial asset is retained, the relevant financial asset shall be recognized based on its continued
involvement in the transferred financial asset, and corresponding liabilities shall be recognized. The degree of continued involvement
in the transferred financial assets refers to the degree to which the Company bears the risk or reward of changes in the value of the
transferred financial assets.
The principle of "substance over form" shall be adopted in judging whether the transfer of financial assets meets the above-
mentioned conditions for derecognition. The Company divides the transfer of financial assets into entire transfer and partial transfer.
1) If the entire transfer satisfies the derecognition condition, the difference between the following amount shall be included in
current profits and losses:
① The book value of the transferred financial asset on the date of derecognition.
② The sum of the consideration received for the transfer of financial assets and the amount corresponding to the derecognized
part of the cumulative fair value changes originally recognized in other comprehensive income (the financial assets involved in the
transfer are financial assets measured at fair value and whose changes are included in other comprehensive income).
2) If a financial asset is partially transferred and the transferred part as a whole meets the conditions for derecognition, the book
value of the entire financial asset before the transfer shall be apportioned between the derecognized part and the continuously
recognized part (in which case, the retained service asset shall be considered as part of the continuously recognized financial asset)
according to their respective relative fair values on the transfer date, and the difference between the following two amounts shall be
included in current profits and losses:
① The book value of the derecognized part on the date of derecognition.
② The sum of the consideration received from the derecognized part and the amount corresponding to the derecognized part of
the cumulative fair value changes originally recognized in other comprehensive income (the financial assets involved in the transfer
are financial assets measured at fair value and whose changes are included in other comprehensive income).
If the financial assets transferred does not meet the conditions of derecognition, the financial assets shall continue to be recognized
and the consideration received shall be recognized as a financial liability.
(5) Determination methods for fair value of financial assets and financial liabilities
The fair value of financial assets or liabilities with an active market shall be determined based on the quoted price in the active
market, unless there is a restricted share trade period for the asset itself. For financial assets subject to restrictions on the sale of the
asset itself, the compensation amount requested by market participants for bearing the risk of not being able to sell the financial asset
in the open market within a specified period shall be determined based on the quoted price in the active market. Active market quotes
include quotes that are easily and regularly obtained from exchanges, traders, brokers, industry groups, pricing agencies, or regulatory
agencies for relevant assets or liabilities, and can represent actual and frequent market transactions on an arm's length basis.
The fair value of initially acquired or derived financial assets or assumed financial liabilities is determined based on market
transaction prices.
For a financial asset or financial liability without active market, its fair value shall be recognized by adopting the estimation
technique. During estimation, the Company adopts the estimation technique that is currently applicable and is supported by sufficient
available data and other information, and selects the input value with characteristics consistent with the assets or liabilities considered
by market participants in relevant transactions of assets or liabilities. The related observable input value is preferred. The non-
observable input value can be used only when it is impossible or not feasible to obtain relevant observable input value.
(6) Impairment of financial instruments
The Company conducts impairment accounting and recognizes loss provisions based on expected credit losses for financial assets
measured at the amortized cost, financial assets measured at fair value and whose changes are included in other comprehensive income,
lease receivables, contract assets, loan commitments other than financial liabilities measured at fair value and whose changes are
included in the current profits and losses, financial liabilities other than financial liabilities measured at fair value and whose changes
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are included in the current profits and losses, as well as financial guarantee contracts formed by financial asset transfers that do not
meet the derecognition conditions or continue to be involved in transferred financial assets.
Expected credit losses refer to the weighted average value of credit losses of financial instruments weighted by the risk of default.
Credit loss refers to the difference between all contractual cash flows receivable from the contract and all cash flows expected to be
received by the Company at the original effective interest rate, that is, the present value of all cash shortages. Among them, the financial
assets that have been credit-depreciated by the Company or purchased by the Company shall be discounted according to the effective
interest rate adjusted by the financial assets.
The Company measures loss provisions for all contract assets and accounts receivable formed by transactions regulated by
revenue standards at an amount equivalent to the expected credit loss over the whole duration.
For financial assets purchased or originated by the Company that have suffered credit impairment, only the cumulative changes
in expected credit losses during the whole duration after initial recognition are recognized as loss reserves on the balance sheet date.
On each balance sheet date, the change amount of expected credit loss during the whole duration shall be included in the current profits
and losses as impairment losses or gains. Even if the expected credit loss determined on the balance sheet date for the whole duration
is less than the amount of the expected credit loss reflected in the estimated cash flow at the time of initial recognition, the favorable
change in the expected credit loss is recognized as impairment gains.
For other financial assets other than those that have been measured using simplified measurement methods and those that have
been purchased or incurred credit impairment, the Company assesses on each balance sheet date whether the credit risk of the relevant
financial instruments has significantly increased since initial recognition, and measures the loss provision and recognizes expected
credit losses, and their changes according to the following circumstances:
1) If the credit risk of the financial instrument has not significantly increased since initial recognition and is in the first stage, the
loss provision shall be measured at an amount equivalent to the expected credit loss of the financial instrument in the next 12 months,
and interest income shall be calculated based on the book balance and actual interest rate.
2) If the credit risk of the financial instrument has significantly increased since initial recognition but has not yet experienced
credit impairment, and it is in the second stage, the loss provision shall be measured at an amount equivalent to the expected credit loss
of the financial instrument throughout its duration, and interest income shall be calculated based on the book balance and actual interest
rate.
3) If the financial instrument has experienced credit impairment since initial recognition and is in the third stage, the Company
measures its loss provision at an amount equivalent to the expected credit loss for the whole duration of the financial instrument, and
calculates interest income at amortized cost and actual interest rate.
The increase or reversal of the provision for credit losses on financial instruments shall be included in current profits and losses
as impairment losses or gains. Except for financial assets classified as financial assets measured at fair value and whose changes are
included in other comprehensive income, the provision for credit losses is offset against the book balance of financial assets. For
financial assets classified as financial assets measured at fair value and whose changes are included in other comprehensive income,
the Company recognizes their provision for credit losses in other comprehensive income without reducing the book value of the
financial asset on the balance sheet.
The Company has already measured the loss provision in the previous accounting period at an amount equivalent to the expected
credit loss for the whole duration of the financial instrument. However, on the current balance sheet date, if the financial instrument is
no longer subject to a significant increase in credit risk since initial recognition, the Company measures the loss provision in the
financial instrument at an amount equivalent to the expected credit loss for the next 12 months on the current balance sheet date. The
reversal amount of the resulting provision for losses is included in current profits and losses as impairment gains.
1) Significant increase in credit risk
The Company utilizes available and reasonable forward-looking information to determine whether the credit risk of financial
instruments has significantly increased since initial recognition by comparing the risk of default on the balance sheet date with the risk
of default on the initial recognition date. For financial guarantee contracts, when applying impairment provisions for financial
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instruments, the date on which the Company becomes the party making an irrevocable commitment shall be regarded as the initial
recognition date.
When evaluating whether credit risk has significantly increased, the Company will consider the following factors:
① Whether there has been a significant change in the actual or expected operating results of the debtor;
② Whether there have been significant adverse changes in the regulatory, economic, or technological environment in which the
debtor is located;
③ Whether there has been a significant change in the value of collateral as collateral for debt collateral or the quality of collateral
or credit enhancement provided by third parties, which is expected to reduce the economic motivation of the debtor to repay within the
period stipulated in the contract or affect the probability of default;
④ Whether there have been significant changes in the debtor's expected performance and repayment behavior;
⑤ Whether there have been changes in the Company's credit management methods for financial instruments.
On the balance sheet date, if the Company determines that the financial instrument only has a lower credit risk, the Company
assumes that the credit risk of the financial instrument has not significantly increased since initial recognition. Where the Company
determines that the default risk of financial instruments is low, the borrower has a strong ability to fulfill its contractual cash flow
obligations in a short term, and the borrower's ability to fulfill its contractual cash flow obligations will not be necessarily reduced even
if there are adverse changes in the economic situation and operating environment for a long period of time, the financial instrument
can be regarded as having low credit risk.
2) Financial assets that have experienced credit impairment
When one or more events that the expected future cash flow of a financial asset has an adverse impact occur, the financial asset
becomes a financial asset with credit impairment. Evidence of credit impairment of financial assets includes the following observable
information:
① Significant financial difficulties of the issuer or the debtor;
② The debtor violates the contract, such as default or overdue payment of interest or principal;
③ The creditor grants concessions that the debtor would not otherwise make for economic or contractual reasons related to the
debtor's financial difficulties;
④ The debtor is likely to go bankrupt or undergo other financial restructuring;
⑤ The financial difficulties of the issuer or the debtor lead to the disappearance of the active market of the financial asset;
⑥ A financial asset is purchased or originated at a substantial discount that reflects the fact that a credit loss has occurred.
The credit impairment of financial assets may be caused by the joint action of multiple events, not necessarily by individually
identifiable events.
3) Determination of expected credit losses
The Company evaluates the expected credit losses of financial instruments based on individual and combination evaluations.
When evaluating expected credit losses, the Company considers reasonable and evidence-based information about past events, current
conditions, and future economic forecasts.
The Company divides financial instruments into different portfolios based on common credit risk characteristics. The common
credit risk characteristics adopted by the Company include: financial instrument type, credit risk rating, aging portfolio, overdue aging
portfolio, contract settlement period, debtor's industry, etc. The individual evaluation criteria and combined credit risk characteristics
of relevant financial instruments are detailed in the accounting policies of relevant financial instruments.
The Company determines the expected credit losses of related financial instruments using the following methods:
① For financial assets, credit loss is the present value of the difference between the contractual cash flows that the Company
should receive and the expected cash flows to receive.
② For lease receivables, credit loss is the present value of the difference between the contractual cash flows that the Company
should receive and the expected cash flows to receive.
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③ For financial guarantee contracts, credit loss is the present value of the difference between the expected payment amount that
the Company will make to the contract holder for the credit loss incurred and the expected amount that the Company will collect from
the contract holder, debtor, or any other party.
④ For financial assets that have experienced credit impairment on the balance sheet date but whose credit impairment has not
occurred upon purchase or origination, credit loss is the difference between the book balance of the financial asset and the present value
of estimated future cash flows discounted at the original effective interest rate.
The factors reflected in the Company's method of measuring expected credit losses of financial instruments include: the unbiased
probability weighted average amount determined by evaluating a range of possible outcomes; the time value of money; reasonable and
evidence-based information about past events, current conditions, and future economic forecasts that can be obtained without
unnecessary additional costs or efforts on the balance sheet date.
4) Write down financial assets
Where the Company does not reasonably expect that the contract cash flow of financial assets can be recovered in whole or in
part, it shall directly write down the book balance of financial assets. This write down constitutes the derecognition of related financial
assets.
(7) Offset of financial assets and financial liabilities
Financial assets and financial liabilities are listed separately in the balance sheet and do not offset each other. However, if the
following conditions are met at the same time, the net amount after mutual offset shall be listed in the balance sheet:
1) The Company has the legal right to offset the recognized amount, and this legal right is currently enforceable;
2) The Company plans to settle at a net amount, or realize the financial assets and settle the financial liabilities at the same time.
12. Notes receivable
The recognition method and accounting treatment method for the expected credit loss of the Company's notes receivable are
detailed in Note V 11.6. Impairment of financial instruments.
For notes receivable with significantly different credit risks compared to portfolio credit risks, the Company provides expected
credit losses on a single basis. The Company separately determines the credit loss of notes receivable that provide sufficient evidence
to evaluate expected credit losses at a reasonable cost at the individual instrument level.
When there is insufficient evidence to evaluate expected credit losses at a reasonable cost at the individual tool level, the Company
divides notes receivable into several portfolios based on credit risk characteristics with reference to historical credit loss experience,
combining current conditions with judgments of future economic conditions, and calculates expected credit losses on the basis of the
portfolio. Basis for determining portfolio:
Portfolio Name Basis for determining portfolio Accrual method
With reference to historical credit loss
The acceptor has a high credit rating, has not defaulted
experience, combined with the current situation
Banker's acceptance on bills in history, has extremely low credit loss risk,
and the prediction of future economic
portfolio and has a strong ability to fulfill its cash flow
conditions, the Company shall measure the bad
obligations under payment contracts in the short term
debt reserve
With reference to historical credit loss
experience, combined with the current situation
and the forecast of future economic conditions,
Commercial acceptance
According to the credit rating of the acceptor the Company shall prepare a comparison table
bill portfolio
between the aging of notes receivable and the
expected credit loss rate to calculate the expected
credit loss.
The comparison table between the aging of commercial acceptance bills and the expected credit loss rate is as follows:
Aging Expected credit loss rate of notes receivable (%)
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Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
The aging of notes receivable is calculated using the first in, first out method (FIFO).
13. Accounts receivable
The recognition method and accounting treatment method for the expected credit loss of the Company's accounts receivable are
detailed in Note V 11.6. Impairment of financial instruments.
The Company separately determines the credit loss of accounts receivable that provide sufficient evidence to evaluate expected
credit losses at a reasonable cost at the individual instrument level.
When there is insufficient evidence to evaluate expected credit losses at a reasonable cost at the individual tool level, the Company
divides accounts receivable into several portfolios based on credit risk characteristics with reference to historical credit loss experience,
combining current conditions with judgments of future economic conditions, and calculates expected credit losses on the basis of the
portfolio. Basis for determining portfolio:
Portfolio Name Basis for determining portfolio Accrual method
Expected credit loss rate is calculated with
reference to historical credit loss experience,
Accounts receivable from related parties within the
combined with the current situation and the
Related party portfolio scope of the Company's consolidated financial
forecast of future economic conditions, through
statements
default risk exposure and the expected credit loss
rate of the entire duration
With reference to historical credit loss
experience, combined with the current situation
and the forecast of future economic conditions,
Including accounts receivable other than the above
Aging portfolio the Company shall prepare a comparison table
portfolio
between the aging of accounts receivable and the
expected credit loss rate to calculate the expected
credit loss.
The comparison table between the aging of aging portfolios and the expected credit loss rate is as follows:
Aging Expected credit loss rate of accounts receivable (%)
Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
The aging of accounts receivable is calculated using the first in, first out method (FIFO).
14. Receivable financing
Notes receivable classified as measured at fair value with changes recognized in other comprehensive income, with a maturity
period of one year (including one year) from the initial recognition date, are listed as receivable financing; if the maturity period is
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more than one year from the initial recognition date, they shall be listed as other debt investments. The relevant accounting policies are
detailed in Note V 11.
The recognition method and accounting treatment method for the expected credit loss of the Company's receivable financing
receivable are detailed in Note V 11.6. Impairment of financial instruments.
15. Other receivables
Determination methods and accounting treatment methods of expected credit losses of other receivables
The recognition method and accounting treatment method for the expected credit loss of the Company's other receivables are
detailed in Note V 11.6. Impairment of financial instruments.
For other receivables with significantly different credit risks compared to portfolio credit risks, the Company provides expected
credit losses on a single basis. The Company separately determines the credit loss of other receivables that provide sufficient evidence
to evaluate expected credit losses at a reasonable cost at the individual instrument level.
When there is insufficient evidence to evaluate expected credit losses at a reasonable cost at the individual tool level, the Company
divides other receivables into several portfolios based on credit risk characteristics with reference to historical credit loss experience,
combining current conditions with judgments of future economic conditions, and calculates expected credit losses on the basis of the
portfolio. Basis for determining portfolio:
Portfolio Name Basis for determining portfolio Accrual method
Aging portfolio This portfolio takes the aging of With reference to historical credit loss experience, combined with
accounts receivable as the credit risk the current situation and the forecast of future economic
characteristics. conditions, the Company shall prepare a comparison table between
the aging of other accounts receivable and the expected credit loss
rate to calculate the expected credit loss.
Related party portfolio This portfolio includes accounts Expected credit loss rate is calculated with reference to historical
receivable from subsidiaries and credit loss experience, combined with the current situation and the
other related parties within the forecast of future economic conditions, through default risk
consolidation scope. exposure and the expected credit loss rate within the following 12
months
Portfolio of deposits, This portfolio features deposits, Expected credit loss rate is calculated with reference to historical
security deposits, security deposits and employee loans credit loss experience, combined with the current situation and the
employee loans, etc. as credit risk characteristics. forecast of future economic conditions, through default risk
exposure and the expected credit loss rate within the following 12
months
The comparison table between the aging of aging portfolios and the expected credit loss rate is as follows:
Aging Expected credit loss rate of other receivables (%)
Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
The aging of other receivables is calculated using the first in, first out method (FIFO).
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16. Contract assets
The Company has transferred the right to receive the consideration for commodities to the customers, and such right depends on
the factors other than the passage of time shall be recognized as the contract assets. The Company's unconditional (i.e., only depending
on the time lapses) right to collect consideration from the customers shall be listed separately as receivables.
The recognition method and accounting treatment method for the expected credit loss of the Company's contract assets are
detailed in Note V 11.6. Impairment of financial instruments.
The Company separately determines the credit loss of contract assets that provide sufficient evidence to evaluate expected credit
losses at a reasonable cost at the individual instrument level.
When there is insufficient evidence to evaluate expected credit losses at a reasonable cost at the individual tool level, the Company
divides contract assets into several portfolios based on credit risk characteristics with reference to historical credit loss experience,
combining current conditions with judgments of future economic conditions, and calculates expected credit losses on the basis of the
portfolio. Basis for determining portfolio:
Portfolio Name Basis for determining portfolio Accrual method
With reference to historical credit loss
Accounts receivable from related parties within the experience, combined with the current situation
Related party portfolio scope of the Company's consolidated financial and the forecast of future economic conditions,
statements the Company shall calculate the expected credit
loss
Expected credit loss rate is calculated with
reference to historical credit loss experience,
Including accounts receivable other than the above combined with the current situation and the
Aging portfolio
portfolio forecast of future economic conditions, through
default risk exposure and the expected credit loss
rate of the entire duration
17. Inventories
(1) Inventories category, valuation method for issuing inventories, inventories taking system, amortization method for
low value consumables and packaging materials
1) Inventories category
Inventories refer to finished products or commodities held by the Company for sale in daily activities, products in process of
production, and materials consumed in the process of production or provision of labor services. Mainly including raw materials,
products in process, goods in stock, goods in transit, consigned processing materials, contract performance costs, etc.
2) Valuation method for issuing inventories
Inventories are initially measured at cost upon acquisition, including procurement costs, processing costs, and other costs.
Inventories are valued using the weighted average method when issued.
3) Inventories taking system
Inventories taking system of the company is a perpetual inventories system.
4) Amortization method for low value consumables and packaging materials
① Low value consumables are amortized by the one-off write-off method;
② Packaging materials are amortized by the one-off write-off method;
③ Other turnover materials are amortized using the one-off write-off method.
(2) Recognition conditions and accrual method of inventories depreciation reserves
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After conducting comprehensive inventories at the end of the period, the provision for inventories depreciation shall be withdrawn
or adjusted based on the lower of the cost and net realizable value of the inventories. For goods inventories directly used for sale, such
as finished products, goods in stock and materials for sale, during the normal production and operation process, the net realizable value
shall be recognized by the estimated selling expenses of the inventories minus the estimated selling and distribution expenses and
related taxes; for material inventories to be processed, during the normal production and operation process, the net realizable value
shall be recognized by the estimated selling price of the finished products produced minus the estimated costs to be incurred upon
completion, estimated selling and distribution expenses and relevant taxes. The net realizable value of the inventories held for execution
of the sales contract or service contract is calculated on the basis of the contract price; if the quantity of inventories held is more than
the quantity ordered in the sales contract, net realizable value for the excess of the inventories is calculated based on the general sales
price.
At the end of the period, the inventories falling price reserves are accrued according to individual inventory items; however, for
the inventories with large quantity and low unit price, the inventories falling price reserves shall be accrued according to the inventories
category; and for inventories that are related to product series produced and sold in the same region, have the same or similar end use
or purpose, and are difficult to be measured separately from other items, the inventories falling price reserves shall be accrued on a
consolidated basis.
18. Held-for-sale assets
(1) Recognition standards for classifying as held-for-sale assets
The Company will recognize non-current assets or disposal groups that meet the following conditions as held-for-sale
components:
(1) In accordance with the practice of selling such assets or disposal groups in similar transactions, they can be sold immediately
under current conditions;
(2) The sale is highly likely to occur, as the Company has already made a resolution on a sale plan, obtained approval of regulatory
authorities, and obtained a confirmed purchase commitment. It is expected that the sale will be completed within one year.
The determined purchase commitment refers to the legally binding purchase agreement signed between the Company and other
parties, which contains important clauses such as transaction price, time and sufficiently severe penalty for breach of contract, so that
the possibility of major adjustment or cancellation of the agreement is extremely small.
(2) Accounting method for held-for-sale assets
The Company does not provide depreciation or amortization for non-current assets or disposal groups held for sale. If the book
value is higher than the net amount of fair value minus selling expenses, the book value shall be written down to the net amount of fair
value minus selling expenses. The written down amount is recognized as losses from impairment of assets and included in current
profits and losses. At the same time, a provision for impairment of held-for-sale assets is made.
For non-current assets or disposal groups that are classified as held for sale on the acquisition date, the initial measurement
amount and the net amount of fair value (assuming that they are not classified as held for sale) minus selling expenses shall be compared,
and the lower amount shall be measured at the initial measurement.
The above principles apply to all non-current assets, but do not include Investment real estate measured using the fair value model
for subsequent measurement, biological assets measured using the net amount of fair value minus selling expenses, assets formed by
employee compensation, deferred income tax assets, financial assets regulated by accounting standards related to financial instruments,
and rights arising from insurance contracts regulated by accounting standards related to insurance contracts.
19. Debt investment
The recognition method and accounting treatment method for the expected credit loss of the Company's debt investment are
detailed in Note V 11.6. Impairment of financial instruments.
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20. Other debt investments
The determination method and accounting treatment method for the expected credit loss of other debt investments by the company
are detailed in Note 5, 11.6. Impairment of financial instruments.
21. Long-term receivables
The recognition method and accounting treatment method for the expected credit loss of the Company's long-term receivables
are detailed in Note V 11.6. Impairment of financial instruments.
22. Long-term equity investment
(1) Recognition of initial investment cost
1) The specific accounting policies for long-term equity investments formed by business mergers are detailed in Note V 6.
Accounting treatment methods of business merger under the common control and merger under different control.
2) Long-term equity investments obtained through other means
For long-term equity investment acquired by cash payment, the actual purchase price shall be regarded as the initial investment
cost. The initial investment cost includes expenses, taxes and other necessary expenses directly related to the acquisition of long-term
equity investment.
For the long-term equity investment obtained by issuing equity securities, the fair value of the issued equity securities shall be
taken as the initial investment cost. The transaction costs incurred when issuing or acquiring equity instruments can be directly
attributed to equity transactions and deducted from equity.
On the premise that the non-monetary asset exchange has commercial substance and the fair value of the assets received or
exchanged can be reliably measured, the initial investment cost of the long-term equity investment received from the non-monetary
asset exchange is determined based on the fair value of the exchanged assets, unless there is conclusive evidence that the fair value of
the exchanged assets is more reliable; for non-monetary asset exchanges that do not meet the above conditions, the book value of the
exchanged assets and the relevant taxes and fees payable shall be used as the initial investment cost for the long-term equity investment
received.
The initial investment cost of long-term equity investments obtained through debt restructuring is determined based on fair value.
(2) Subsequent measurement and profit and loss recognition
1) Cost method
The long-term equity investments that the Company is able to control over the investee are accounted for using the cost method
and are valued at the initial investment cost. The cost of long-term equity investments is adjusted by adding or recovering investments.
Except the declared but not released cash dividends or profits which are included in actual amount or consideration paid for
acquiring investments, the profit distribution or cash dividends declared by the investees are recognized as the current investment
income by the Company.
2) Equity method
The Company adopts the equity method to account for long-term equity investments in associates and joint ventures; for equity
investments in associates indirectly held through venture capital institutions, mutual funds, trust companies, or similar entities including
investment linked insurance funds, fair value measurement is adopted and changes are included in profits and losses.
If the cost of initial investment of long-term equity investment exceeds the difference of the identifiable fair value of net assets
of the investee sharable at investment, cost of initial investment of long-term equity investment shall not be adjusted; if the cost of
initial investment of long-term equity investment is less than identifiable fair value of net assets of the investee sharable at investment,
the difference is included in current profits and losses when it is incurred.
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After the Company obtains the long-term equity investment, the investment income and other comprehensive income shall be
recognized respectively according to the share of net profit and loss and other comprehensive income realized by the investee that
should be enjoyed or shared, and the book value of the long-term equity investment shall be adjusted; the Company shall calculate the
attributable part according to the profits or cash dividends declared to be distributed by the investee, and reduce the book value of long-
term equity investment accordingly; the Company shall adjust the book value of long-term equity investment and include it in the
owner's equity for other changes in the owner's equity of the investee other than net profits and losses, other comprehensive income
and profit distribution.
In recognition of the share of the net profit or loss of the investee entity by the Company, the net profit of the investee shall be
adjusted and confirmed on the basis of the fair value of the identifiable assets of the investee entity when the investment is made. The
unrealized profits or losses arising from the intra-company transactions amongst the Company and its associates and joint ventures are
eliminated in proportion to the Company's equity interest in the associates and joint ventures, and then based on which the investment
profits and losses are recognized.
When the Company confirms that it shall share the losses incurred by the investee, it shall handle them in the following order:
firstly, offset the book value of long-term equity investments. Secondly, if the book value of long-term equity investments is not
sufficient to offset, investment losses shall be recognized to the extent of other long-term equity book values that essentially constitute
net investments in the investee, and the book value of long-term accounts receivable shall be offset. Finally, after the above processing,
if the enterprise still bears additional obligations as stipulated in the investment contract or agreement, the expected liabilities shall be
recognized based on the expected obligations and included in the current investment loss.
If the investee realizes profits in the future period, the Company shall handle it in the opposite order after deducting the
unrecognized loss sharing, write down the book balance of the recognized expected liabilities, restore the book value of other long-
term equity and long-term equity investments that essentially constitute the net investment in the investee, and then restore the
recognition of investment income.
(3) Conversion of accounting methods for long-term equity investments
1) Fair value measurement to equity method accounting
For equity investments held by the Company that do not have control, joint control, or significant impact over the investee and
are accounted for according to the financial instrument recognition and measurement standards, if they can exert significant impact or
implement joint control over the investee but do not constitute control due to additional investment or other reasons, the fair value of
the original equity investment determined in accordance with "Accounting Standards for Enterprises No. 22 - Recognition and
Measurement of Financial Instruments" plus the additional investment cost shall be used as the initial investment cost accounted for
using the equity method.
For the difference between the initial investment cost calculated using the equity method and the fair value share of the identifiable
net assets of the investee on the date of the additional investment, calculated based on the new shareholding ratio after the additional
investment, the book value of the long-term equity investment shall be adjusted and included in the current non-operating income.
2) Fair value measurement or equity method accounting to cost method accounting
For equity investments held by the Company that do not have control, joint control, or significant impact on the investee and are
accounted for according to financial instrument recognition and measurement standards, or for long-term equity investments held by
the Company in associates or joint ventures that can exert control over the investee under different control due to additional investments
or other reasons, when preparing individual financial statements, the initial investment cost calculated using the cost method is the sum
of the book value of the original equity investment held and the additional investment cost.
The other comprehensive income recognized by the equity investment held on the date of acquisition due to the equity method
is used for accounting treatment on the same basis as the direct disposal of related assets or liabilities by the investee when the asset is
disposed of.
If the equity investments held before the date of acquisition are accounted for in accordance with the relevant provisions of the
"Accounting Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments", the cumulative fair value
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changes originally recognized in other comprehensive income are transferred to the current profits and losses when the cost method is
used for accounting.
3) Equity method accounting to fair value measurement
Where the joint control or significant impact on the investee is lost due to the disposal of part of the equity investment or other
reasons, and the remaining equity after disposal shall be accounted for in accordance with the "Accounting Standards for Enterprises
No. 22 - Recognition and Measurement of Financial Instruments", the difference between the fair value and the book value of the
remaining equity on the date of loss of joint control or significant impact is included in current profits and losses.
The other comprehensive income recognized by the original equity investment due to the equity method is used for accounting
treatment on the same basis as the direct disposal of related assets or liabilities by the investee when the equity method is terminated.
4) Cost method to equity method
When the Company loses control over the investee due to partial disposal of equity investment and the residual equity after
disposal can implement joint control over or significant impact on the investee at the time of preparing individual financial statements,
the equity method is adopted, and the residual equity is adjusted deeming to have been accounted for with the equity method since its
acquisition.
5) Cost method to fair value measurement
If the Company loses control over the investee due to the disposal of some equity investments or other reasons, and the remaining
equity after disposal cannot exercise joint control or have a significant impact on the investee in the preparation of individual financial
statements, the accounting treatment shall be carried out in accordance with the relevant provisions of the "Accounting Standards for
Enterprises No. 22 - Recognition and Measurement of Financial Instruments". The difference between the fair value and the book value
on the date of loss of control shall be included in current profits and losses.
(4) Disposal of long-term equity investments
When disposing of long-term equity investment, the balance between the book value and actual price for acquisition shall be
included in current profits and losses. For long-term equity investments accounted for using the equity method, when disposing of the
investment, the accounting treatment for the portion originally recognized in other comprehensive income shall be carried out on the
same basis as the direct disposal of relevant assets or liabilities by the investee in a corresponding proportion.
The terms, conditions, and economic impact of various transactions related to the disposal of equity investments in subsidiaries
in one or more of the following circumstances usually indicate that multiple transactions shall be accounted for as a package deal:
1) These transactions were entered into simultaneously or taking into account mutual influence;
2) These transactions as a whole can achieve a complete business result;
3) The occurrence of a transaction depends on the occurrence of at least one other transaction;
4) A transaction alone is not economical, but it is economic when considered with other transactions.
If the control over the original subsidiary is lost due to the disposal of some equity investments or other reasons, which is not a
package deal, relevant accounting treatment shall be distinguished between individual financial statements and consolidated financial
statements:
1) In individual financial statements, the difference between the book value of the disposed equity and the actual acquisition price
is included in current profits and losses. If the remaining equity after disposal can exercise joint control or have a significant impact on
the investee, it shall be accounted for using the equity method, and the remaining equity shall be adjusted as if it was accounted for
using the equity method at the time of acquisition; if the remaining equity after disposal cannot exercise joint control or have a
significant impact on the investee in the preparation of individual financial statements, the accounting treatment shall be carried out in
accordance with the relevant provisions of the "Accounting Standards for Enterprises No. 22 - Recognition and Measurement of
Financial Instruments". The difference between the fair value and the book value on the date of loss of control shall be included in
current profits and losses.
2) In the consolidated financial statements, for all transactions before the loss of control over the subsidiary, the difference
between the disposal price and the corresponding share of net assets of the subsidiary calculated continuously from the date of
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acquisition or combination date for the disposal of long-term equity investments, the capital reserve (share premium) shall be adjusted.
If the capital reserve is insufficient to offset, the retained earnings shall be adjusted; when losing control over a subsidiary, the remaining
equity shall be remeasured at its fair value on the date of loss of control. The difference between the sum of the consideration obtained
from the disposal of equity and the fair value of the remaining equity minus the share of the net assets of the original subsidiary
continuously calculated from the date of acquisition calculated according to the original shareholding ratio shall be included in the
investment income of the current period when the control right is lost, and the goodwill shall be offset. Other comprehensive income
related to equity investments in the original subsidiary shall be converted into current investment income when control is lost.
If all transactions related to the disposal of equity investments in subsidiaries until the loss of control belong to a package deal,
each transaction shall be treated as a transaction related to the disposal of equity investments in subsidiaries and the loss of control,
and relevant accounting treatment shall be distinguished between individual financial statements and consolidated financial statements:
1) In individual financial statements, the difference between the disposal price and the book value of the long-term equity
investment corresponding to the disposed equity before the loss of control is recognized as other comprehensive income and transferred
to the current profits and losses when the control is lost.
2) In the consolidated financial statements, the difference between the disposal price and the net asset share of the subsidiary
corresponding to the disposal investment before the loss of control is recognized as other comprehensive income, and is transferred to
the current profits and losses when the control is lost.
(5) Judgment standard for common control and significant impact
If the Company collectively controls a certain arrangement with other participants in accordance with relevant agreements, and
any activity decision that has a significant impact on the return of the arrangement requires the unanimous consent of the participants
who share control, it shall be deemed that the Company and other participants jointly control a certain arrangement, which is a joint
venture arrangement.
When a joint venture arrangement is reached through a separate entity, and it is determined based on relevant agreements that
the Company has rights to the net assets of the separate entity, the separate entity shall be treated as a joint venture and accounted for
using the equity method. If it is determined according to relevant agreements that the Company does not have the right to the net assets
of the separate entity, the separate entity shall be considered as an entity in joint operation, and the Company shall recognize the items
related to the share of joint operation interests and conduct accounting treatment in accordance with the relevant Accounting Standards
for Enterprises.
Significant impact means that the investor has the power to participate in the decision-making of the financial and operating
policies of the investee, but is not able to control or jointly control the formulation of these policies with other parties. After considering
all facts and circumstances, the Company determines that it has a significant impact on the investee through one or more of the following
circumstances: (1) Having representatives on the Board of Directors or similar authorities of the investee; (2) Participating in the
process of formulating financial and operational policies for the investee; (3) Significant transactions occur with the investee; (4)
Dispatching management personnel to the investee; (5) Providing key technical information to the investee.
23. Investment real estate
Measurement model of investment real estate
Cost method measurement
Depreciation or amortization method
The investment real estate refers to the properties held for earning rentals or capital appreciation or both, including the land use
right which has already been leased out, land use right which is held for transfer after its appreciation and buildings which have already
been leased out. Moreover, idle buildings owned by the Company ready for operating lease, with the written announcement from the
Board of Directors, that it has an explicit intention to hold the buildings for operating lease and such intention will not change in short-
term, are disclosed as investment real estate as well.
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The investment real estate of the Company is used as the entry value at its cost, and the cost of purchasing investment real estate
includes the purchase price, relevant taxes, and other expenses directly attributable to the asset; the cost of self constructing investment
real estate is composed of the necessary expenses incurred before the construction of the asset reaches its expected conditions for use.
The impairment test method and impairment provision method for investment real estate are detailed in Note V 28. Long-term
assets impairment.
When investment real estate is converted for self-use, such real estate shall be converted into fixed assets or intangible assets
since the date of conversion. When properties for self-use are converted for earning rents or capital appreciation, the fixed assets or
intangible assets shall be converted into investment real estate since the date of conversion. When conversion occurs, the book value
prior to conversion shall be the entry value after conversion.
When an investment real estate is disposed of, or permanently withdrawn from use and is not expected to obtain economic
benefits from its disposal, the recognition of the investment real estate shall be terminated. The amount of proceeds on sale, transfer,
retirement or damage of any investment real estate net of the book value of the investment real estate and the relevant taxes shall be
included in current profits and losses.
24. Fixed assets
(1) Recognition conditions
Fixed assets mean the tangible assets held for producing commodities, providing services, renting or operating management, with
a service life in excess of one accounting year. Fixed assets shall be recognized when the following the conditions are met
simultaneously:
1) Economic benefits associated with such fixed assets are likely to flow into the Company;
2) Cost of such fixed assets can be measured reliably.
(2) Depreciation methods
Annual depreciation
Category Depreciation method Depreciation period Residual value rate
rate
Houses and buildings Straight-line method 20-50 years 5% 1.90%-4.75%
Machinery equipment Straight-line method 5-10 years 5% 9.50%-19.00%
Electronic equipment
Straight-line method 3-5 years 5% 19.00%-31.67%
and others
Transportation vehicles Straight-line method 4 years 5% 23.75%
25. Construction in progress
The construction in progress projects constructed by the Company are priced at actual cost, which is composed of necessary
expenses incurred before the construction of the asset reaches its expected conditions for use, including the cost of engineering materials,
labor costs, relevant taxes and fees paid, capitalized borrowing costs, and indirect expenses to be shared.
All expenses incurred before the asset reaches its expected conditions for use in construction in progress projects shall be
recognized as the entry value of fixed assets. If the construction in progress has reached the expected conditions for use but has not yet
completed the final settlement, from the date of reaching the expected conditions for use, the estimated value shall be transferred to
fixed assets based on the project budget, cost, or actual project cost, and the depreciation of fixed assets shall be calculated according
to the Company's fixed asset depreciation policy. After completing the final settlement, the original estimated value shall be adjusted
according to the actual cost, but the depreciation amount already calculated shall not be adjusted.
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The impairment test method and impairment provision method for construction in progress are detailed in Note V 28. Long-term
assets impairment.
26. Borrowing costs
(1) Recognition principles for capitalization of borrowing costs
Borrowing costs of the Company which can be classified directly as expenses for the acquisition, construction or production
activities for preparing an asset eligible for capitalization, shall be capitalized and booked into cost of capital; other borrowing costs
shall be defined upon occurred as expenses on the basis of the amount and included in current profits and losses.
The assets meeting the capitalization conditions refer to the fixed assets, investment properties and inventories that need a
substantially long period for acquisition, construction or production to be ready for their intended use or sale.
The borrowing costs shall be capitalized when all of the following conditions are satisfied:
1) Expenditures on an asset have been incurred, and expenditures on the asset comprise payments in cash, transfer of non-cash
assets or assumption of debts with interest for acquisition and construction or production of the asset qualifying for capitalization;
2) The borrowing costs have already been incurred;
3) Acquisition, construction or production activities necessary to bring the asset to reach expected conditions for use or sale are
in progress.
(2) Period of capitalization of borrowing costs
Period of capitalization refers to the period from the beginning time point of capitalization to the end time point of capitalization.
The suspension period of capitalization of borrowing costs shall be excluded.
When the acquisition, construction or production of assets that meet the capitalization conditions is ready for its intended use or
sale, the capitalization of borrowing costs will cease.
When a portion of the assets that meet the capitalization conditions are completed and can be used separately, the capitalization
of the borrowing costs for that portion of the assets shall cease.
If each part of the purchased or produced asset is completed separately, but can only be used or sold to the outside world after
the overall completion, the capitalization of borrowing costs shall be stopped when the entire asset is completed.
(3) Suspension period of capitalization
Where the acquisition, construction or production of eligible assets is interrupted abnormally and the interruption period lasts for
more than 3 months, capitalization of the borrowing costs shall be suspended; if the interruption is a necessary step for making the
eligible assets under acquisition, construction or production reach the expected conditions for use or marketing, the capitalization of
the borrowing costs shall be continued. The borrowing costs incurred during the period of cease will be determined as current profit
and loss, and the borrowing costs will continue to be capitalized after the acquisition, construction or production activities of the assets
are resumed.
(4) Calculation methods for capitalized amount of borrowing costs
The interest expenses of special loans (excluding interest income obtained from unused loan funds deposited in banks or
investment income obtained from temporary investments) and their auxiliary expenses shall be capitalized before the purchased or
produced assets that meet the capitalization conditions reach their expected conditions for use or sale.
The amount of capitalization of the interest amount shall be determined by multiplying the weighted average of difference
between accumulative assets expenditure and assets expenditure of specially borrowed loans by the capitalization rate of general
borrowings. The capitalization rate is calculated and determined based on the weighted average interest rate of general borrowings.
If there is a discount or premium on the loan, the amount of discount or premium to be amortized for each accounting period
shall be determined using the effective interest rate method, and the interest amount for each period shall be adjusted.
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27. Intangible assets
(1) Useful life and its determination basis, estimated situation, amortization method or review procedure
Intangible assets are identifiable non-monetary assets without physical substance owned or controlled by the Company, including
land use rights, software, others, etc.
1) Initial measurement of intangible assets
Costs of purchased intangible assets include purchase price, related taxes as well as other expenditures directly attributable to
making such assets ready for intended use. Where the payment of the acquisition price for intangible assets is delayed beyond the
normal credit terms, for those with financing nature, the cost of intangible assets is determined at the present value of the acquisition
price.
For intangible assets from debt restructuring used by the debtor to offset debts, its entry value is determined based on the fair
value of the intangible asset. The difference between the book value of the restructured debt and the fair value of the intangible asset
used to offset debts is included in current profits and losses.
On the premise that the non-monetary asset exchange has commercial substance and the fair value of the assets received or
exchanged can be reliably measured, the entry value of the intangible asset received from the non-monetary asset exchange is
determined based on the fair value of the exchanged assets, unless there is conclusive evidence that the fair value of the exchanged
assets is more reliable; for non-monetary asset exchanges that do not meet the above conditions, the book value of the exchanged assets
and the relevant taxes and fees payable shall be used as the cost for the intangible asset received, and no profit or loss shall be recognized.
The entry value of intangible assets obtained by absorption and merger of enterprises under the same control shall be determined
according to the book value of the combined party; the entry value of intangible assets obtained by absorption and merger of enterprises
not under the same control shall be determined at fair value.
The costs of intangible assets developed internally include: materials, service costs and registration fees consumed in the
development of the intangible assets, amortization of other patents and franchise used in the development process, interest costs that
meet the capitalization conditions, as well as other direct costs incurred before the achievement of intended use of intangible asset.
2) Subsequent measurement of intangible assets
The Company analyzes and determines the useful life of intangible assets when acquiring them, and divides them into intangible
assets with limited or uncertain useful lives.
1. Intangible assets with limited useful life
For intangible assets with limited useful lives, they are amortized using the straight-line method within the period of bringing
economic benefits to the enterprise. The estimated life and basis for intangible assets with limited useful life are as follows:
Item Estimated Useful Lives Basis
Software 2-10 years Benefit period
From obtaining the land use right to the termination
Land use rights Benefit period
date of the land use right
At the end of the period, the useful life and amortization method of intangible assets with limited useful life shall be reviewed,
and adjustments shall be made if necessary.
2. Tangible assets with unclear useful life
If it is impossible to foresee the period within which intangible assets will bring economic benefits to the enterprise, it shall be
regarded as an intangible asset with an uncertain useful life. At the end of the period, the useful life of intangible assets with uncertain
service life shall be reviewed. If there is evidence that the period of intangible assets bringing economic benefits to the enterprise is
foreseeable, the useful life shall be estimated and amortized according to the amortization policy of intangible assets with limited useful
life.
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The impairment test method and impairment provision method for intangible assets are detailed in Note V 28. Long-term assets
impairment.
(2) The scope of R&D expenditure collection and related accounting treatment methods
1) Specific standards for dividing the research stage and development stage of the company's internal research and
development projects
Research stage: the stage of original planned investigation and research activities to acquire and understand new scientific or
technical knowledge.
Development stage: the stage where research results or other knowledge are applied to a plan or design to produce new or
substantially improved materials, devices, products and other activities before commercial production or use.
Expenditures of internal research and development projects during research stage are included in current profits and losses upon
occurrence.
2) Expenditures at the development stage meet the specific standards for capitalization
Expenses incurred during the development phase of internal research and development projects are recognized as intangible
assets when the following conditions are met:
① Complete such intangible asset to make it usable or salable with technical feasibility;
② Intention of completing such intangible asset for use or sale;
③ Method for intangible assets to produce economic benefits, including the ability to prove that the products from such
intangible assets exist in the market or that the intangible assets themselves exist in the market, and the ability to prove the serviceability
of the intangible asset if used internally;
④ There is sufficient support from technical, financial resources and other resources, to complete development of such intangible
assets, and the ability of using or selling such intangible assets;
⑤ The expenditures attributable to development stage of such intangible assets shall be measured reliably.
Expenditures in the development stage that do not meet the above conditions shall be included in the current profits and losses
when incurred. If expenditure in research stage and expenditure in development stage fail to be divided, generated research expenditure
shall be concluded in current profits and losses when they are incurred. The cost of intangible assets formed by internal development
activities only includes the total expenditure incurred from the time when the capitalization conditions are met until the intangible
assets reach their intended use. Expenditures for the same intangible asset that have been expensed and included in profit or loss before
reaching the capitalization conditions during the development process will not be adjusted.
28. Long-term assets impairment
The Company inspects long-term equity investments, fixed assets, construction in progress, intangible assets with determined
useful lives, and any signs of potential impairment on each balance sheet date. If there are signs of impairment in long-term assets, the
Company shall estimate their recoverable amount based on individual assets; if it is difficult to estimate the recoverable amount of a
single asset, the recoverable amount of the asset group shall be determined based on the asset group to which the asset belongs.
The estimate of the recoverable amount of an asset is determined based on the higher of its fair value minus disposal expenses
and the present value of the expected future cash flows of the asset.
The measurement results of the recoverable amount indicate that if the recoverable amount of an asset is lower than its book
value, the book value of the long-term asset shall be written down to the recoverable amount. The written down amount is recognized
as a loss from impairment of assets and included in current profits and losses. At the same time, a corresponding asset impairment
provision shall be made. Once the losses from impairment of assets are recognized, they shall not be reversed in subsequent accounting
periods.
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After the loss from impairment of assets is recognized, the depreciation or amortization expenses of the impaired assets shall be
adjusted accordingly in the future, so that the adjusted book value of the assets can be systematically amortized within the remaining
useful life of the assets (deducting the expected net residual value).
Intangible assets with uncertain goodwill and useful life formed by business mergers shall undergo impairment test annually,
regardless of whether there are signs of impairment.
During the impairment test of the goodwill, the book value of the goodwill is divided to the asset group or portfolio of asset
groups that are expected to benefit from the business merger synergies. When conducting impairment tests on the related asset portfolio
or portfolio of asset groups that contain(s) goodwill, if there are indications of impairment, test the asset groups or groups of asset
groups that do(es) not contain goodwill firstly and calculate the recoverable amount, and compare it with the related book value to
confirm the corresponding impairment loss. Then conduct an impairment test on the asset group or asset group portfolio containing
goodwill, and compare the book value (including the book value of the apportioned goodwill) of these relevant asset groups or asset
group portfolios with their recoverable amount. If the recoverable amount of the relevant asset group or asset group portfolios is lower
than its book value, the impairment loss of goodwill shall be recognized.
29. Long-term unamortized expenses
Long-term deferred expenses refer to all expenses which have occurred and shall be amortized by the Company in more than one
year in the current period and subsequent period. Long-term deferred expenses are amortized over the benefit period using the straight-
line method.
30. Contract liabilities
The Company recognizes the obligation to transfer goods to customers for consideration received or receivable as contract
liabilities.
31. Employee compensation
(1) Accounting treatment methods for short-term compensation
Short-term remuneration refers to the remuneration of employees that the Company needs to pay in full within 12 months after
the end of the annual reporting period for employees to provide relevant services, except for post employment benefits and termination
benefits. During the accounting period when employees provide services, the Company recognizes the short-term remuneration payable
as liabilities, and includes it in the relevant asset costs and expenses according to the beneficiary of the services provided by employees.
(2) Accounting treatment method for post employment benefits
Post employment benefits refer to various forms of remuneration and benefits provided by the Company after the retirement of
employees or the termination of labor relations with the enterprise in order to obtain the services provided by employees, except short-
term remuneration and dismission welfare.
The post employment welfare plan of the Company includes a defined contribution plan and a defined benefit plan.
The defined contribution plan for the post employment benefit mainly involves participating in social basic pension insurance,
unemployment insurance, etc. organized and implemented by labor and social security institutions in various regions; during the
accounting period when employees provide services to the Company, the amount of deposit payable calculated according to the defined
contribution plan will be recognized as a liability and included in current profits and losses or related asset costs.
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After the Company regularly pays the above-mentioned funds in accordance with national standards, it has no further payment
obligations.
(3) Accounting treatment method for dismissal benefits
The dismission welfare refers to the compensation given by the Company to terminate the labor relationship with employees
before the expiration of their labor contracts, or propose compensation to encourage employees to voluntarily accept layoffs. When the
Company cannot unilaterally withdraw the termination plan or layoff proposal, or when the Company recognizes the costs and expenses
related to the restructuring involving the payment of dismission welfare, whichever is earlier, the liabilities arising from the
compensation for the termination of the labor relationship with employees are recognized and included in current profits and losses.
32. Estimated liabilities
(1) Recognition standards for estimated liabilities
When the obligation related to product quality assurance contingency is a current obligation undertaken by the Company, and
the fulfillment of this obligation is likely to result in the outflow of economic benefits, and the amount of this obligation can be reliably
measured, it is recognized as an estimated liability.
(2) Measurement method for estimated liabilities
Estimated liabilities of the Company shall be measured initially pursuant to the optimal estimate of expenditure required to
perform relevant current obligations.
When determining the optimal estimate, the Company shall comprehensively consider such factors as relevant risks and
uncertainties related to contingencies and the time value of currency. If there is significant effect on time value of money, the best
estimate is determined by discounting the relevant future cash outflow.
The best estimate is handled in the following situations:
If there is a continuous range (or interval) of required expenses and the likelihood of various outcomes occurring within that
range is the same, the best estimate is determined based on the average of the upper and lower limits of the range.
If there is no continuous range (or interval) of required expenses, or although there is a continuous range, the likelihood of various
outcomes occurring within that range is different, in the event that there is a contingency involving a single item, the best estimate shall
be determined based on the amount most likely to occur; if the contingency involves multiple items, the best estimate shall be
determined based on various possible outcomes and related probabilities.
If all or part of the expenditures to pay off estimated liabilities by the Company are expected to be compensated by third parties,
once it is basically certain that compensation amount can be received, that amount can be recognized as asset individually but will not
exceed book value of estimated liabilities.
33. Share-based payments
(1) Types of share-based payments
The share-based payment of the Company is divided into equity settled share-based payment and cash settled share-based
payment.
(2) Method for determining the fair value of equity instruments
For equity instruments such as options granted in an active market, their fair value is determined based on the quoted price in the
active market. For equity instruments such as options granted without an active market, the fair value is determined using option pricing
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models, etc. The selected option pricing model considers the following factors: 1) The exercise price of the option; 2) The validity
period of the option; 3) The current price of the underlying shares; 4) The expected volatility of stock price; 5) The expected dividend
of the shares; 6) The risk-free interest rate during the validity period of the option.
When determining the fair value of equity instruments on the grant date, the Company shall consider the impact of market
conditions and non-vesting conditions specified in the share-based payment agreement. If there are non-vesting conditions for share-
based payment, as long as the employee or other party meets all non-market conditions (such as service period, etc.) of the vesting
conditions, it is confirmed that the corresponding cost of the service has been received.
(3) Basis for confirming the best estimate of exercisable equity instruments
On each balance sheet date during the waiting period, the best estimate is made based on the latest changes in the number of
eligible employees and subsequent information, and the estimated number of eligible equity instruments is revised. On the vesting date,
the final estimated number of exercisable equity instruments is consistent with the actual number of exercisable equity instruments.
(4) Accounting treatment method
1) Accounting treatment for equity settlement and cash settlement of share-based payments
The share-based payment settled by equity shall be measured at the fair value of the equity instruments granted to employees. If
the right is exercisable immediately after the grant, it shall be included in the relevant costs or expenses according to the fair value of
the equity instruments on the grant date, and the capital reserve shall be increased accordingly. If the right can be exercised only after
completing the services within the waiting period or meeting the prescribed performance conditions, on each balance sheet date within
the waiting period, the services obtained in the current period shall be included in the relevant costs or expenses and capital reserves
on the basis of the best estimate of the number of equity instruments exercisable and according to the fair value on the grant date of
equity instruments. After the exercisable date, the recognized relevant costs or expenses and the total amount of owner's equity will
not be adjusted.
Cash-settled share-based payment will be measured according to the fair value of liabilities borne by the Company which is
calculated and recognized based on shares or other equity instruments. If the right is exercisable immediately after the grant, the fair
value of the Company's liabilities shall be included in the relevant costs or expenses on the date of grant, and the liabilities shall be
increased accordingly. For cash settled share-based payment that can be exercised only after completing the services in the waiting
period or meeting the prescribed performance conditions, on each balance sheet date in the waiting period, based on the best estimate
of the exercisable rights, the services obtained in the current period shall be included in the cost or expense and the corresponding
liabilities according to the fair value amount of the Company's liabilities. On each balance sheet date and settlement date before the
settlement of relevant liabilities, the fair value of liabilities shall be re-measured, and the changes shall be included in the current profits
and losses.
2) Accounting treatment for modification of terms and conditions of share-based payment
For adverse modifications, the Company considers that the change has never occurred and continues to account for the services
obtained.
For favorable modifications, the Company shall handle them in accordance with the following provisions: if the modification
increases the fair value of the equity instruments granted, the enterprise shall recognize the increase in services obtained accordingly
based on the increase in fair value of the equity instruments. If the modification occurs during the waiting period, the fair value of the
services obtained between the confirmation of the modification date and the modified vesting date shall include both the service amount
determined based on the fair value of the original equity instrument on the grant date during the remaining original waiting period and
the increase in the fair value of the equity instrument. If the modification occurs after the vesting date, the increase in the fair value of
the equity instrument shall be immediately recognized. If the share-based payment agreement requires employees to only obtain the
modified equity instrument after completing a longer period of service, the enterprise shall recognize the increase in the fair value of
the equity instrument throughout the waiting period.
If the modification increases the number of equity instruments granted, the enterprise will recognize the fair value of the increased
equity instruments as an increase in the acquisition of services. If the modification occurs during the waiting period, the fair value of
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the services obtained between the confirmation of the modification date and the vesting date of the added equity instruments shall
include both the service amount determined based on the fair value of the original equity instrument on the grant date during the
remaining original waiting period and the increase in the fair value of the equity instrument.
If the enterprise modifies its vesting conditions in a way that benefits its employees, such as shortening the waiting period, and
changing or canceling performance conditions (rather than market conditions), the Company shall consider the modified vesting
conditions when dealing with them.
3) Accounting treatment for cancellation of share-based payment
If the equity instruments granted are canceled within the waiting period, the Company shall regard cancellation of the equity
instruments granted as acceleration of exercising the rights. The amount which shall be recognized within the remaining waiting period
shall be included in current profits and losses immediately, and the capital reserve shall be recognized simultaneously. If employees or
other parties are able to choose to meet non-vesting conditions but fail to do so during the waiting period, the Company will treat them
as cancellation of equity instruments granted.
34. Revenue
Accounting policies adopted for disclosing revenue recognition and measurement according to business types
The Company's revenue mainly comes from selling goods.
(1) General principles for revenue recognition
The Company has fulfilled its contractual obligations by recognizing revenue based on the transaction price allocated to the
performance obligation when the customer obtains control of the relevant goods or services. Performance obligation refers to the
commitment made by the Company in the contract to transfer goods or services that can be clearly distinguished to customers.
Obtaining the control power over the relevant goods means being able to dominate the use of such goods and obtain almost all economic
benefits from them.
The Company evaluates the contract from the commencement date, identifies the individual performance obligations included in
the contract, and determines whether each individual performance obligation is to be performed within a certain period of time or at a
certain point in time. If one of the following conditions is met, it belongs to the performance obligation fulfilled within a certain period
of time, and the Company recognizes revenue within a certain period of time according to the performance progress: 1) The customer
obtains the contract at the same time as the Company fulfills the contract. Consuming the economic benefits of the Company's
performance; 2) Customers can control the goods under construction in the process of performance of the Company; 3) The goods
produced in the process of performance by the Company have irreplaceable uses, and the Company has the right to collect payments
for the accumulated performance so far during the whole contract period. Otherwise, the Company recognizes the revenue when the
consumer obtains the control power over relevant goods or services.
For performance obligations performed within a certain period of time, the Company adopts the input method to determine the
appropriate progress of performance based on the nature of goods and services. The input method is to determine the progress of
performance based on the investment made by the Company to fulfill its obligations. If the performance progress cannot be reasonably
determined and the costs incurred are expected to be compensated, the Company will recognize the revenue according to the amount
of costs incurred until the performance progress can be reasonably determined.
(2) Specific methods of revenue recognition
1) The principle for recognizing domestic offline sales revenue of products: If the Company sells its products to engineering
contractors, dealers, and end customers, and the contract is signed without installation, the Company will send the goods to the customer
or the customer will pick them up at their doorstep according to the delivery method agreed in the sales contract. The customer receives
the goods and accepts them as qualified. The revenue is recognized when the Company obtains the customer's receipt certificate.
2) The principle for recognizing revenue from overseas offline sales of products: For domestic companies that directly export
and sell products, FOB terms are adopted. For those that declare and export through sea and air freight, the export customs declaration
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procedures are completed, the customs declaration form is obtained, and the revenue is recognized when obtaining the bill of lading.
For customs declaration and export through express delivery, revenue shall be recognized based on the date of the customs declaration.
If the overseas subsidiary sells overseas, the goods shall be delivered to the customer or picked up at the customer's doorstep according
to the agreed delivery method with the customer. Revenue shall be recognized when the customer receives the goods and the acceptance
is qualified.
3) The principle for recognizing sales revenue through online self operation mode of products: In self operation mode, the
Company mainly sells products directly to consumers through domestic e-commerce platforms (Tmall, Taobao, JD, PDD, Suning) and
overseas e-commerce platforms (Amazon, Lazada, Shoppe). The Company confirms online self operated business revenue when
sending out goods, either directly confirmed by consumers or automatically confirmed by the system's default delivery time and
meeting the return period terms.
4) Principle for recognizing sales revenue of system integration: The sales of company system integration products include
providing customers with supporting products, installation, debugging, and system trial operation, and other supporting services. After
passing the acceptance inspection, sales revenue is recognized.
5) Software sales revenue recognition principle: The software is directly provided to the buyer and requires a dedicated software
authorization code to be used. After the software authorization code is provided to the buyer, the realization of software sales revenue
is recognized. If the company contract stipulates that the software needs to be installed, debugged, or inspected, the software sales
revenue will be recognized after the installation, debugging, or inspection are completed and an acceptance report is obtained.
(3) Principles for income processing of specific transactions
1) A contract with quality assurance clauses attached
The Company shall assess whether the quality assurance provides a separate service beyond ensuring that the products sold meet
established standards to customers. If the Company provides additional services, it shall be treated as a single performance obligation
and subject to accounting treatment in accordance with the income standards; otherwise, the quality assurance responsibility shall be
accounted for in accordance with the accounting standards for contingencies.
2) Main responsible persons and agents
The Company determines whether it the main responsible person or agent when engaging in transactions based on whether it has
control over the goods or services before transferring them to customers. If the Company is able to control the goods or services before
transferring them to customers, it is the main responsible person and recognizes revenue based on the total amount of consideration
received or receivable; otherwise, the Company acts as an agent and recognizes revenue based on the expected amount of commission
or handling fees entitled to receive. This amount is determined by deducting the total amount of consideration received or receivable
from the amount payable to other relevant parties.
35. Contract cost
(1) Contract performance cost
If the cost incurred by the Company in performing the contract does not fall within the scope of other Accounting Standards for
Enterprises (except revenue standards), it shall be recognized as an asset as contract performance cost when the following conditions
are met simultaneously:
1) The cost is directly related to a current or expected contract, including direct labor, direct materials, manufacturing expenses
(or similar expenses), costs clearly borne by the customer and other costs incurred solely as a result of the contract;
2) This cost increases the resources that the enterprise will use to fulfill its performance obligations in the future;
3) The cost is expected to be recovered.
The asset is reported in inventories or other non-current assets based on whether its initial recognition amortization period has
exceeded a normal operating cycle.
(2) Contract acquisition cost
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If the incremental cost incurred by the Company for acquiring the contract is expected to be recovered, it shall be recognized as
an asset as the contract acquisition cost. Incremental cost refers to the cost (such as sales commission) that will not be incurred if the
company does not obtain the contract. For amortization periods not exceeding one year, they are included in current profits and losses
when incurred.
(3) Amortization of contract costs
The assets related to contract costs mentioned above are recognized on the same basis as the revenue from goods or services
related to the asset, and are amortized at the time of performance or according to the progress of performance, and are included in
current profits and losses.
(4) Impairment of contract costs
If the book value of the assets related to contract costs mentioned above is higher than the difference between the expected
remaining consideration for the transfer of goods related to the asset and the estimated cost to be incurred for the transfer of the related
goods of the Company, the excess shall be subjected to provision for impairment and recognized as losses from impairment of assets.
After the provision for impairment has been made, if the factors causing impairment in the previous period change, resulting in
a difference between the above two items higher than the book value of the asset, the original provision for impairment of the asset
shall be reversed and included in current profits and losses. However, the reversed book value of the asset shall not exceed the book
value of the asset on the reversal date assuming no provision for impairment.
36. Government subsidies
(1) Type
Government subsidies refer to monetary and non-monetary assets acquired by the Company from the government for free.
According to the subsidy target specified in the government documents, government subsidies are divided into government subsidies
related to assets and government subsidies related to income.
For government subsidies that are not clearly defined in government documents, the Company divides them into government
subsidies related to assets or government subsidies related to income based on the actual subsidy targets. The relevant judgment basis
is explained in Note VII 35. Deferred income/48. Other income.
Asset-related governmental subsidies refer to the governmental subsidies that are obtained by the Company and used for
constructing long-term assets, or forming the long-term assets in other ways. The government subsidies related to income refer to other
government subsidies other than those related to assets.
(2) Recognition of government subsidies
If there is evidence at the end of the period that the Company can meet the relevant conditions stipulated in the financial support
policy and is expected to receive financial support funds, government subsidies shall be recognized based on the receivable amount. In
addition, government subsidies are recognized upon actual receipt.
If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable. If government subsidies
are non-monetary assets, they shall be measured at fair value. If the fair value cannot be obtained reliably, it shall be measured at the
nominal amount (RMB 1). Government subsidies measured at their nominal amounts are directly included in the current profits and
losses.
(3) Accounting treatment method
Based on the essence of economic transactions, the Company determines whether a certain type of government subsidy business
shall be accounted for using the gross price method or the net amount method. Normally, the Company only uses one method for
similar government subsidy businesses, and consistently applies this method for that business.
Item Accounting content
Government subsidy categories accounted
Other government subsidies except for government interest subsidies
for using the gross price method
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Government subsidy categories accounted
Government interest subsidies
for using the net amount method
Government subsidies related to assets shall be used to offset the book value of the related assets or recognized as deferred
incomes. Government subsidies related to assets are recognized as deferred income and included in the profits and losses in stages
within the useful life of the assets constructed or purchased in a reasonable and systematic way.
Government subsidies related to income used to compensate related costs or losses in later periods shall be recognized as deferred
income, and included in current profits and losses or to write off related costs during the period of recognition of related costs or losses.
Relevant costs or losses incurred for compensation shall be directly included in current profits and losses or to write off related costs.
The government subsidies related to the enterprise's daily activities shall be included in other income or offset against relevant
costs; and the government subsidies unrelated to the enterprise's daily activities shall be included in non-operating income and
expenditure.
Government subsidies related to policy preferential loan interest subsidies are received to offset related borrowing costs; if a
policy preferential interest rate loan provided by the lending bank is obtained, the actual received loan amount shall be used as the
entry value of the loan, and the relevant borrowing costs shall be calculated based on the loan principal and the policy preferential
interest rate.
When confirmed government subsidies need to be returned, if the book value of the relevant assets is offset at the initial
recognition, the book value of the assets shall be adjusted; if there is a balance of related deferred income, it shall be offset against the
book balance of related deferred income, and the excess shall be included in current profits and losses; if there is no relevant deferred
income, it shall be directly included in current profits and losses.
37. Deferred income tax assets/deferred income tax liabilities
Deferred income tax assets and deferred income tax liabilities are calculated and recognized based on the differences (temporary
differences) between the tax bases of assets and liabilities and their book values. On the balance sheet date, the deferred income tax
assets and deferred income tax liabilities shall be measured according to the tax rate applicable to the period during which the assets
are expected to be recovered or the liabilities are expected to be paid off.
(1) Basis for recognizing deferred income tax assets
The Company recognizes deferred income tax assets arising from deductible temporary differences to the extent that it is likely
to obtain taxable income that can be used to offset deductible temporary differences, deductible losses that can be carried forward to
future years, and tax deductions. However, deferred income tax assets arising from the initial recognition of assets or liabilities in
transactions with the following characteristics are not recognized: (1) The transaction is not a business merger; (2) At the time of
transaction, neither accounting profit nor taxable income (or deductible loss) will be affected.
For deductible temporary differences related to the investments of associates, the corresponding deferred income tax assets are
recognized if the following conditions are met: the temporary differences are likely to be reversed in the foreseeable future, and the
taxable income amount used to offset the deductible temporary differences is likely to be obtained in the future.
(2) Basis for recognizing deferred income tax liabilities
The Company recognizes temporary differences in taxable income between the current and previous periods as deferred income
tax liabilities. But it does not include:
1) Temporary differences formed by the initial recognition of goodwill;
2) Transactions or events that are not formed by business mergers and do not affect accounting profits or temporary differences
in taxable income (or deductible losses) at the time of their occurrence;
3) The temporary taxable difference related to the subsidiaries and associates, whose time of the reverse can be controlled and
which is unlikely to be reversed in the excepted future.
(3) When the following conditions are met simultaneously, the deferred income tax assets and deferred income tax
liabilities shall be presented as the net amount after offsetting
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1) The enterprise has the legal right to carry out the net settlement for the current tax assets and current tax liabilities;
2) Deferred income tax assets and deferred income tax liabilities are related to the income tax levied by the same tax collection
and management department on the same taxpayer or different taxpayers. However, in each future period in which significant deferred
income tax assets and deferred income tax liabilities are reversed, the involved taxpayers intend to settle current income tax assets and
current income tax liabilities at net amount or acquire assets and settle liabilities at the same time.
38. Leasing
(1) Accounting treatment method for leasing as a lessee
On the commencement date of the lease term, except for short-term leases and low value asset leases that apply simplified
processing, the Company recognizes right-of-use assets and lease liabilities for leases.
1) Short-term leases and low-value asset leases
Short-term leases are leases with a lease term of 12 months or less, excluding the purchase option. Low value asset lease refers
to the lease with lower value when the single leased asset is a brand-new asset.
The Company does not recognize the right-of-use assets and lease liabilities for the following short-term leases and low-value
asset leases, and the relevant lease payments are included in the relevant asset costs or current profits and losses according to the
straight-line method in each period of the lease term.
The Company recognizes right-of-use assets and lease liabilities for short-term leases and low value asset leases other than those
mentioned above.
2) Accounting policies for right-of-use assets
The Company initially measures the right-of-use assets at cost, which includes:
① The initial measurement amount of lease liabilities;
② For the lease payment paid on or before the commencement date of the lease term, if there is lease incentive, the relevant
amount of lease incentive enjoyed shall be deducted;
③ Initial direct expenses incurred by the Company;
④ The costs expected to be incurred by the Company to dismantle and remove the leased assets, restore the site where the leased
assets are located or restore the leased assets to the state agreed in the lease terms, but excluding the costs incurred for the production
of inventories.
After the commencement date of the lease term, the Company adopts a cost model for subsequent measurement of the right-of-
use asset.
If the lessee can be reasonably determined that the ownership of the leased asset can be obtained when the lease term expires,
depreciation shall be accrued by the Company during the remaining useful life of the leased asset. If it cannot be reasonably determined
that the ownership of the leased asset can be obtained when the lease term expires, depreciation shall be accrued by the Company
during the shorter period of the lease term and the remaining useful life of the leased asset. For right-of-use assets with provision for
impairment, depreciation shall be calculated in future periods based on the book value after deducting the impairment provision in
accordance with the above principles.
The Company determines whether the right-of-use assets have been impaired and accounts for any identified impairment losses
according to the "Accounting Standards for Enterprises No. 8 - Asset Impairment". Please refer to Note (XXVIII) Long-term assets
impairment for details.
3) Accounting policies for lease liabilities
Lease liabilities are initially measured by the Company according to the present value of the unpaid lease payments on the
commencement date of the lease term. In calculating the present value of the lease payment, the Company adopts the embedded interest
rate of the lease as the discount rate; if the embedded interest rate of the lease cannot be determined, the incremental borrowing rate of
the Company shall be used as the discount rate. Lease payments include:
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① The fixed payment amount and substantial fixed payment amount after deducting the amount related to lease incentives;
② Variable lease payments depending on index or ratio;
③ When the Company reasonably determines that the option will be exercised, the lease payment amount includes the exercise
price of the purchase option;
④ When the lease term reflects that the Company will exercise the right to terminate the lease, the lease payment amount includes
the amount that needs to be paid to exercise the right to terminate the lease;
⑤ The amount expected to be paid according to the residual value of the guarantee provided by the Company.
The Company calculates the interest expenses of the lease liability in each period of the lease term according to the fixed discount
rate and records it into the current profits and losses or the cost of relevant assets.
The amount of variable lease payments not included in the measurement of lease liabilities shall be included in current profits
and losses or relevant asset costs when actually incurred.
(2) Accounting treatment method for leasing as a lessor
1) Classification of leases
On the lease commencement date, the Company divides the lease into financial lease and operating lease. The finance lease
means almost all leases that substantially transfer all risks and rewards related to the ownership of a leased asset, the ownership of
which may be finally transferred or may not be transferred. Operating leases refer to leases other than financial leases.
If a lease involves one or more of the following situations, the Company usually classifies it as a financing lease:
① At the expiration of the lease term, the ownership of the leased asset is transferred to the lessee;
② The lessee has the right to choose to purchase the leased asset; the established purchase price is expected to be much lower
than the fair value of the leased asset when exercising the right of choice, and hence it can be reasonably determined that the Company
will exercise this right of choice on the lease beginning date.
③ Even if the ownership of the asset is not transferred, the lease term accounts for the majority of the useful life of the leased
asset.
④ On the lease commencement date, the present value of the lease proceeds is almost equivalent to the fair value of the leased
asset.
⑤ The leased asset is of a special nature. Only the lessee can use the leased asset without major transformation.
If a lease shows one or more of the following signs, the Company may also classify it as a financing lease:
① If the lessee cancels the lease, the losses incurred by the lessor due to the cancellation of the lease shall be borne by the lessee.
② The gains or losses arising from fluctuations in the fair value of residual assets are attributable to the lessee.
③ The lessee has the ability to continue leasing at a rent significantly lower than the market level until the next period.
2) Accounting treatment of financial leasing
On the lease commencement date, the Company recognizes the finance lease receivables for the finance lease and terminates the
recognition of the finance lease assets.
At the initial measurement of receivable financing lease payments, the sum of the unguaranteed residual value and the present
value of lease payments not yet received on the commencement date of the lease term discounted at the implicit interest rate of the
lease shall be used as the entry value of receivable financing lease payments. The lease receipt amount includes:
① The fixed payment amount and substantial fixed payment amount after deducting the amount related to lease incentives;
② Variable lease payments depending on index or ratio;
③ When it is reasonably determined that the lessee will exercise the purchase option, the lease receipt amount includes the
exercise price of the purchase option;
④ When the lease term reflects that the lessee will exercise the right to terminate the lease, the lease receipt amount includes the
amount that needs to be paid by the lessee to exercise the right to terminate the lease;
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⑤ The residual value of the guarantee provided by the lessee, the party related to the lessee, and an independent third party with
the ability to fulfill the guarantee obligation to the lessor.
The Company calculates and recognizes interest income for each period of the lease term based on a fixed lease interest rate.
Variable lease payments that are not included in the net lease investment measurement are included in current profits and losses when
actually incurred.
3) Accounting treatment of operating leases
The Company adopts the straight-line method or other systematic and reasonable methods to recognize the rental income from
operating leases during each period of the lease term; the capitalization of initial direct expenses related to operating leases shall be
amortized over the lease term on the same basis as the recognition of rental income, and shall be included in current profits and losses
in installments; the variable lease payments related to operating leases that are not included in the lease income are included in current
profits and losses when actually incurred.
39. Other important accounting policies and estimates
None
40. Changes of significant accounting policies and accounting estimates
(1) Significant accounting policy changes
□ Applicable Not applicable
(2) Changes in significant accounting estimates
□ Applicable Not applicable
(3) Implementation of new accounting standards adjustment for the first time starting from 2024. Relevant project information
on financial statements at the beginning of the year
□ Applicable Not applicable
41. Others
None
VI. Taxation
1. Main tax types and tax rates
Tax Type Tax Basis Tax rates
13.00%、9.00%、6.00%、5.00%、
Selling goods or providing taxable
VAT 3.00%, and applicable value-added tax
services
rate for overseas subsidiaries in their
registered location
Urban maintenance and construction tax Paid turnover tax amount 7.00%、5.00%
Please refer to the explanation of income
Enterprise income tax Taxable income
tax disclosure for details.
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Education surcharge Paid turnover tax amount 3.00%
Local education surcharges Paid turnover tax amount 2.00%
Based on 70% of the original value of
Property tax the property (or rental income) as the tax 1.20%、12.00%
benchmark
Disclosure of information on taxpayers with different corporate income tax rates
Name of Taxpayer Income tax rate
ZKTECO CO., LTD. 15.00%
Xiamen Zkteco Biometric Identification Technology Co., Ltd. 20.00%
Shenzhen ZKTeco Biometric Identification Technology Co.,
20.00%
Ltd.
ZK INVESTMENTS INC. 21.00%
ZK TECHNOLOGY LLC Not applicable
ZKTeco Sales Co., Ltd. 25.00%
Hangzhou ZKTeco Hanlian E-commerce Co., Ltd. 20.00%
ZKCserv Technology Limited Co., Ltd. 20.00%
Dalian ZKTeo CO., Ltd. 20.00%
XIAMEN ZKTECO CO., LTD. 15.00%
ZKTeco Huayun (Xiamen) Integrated Circuit Co., Ltd. 20.00%
ZKTECO VIETNAM TECHNOLOGY COMPANY LIMITED 20.00%
ZKTECO (GUANGDONG) CO., LTD 15.00%
Xi'an ZKTeco Co., Ltd. 20.00%
ZKTECO CO., LIMITED 16.50%, 8.25%
ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET
25.00%
LIMITED SIRKETI.
ZKTECO LATAM, S.A. DE C.V. 30.00%
ZK SOFTWARE DE MEXICO, S.A. DE C.V. 30.00%
ZKTECO COLOMBIA SAS 35.00%
ZKTECO (M) SDN. BHD. 24.00%
ZKTECO BIOMETRICS INDIA PRIVATE LIMITED 25.00%, 15.00%
ZKTECO EUROPE SL 25.00%
ZKTECO IRELAND LIMITED 12.50%
ZKTeco Deutschland GmbH 31.225%
ZKTECO ITALIA S.R.L. 27.90%
ZKTECO UK LTD 19.00%, 25.00%
ZKTECO PERU SOCIEDAD ANONIMA CERRADA 29.50%
ZKTECO THAI CO., LTD. 20.00%, 15.00%, 0.00%
ZKTeco Chile SpA 27.00%
SOLUCIONES INTEGRALES Y SISTEMAS SpA 27.00%
ZKTECO SECURITY L.L.C 0.00%
ZKTECO ARGENTINA S.A. 25.00%, 30.00%, 35.00%
Limited Liability Company "ZKTeco biometrics and security" 20.00%
ZKTECO Investment Inc. 21.00%
ZKTECO USA LLC Not applicable
ARMATURA LLC. Not applicable
Armatura Co., Ltd. 25.00%, 22.00%, 20.00%, 10.00%
RALVIE AI INC. 38.00%
ZKTeco Japan Co., Ltd. 23.20%
PT. ZKTECO BIOMETRICS INDONESIA 22.00%, 11.00%
ZK INVESTIMENTOS DO BRASIL LTDA. 25.00%
ZKTECO DO BRASIL S.A. 25.00%
ZKTeco Latam R&D S.A. 25.00%, 30.00%, 35.00%
NGTECO CO., LIMITED 16.50%, 8.25%
ZKTECO BIOMETRIC LIMITED 30.00%
ZKTECO PANAMA, S.A. 5.00%
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ZK INTELLIGENT SOLUTIONS (PTY) LTD 27.00%
ZKTECO BIOMETRICS KENYA LIMITED 30.00%
ZKTECO ROMANIA S.R.L 16.00%
Hubei ZKTeco Co., Ltd. 20.00%
Wuhan ZKTeco Perception Technology Co., Ltd. 20.00%
ZKTECO SG INVESTMENT PTE. LTD. 4.25%, 8.50%, 17.00%
ZKTECO SINGAPORE PTE. LTD. 4.25%, 8.50%, 17.00%
ZKDIGIMAX PTE. LTD. 4.25%, 8.50%, 17.00%
ZKDIGIMAX PANAMA, S.A. 25.00%
Armatura Tech Co., Ltd. 20.00%, 15.00%, 0.00%
ZKDIGIMAX (PTY) LTD 27.00%
PT. ZKDIGIMAX EXCEL NOBLE 22.00%, 11.00%
ZKDIGIMAX CHINA CO., LTD. 20.00%
ZKDIGIMAX COLOMBIA SAS 35.00%
ZK TECHNOLOGY MOROCCO 30.00%
ZKTECO EGYPT LLC 22.50%
ZKTECO BUSINESS SOLUTIONS COMPANY 20.00%
2. Tax incentives
(1) Article 28 of the "Law of the People's Republic of China on Enterprise Income Tax" stipulates that high-tech enterprises that
require key support from the state shall be subject to corporate income tax at a rate of 15%.
1) In December 2021, the Company obtained a high-tech enterprise certificate (No. GR202144002274), which is valid for three
years.
2) In November 2022, XIAMEN ZKTECO CO., LTD. obtained a high-tech enterprise certificate (No. GR202235100737), which
is valid for three years.
3) In December 2022, Zkteco (Guangdong) Co., Ltd. obtained a high-tech enterprise certificate (No. GR202244002616), which
is valid for three years.
(2) According to the relevant provisions of the "Notice of the Ministry of Finance and the State Administration of Taxation on
Value-added Tax Policies for Software Products" (CS [2011] No. 100) and the "Notice on Questions of Policies on Encouraging the
Development of the Software and Integrated Circuit Industries" (CS [2000] No. 25), from January 1, 2011, for general taxpayers of
value-added tax who sell software products developed and produced by themselves, after value-added tax is levied at the applicable
tax rate, a policy of taxation and drawback has been implemented for the portion of its actual value-added tax burden exceeding 3.00%.
(3) According to the "Announcement on Further Supporting the Development of Micro and Small Enterprises and Individual
Industrial and Commercial Households" (Announcement No. 12 of the State Administration of Taxation of the Ministry of Finance,
2023), from January 1, 2023 to December 31, 2027, small-scale value-added tax taxpayers, small and micro profit enterprises, and
individual industrial and commercial households can reduce resource tax by half (excluding water resource tax), urban maintenance
and construction tax, property tax, urban land use tax, stamp duty (excluding securities transaction stamp duty), farmland occupation
tax, education surcharge, and local education surcharge. The policy of reducing the taxable income of small and micro profit enterprises
by 25% and paying corporate income tax at a rate of 20.00% will continue to be implemented until December 31, 2027. This policy is
applicable to Shenzhen ZKTeco Biometric Identification Technology Co., Ltd., Hangzhou ZKTeco Hanlian E-commerce Co., Ltd.,
Xi'an ZKTeco Co., Ltd., Hubei ZKTeco Co., Ltd., and Wuhan ZKTeco Perception Technology Co., Ltd., and Dalian ZKTeo CO., Ltd.,
Xiamen Zkteco Biometric Identification Technology Co., Ltd., ZKCserv Technology Limited Co., Ltd., ZKTeco Huayun (Xiamen)
Integrated Circuit Co., Ltd., and ZKDIGIMAX CHINA CO., LTD.
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ZKTeco 2024 Half Year Report
3. Others
(1) LLC type companies are not required to pay corporate income tax, and the profits of LLC companies are summarized to C-
corp type company shareholders or individual shareholders, and then shareholders pay income tax.
(2) If the accumulated taxable net income of ZKTECO ARGENTINA S.A. and ZKTeco Latam R&D S.A. exceeds 5 million
pesos, they will be taxed at a tax rate of 25.00%; those between 5 million and 50 million pesos will be taxed at a tax rate of 30.00%;
those exceeding 50 million pesos will be taxed at a tax rate of 35.00%.
(3) Coexistence of two types of corporate income tax of ZKTECO BIOMETRICS INDIA PRIVATE LIMITED: (1) Normal Tax
corporate income tax rate is 25.00%; (2) MAT Tax: In 2024, the MAT Tax rate was 15.00%. When the Company's tax payable is
less than 15.00% of its book profit, the minimum alternative tax is paid, calculated as 15.00% of its book profit; Normal Tax and
MAT Tax, whichever is higher.
(4) The corporate income tax rate for ZKTeco Deutschland GmbH in 2024 is 31.225%.
(5) ZKTECO THAI CO., LTD. and Armatura Tech Co., Ltd. are small and medium-sized enterprises (SMEs) that meet the
following two conditions: 1) As of the last day of the accounting cycle, the paid in capital shall not exceed THB 5 million; 2) The
total annual revenue from selling goods or providing services shall not exceed THB 30 million. Applicable to tax rates of 20.00%,
15.00%, and 0.00%, specifically including: accounting profits below THB 300,000.00, with a tax rate of 0.00%; from THB
300,000.00 to THB 3,000,000.00, with a tax rate of 15.00%; above THB 3,000,000.00, with tax rate of 20.00%. If the above two
conditions are not met, the tax rate is applicable at 20.00%.
(6) The corporate income tax rate of ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET LIMITED SIRKETI for the
year 2024 was 25%.
(7) PT.ZKTECO BIOMETRICS INDONESIA and PT. ZKDIGIMAX EXCEL NOBLE apply the corporate income tax rate for
the year 2024 as follows:
1) When the total sales revenue does not exceed IDR 4.8 billion, the applicable income tax rate is 11.00%;
2) When the total sales exceed IDR 4.8 billion and do not exceed IDR 50 billion, the taxable income of IDR 4.8 billion accounting
for the proportion of total sales shall be calculated at a tax rate of 11.00%, and the taxable income of the part exceeding IDR 4.8 billion
accounting for the proportion of total sales shall be calculated at a tax rate of 22.00%;
3) When the total sales exceed IDR 50 billion, the applicable income tax rate is 22.00%.
Armatura Co., Ltd. has an income tax rate of 10.00% for sales between KRW 0.00 to KRW 200 million; 20.00% for KRW 200
million to 20 billion; 22.00% for KRW 20-300 billion, and 25.00% for over KRW 300 billion.
(9) The applicable income tax rates for ZKTECO CO., LIMITED and NGTECO CO., LIMITED are 8.25% and 16.50%
respectively; the tax rate is 8.25% for accounting profits of HKD 2 million, and the tax rate is 16.50% for those exceeding HKD 2
million.
(10) ZKTECO PANAMA, S.A. obtained the letter of authorization for the Colon Free Zone, Panama on August 30, 2021. In
2022, export income of enterprises within the zone was exempt from corporate income tax. From January to February 2022, the
corporate income tax rate for sales revenue in Panama was 25.00%. On March 3, 2022, they obtained the SEM license, and from
March 2022, the corporate income tax rate for sales revenue in Panama was 5.00%.
(11) The applicable income tax rates for ZKTECO SG INVESTMENT PTE. LTD., ZKTECO SINGAPORE PTE. LTD. and
ZKDIGIMAX PTE.LTD in 2024 were 4.25%, 8.50%, and 17.00% respectively; the taxable income rate was 4.25% for those within
SGD 10,000, 8.50% for those between SGD 10,000 and SGD 200,000, and 17.00% for the excess.
(12) The applicable corporate income tax rate for ZKTECO UK LTD in 2024 is as follows: Starting from April 2023, if the profit
exceeds GBP 250,000, the income tax rate is 25.00%; if the profit is below GBP 50,000, 19.00% still applies; if the profit is between
GBP 50,000 and GBP 250,000, 25.00% applies, and marginal relief is implemented.
(13) The applicable corporate income tax rate for RALVIE AI INC. in 2024 is as follows: The basic tax rate for federal income
tax is 38.00%. After deducting the tax exemption items specified in Section 149 (1) (t) of the "Law of the People's Republic of China
on Enterprise Income Tax", enterprises can enjoy a 10.00% federal tax credit for income obtained in various provinces (or territories)
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ZKTeco 2024 Half Year Report
of Canada, which is a preferential tax rate of 28.00%. However, for income sourced from outside Canada, the 10.00% credit policy
is not applicable.
(14) For income exceeding JPY 8 million, the corporation tax rate (income tax) of ZKTeco Japan Co., Ltd. is 23.20%.
VII. Notes to Consolidated Financial Statements
1. Monetary funds
Unit: RMB
Item Ending Balance Beginning Balance
Cash on hand 1,289,301.50 1,401,947.05
Cash in bank 1,249,556,930.42 1,921,774,208.61
Other monetary funds 68,411,336.27 67,748,799.12
Total 1,319,257,568.19 1,990,924,954.78
Including: total amount deposited
300,306,926.34 269,209,971.66
abroad
Other explanations:
Note 1: The funds deposited overseas mainly refer to the monetary funds of subsidiary companies ZK INVESTEMENTS INC.,
ZKTECO CO., LIMITED, ZKTECO EUROPE SL, ZKTECO Investment Inc., ZK TECHNOLOGY LLC, ZKTECO SECURITY L.L.C
and Armatura Tech Co., Ltd., as shown in the table below:
Item Ending Balance Beginning Balance
ZK INVESTMENTS INC. 75,740,081.75 50,836,806.93
ZKTECO CO., LIMITED 11,158,341.62 21,156,346.88
ZKTECO EUROPE SL 30,514,778.30 31,524,794.43
ZKTECO Investment Inc. 13,783,033.22 14,446,108.58
ZK TECHNOLOGY LLC 17,156,346.71 14,890,877.77
ZKTECO SECURITY L.L.C 31,388,959.00 30,848,104.48
Armatura Tech Co., Ltd. 46,539,091.19 22,185,840.84
Total amount of funds held overseas by other
74,026,294.55 83,321,091.75
overseas subsidiaries
Total 300,306,926.34 269,209,971.66
Note 2: As of June 30, 2024, in the ending balance of bank deposits, the principal ending balance of the time deposit was RMB
276,154,370.28, and the unearned interest receivable amount was RMB 10,571,554.96, which does not belong to cash and cash
equivalents. Please refer to "VII. Notes to Items in the Consolidated Financial Statements Note 58. Supplementary information of cash
flow statement" for details.
Note 3: Details of restricted monetary capital are as follows:
Item Ending Balance Beginning Balance
Margin of bank acceptance draft 46,267,829.38 46,693,268.67
Frozen litigation funds 800,000.00 800,000.00
Funds in transit 18,993,724.85 7,461,401.81
Total 66,061,554.23 54,954,670.48
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2. Trading financial assets
Unit: RMB
Item Ending Balance Beginning Balance
Financial assets measured at fair value
and whose changes are included in the 545,824,974.27 80,980,203.63
current profits and losses
Including:
Financial products 545,824,974.27 80,887,585.81
Forward foreign exchange settlement and
92,617.82
sales
Including:
Total 545,824,974.27 80,980,203.63
Other explanations:
3. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 448,130,978.25 465,244,619.74
1-2 years 44,491,273.76 41,128,894.34
2-3 years 8,144,317.13 4,763,523.90
Over 3 years 4,475,790.63 3,103,189.24
3-4 years 1,879,889.66 1,424,766.06
4-5 years 1,171,758.66 377,084.95
Over 5 years 1,424,142.31 1,301,338.23
Total 505,242,359.77 514,240,227.22
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Accrual
Book value Proportio Book value
Amount Proportion Amount proporti Amount Amount proporti
n
on on
Accounts
receivable
with
individual 6,838,311.12 1.35% 5,822,311.08 85.14% 1,016,000.04 7,025,009.31 1.37% 6,009,009.31 85.54% 1,016,000.00
provision
for bad
debts
Includin
155
ZKTeco 2024 Half Year Report
g:
Accounts
receivable
with
insignifica
nt single
amount 6,838,311.12 1.35% 5,822,311.08 85.14% 1,016,000.04 7,025,009.31 1.37% 6,009,009.31 85.54% 1,016,000.00
and bad
debt
reserve
withdrawn
separately
Receivable
with
combined
provision 498,404,048.65 98.65% 29,102,547.37 5.84% 469,301,501.27 507,215,217.91 98.63% 28,427,904.25 5.60% 478,787,313.66
for bad
debt
reserve
Includin
g:
Aging
498,404,048.65 98.65% 29,102,547.37 5.84% 469,301,501.27 507,215,217.91 98.63% 28,427,904.25 5.60% 478,787,313.66
portfolio
Total 505,242,359.77 100.00% 34,924,858.45 6.91% 470,317,501.31 514,240,227.22 100.00% 34,436,913.56 6.70% 479,803,313.66
Category name of bad debt reserve made individually:
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Hainan Jialing
Risk in
Digital
2,032,000.00 1,016,000.00 2,032,000.00 1,016,000.00 50.00% payment
Technology
collection
Co., Ltd.
Noble IT
Expected non-
Solutions Co., 415,485.70 415,485.70 418,072.70 418,072.70 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 371,452.20 371,452.20 373,765.03 373,765.03 100.00%
recoverable
Securit
Al Asma Expected non-
353,391.81 353,391.81 355,895.35 355,895.33 100.00%
Technology recoverable
Shanghai Leqi
Automation Expected non-
521,950.00 521,950.00 351,950.00 351,950.00 100.00%
Technology recoverable
Co., Ltd.
Guizhou
Zhongjiang
Expected non-
Intelligent 334,800.21 334,800.21 334,800.21 334,800.21 100.00%
recoverable
Technology
Co., Ltd.
Shenzhen
Zhongjiang Expected non-
329,077.00 329,077.00 100.00%
Intelligent recoverable
Technology
156
ZKTeco 2024 Half Year Report
Co., Ltd.
Shenzhen
Xuhui
Expected non-
Information 326,350.00 326,350.00 326,350.00 326,350.00 100.00%
recoverable
Technology
Co., Ltd.
TIMEWATCH
Expected non-
INFOCOM 300,723.36 300,723.36 302,595.80 302,595.80 100.00%
recoverable
PVT. LTD.
Gansu Fourth
Expected non-
Construction 224,676.00 224,676.00 224,676.00 224,676.00 100.00%
recoverable
Group Co., Ltd.
VENDEMMIA
COMERCIO Expected non-
201,017.79 201,017.79 202,269.42 202,269.42 100.00%
INTERNACIO recoverable
NAL LTDA
Hainan
Zhongkong
Expected non-
IOT 200,089.00 200,089.00 200,089.00 200,089.00 100.00%
recoverable
Technology
Co., Ltd.
Tianjin Eagle
Eye Expected non-
178,130.00 178,130.00 178,130.00 178,130.00 100.00%
Biotechnology recoverable
Co., Ltd.
ASIA
IDENTIFICATI
ON AND
Expected non-
SECURITY 167,864.95 167,864.95 168,910.15 168,910.15 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
Wanqiao
Information Expected non-
165,900.00 165,900.00 165,900.00 165,900.00 100.00%
Technology recoverable
Co.,Ltd.
Baoneng Urban
Development
Expected non-
and 155,292.00 155,292.00 155,292.00 155,292.00 100.00%
recoverable
Construction
Group Co., Ltd.
PONTO RHJ Expected non-
100,061.62 100,061.62 100,684.65 100,684.65 100.00%
EIRELI - ME recoverable
SECUZAA
SECURITY
Expected non-
SOLUTIONS 98,224.87 98,224.87 98,836.46 98,836.46 100.00%
recoverable
LAB PRIVATE
LIMITED
INTELLISMA
RT Expected non-
74,495.84 74,495.84 74,959.68 74,959.68 100.00%
TECHNOLOG recoverable
Y INC.
Qianxinan
Mengku
Expected non-
Business 74,672.00 74,672.00 74,672.00 74,672.00 100.00%
recoverable
Service Co.,
Ltd.
157
ZKTeco 2024 Half Year Report
RBB
Expected non-
Technologies 62,167.12 62,167.12 62,336.90 62,336.90 100.00%
recoverable
Private Limited
Yichang Anlian
Intelligent
Expected non-
Technology 56,085.00 56,085.00 56,085.00 56,085.00 100.00%
recoverable
Development
Co., Ltd.
Dongguan
Yukong
Expected non-
Security 53,703.00 53,703.00 53,703.00 53,703.00 100.00%
recoverable
Technology
Co., Ltd.
Northwood
244,778.11 244,778.11
Investors LLC
Logile 105,108.97 105,108.97
Expected non-
Others 206,589.76 206,589.76 197,260.77 197,260.75 100.00%
recoverable
Total 7,025,009.31 6,009,009.31 6,838,311.12 5,822,311.08
Category name of bad debt reserve made by portfolio:
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year 448,096,654.50 22,404,832.97 5.00%
1-2 years 44,491,271.70 4,449,127.28 10.00%
2-3 years 5,096,479.04 1,528,943.71 30.00%
Over 3 years 719,643.41 719,643.41 100.00%
Total 498,404,048.65 29,102,547.37
Explanation of the basis for determining the portfolio:
Category name of bad debt reserve made by portfolio:
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 498,404,048.65 29,102,547.37 5.84%
Total 498,404,048.65 29,102,547.37
Explanation of the basis for determining the portfolio:
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
□ Applicable Not applicable
(3) Bad debt reserves withdrawn, recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Beginning Current period change amount
Category Ending Balance
Balance Provision Return or Redeem/redem Others
158
ZKTeco 2024 Half Year Report
reversal ption
Accounts
receivable with
insignificant
single amount
6,009,009.31 342,414.47 170,000.00 371,295.70 12,183.00 5,822,311.08
and bad debt
reserve
withdrawn
separately
Aging portfolio 28,427,904.25 871,796.02 -197,152.90 29,102,547.37
Total 34,436,913.56 1,214,210.49 170,000.00 371,295.70 -184,969.90 34,924,858.45
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 371,295.70
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanation of accounts receivable verification:
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending balance
Unit: RMB
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
Customer 1 40,668,761.71 40,668,761.71 8.04% 2,033,438.16
Customer 2 32,853,367.73 32,853,367.73 6.50% 1,654,480.30
Customer 3 16,160,499.57 16,160,499.57 3.20% 808,024.98
Customer 4 15,235,796.47 15,235,796.47 3.01% 761,789.50
Customer 5 13,569,179.91 13,569,179.91 2.68% 1,156,642.18
159
ZKTeco 2024 Half Year Report
Total 118,487,605.39 118,487,605.39 23.43% 6,414,375.12
4. Contract assets
(1) Contract asset situation
Unit: RMB
Ending Balance Beginning Balance
Item Bad debt Bad debt
Book balance Book value Book balance Book value
reserve reserve
Quality
guarantee
321,793.78 39,607.47 282,186.31 321,793.78 39,607.47 282,186.31
deposit
receivable
Total 321,793.78 39,607.47 282,186.31 321,793.78 39,607.47 282,186.31
(2) Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Item Change amount Reasons for changes
(3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Withdrawing bad
debt reserves by 0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00
individual item
Including:
Single item
0.00 0.00% 0.00 0.00% 0.00 0.00 0.00% 0.00 0.00% 0.00
provision
Bad debt reserve
withdrawn by 321,793.78 100.00% 39,607.47 12.31% 282,186.31 321,793.78 100.00% 39,607.47 12.31% 282,186.31
portfolio
Including:
Aging portfolio 321,793.78 100.00% 39,607.47 12.31% 282,186.31 321,793.78 100.00% 39,607.47 12.31% 282,186.31
Total 321,793.78 100.00% 39,607.47 12.31% 282,186.31 321,793.78 100.00% 39,607.47 12.31% 282,186.31
Category name of bad debt reserve made individually single item provision
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Single item
0.00 0.00 0.00 0.00 0.00%
provision
Total 0.00 0.00 0.00 0.00
160
ZKTeco 2024 Half Year Report
Category number of bad debt reserve made by portfolio: 1
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 321,793.78 39,607.47 12.31%
Total 321,793.78 39,607.47
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses
□ Applicable Not applicable
5. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Other receivables 38,923,993.14 32,744,574.20
Total 38,923,993.14 32,744,574.20
(1) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 5,291,380.30 14,563,843.76
Guarantee deposit 14,143,817.82 14,264,601.52
Reserve funds and loans 7,968,212.09 5,408,335.70
Collection and payment on behalf of
6,092,666.14 3,604,884.91
others
Withholding and paying social security
1,716,084.19 1,784,200.95
and capital reserve on behalf of others
Export tax refund 7,917,027.85 3,537,610.99
Others 1,460,531.19 1,840,576.77
Total 44,589,719.58 45,004,054.60
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 24,517,689.86 19,030,462.60
1-2 years 3,838,629.15 1,949,905.24
2-3 years 4,423,923.85 3,010,293.84
Over 3 years 11,809,476.72 21,013,392.92
3-4 years 2,248,717.26 1,467,967.79
4-5 years 1,133,790.62 9,492,724.32
Over 5 years 8,426,968.84 10,052,700.81
161
ZKTeco 2024 Half Year Report
Total 44,589,719.58 45,004,054.60
3) Disclosure by bad debt accrual method
Applicable □ Not applicable
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual
Accrual Book value Book value
Amount Proportion Amount Amount Proportion Amount proporti
proportion
on
Withdraw
ing bad
debt
reserves 4,019,800.32 9.02% 4,019,800.32 100.00% 0.00 12,384,636.67 27.52% 10,624,147.18 85.78% 1,760,489.49
by
individual
item
Including:
Bad debt
reserve
withdraw 40,569,919.26 90.98% 1,645,926.12 4.06% 38,923,993.14 32,619,417.93 72.48% 1,635,333.22 5.01% 30,984,084.71
n by
portfolio
Including:
Aging
2,912,287.11 6.53% 1,645,926.12 56.52% 1,266,360.99 2,920,550.05 6.49% 1,635,333.22 55.99% 1,285,216.83
portfolio
Portfolio
of
deposits,
security 37,657,632.15 84.45% 37,657,632.15 29,698,867.88 65.99% 29,698,867.88
deposits,
employee
loans, etc.
Total 44,589,719.58 100.00% 5,665,726.44 12.71% 38,923,993.14 45,004,054.60 100.00% 12,259,480.40 27.24% 32,744,574.20
Category name of bad debt reserve made individually:
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Shenzhen
Zhongjiang
Expected non-
Intelligent 1,941,963.89 1,941,963.89 100.00%
recoverable
Technology
Co., Ltd.
Shenzhen
Zhongan
Intelligent
7,772,552.26 6,012,062.77 Written off
Control
Technology
Co., Ltd.
Shenzhen 2,500,000.00 2,500,000.00 Written off
162
ZKTeco 2024 Half Year Report
Zhikongtaike
Biometric
Technology
Co., Ltd.
CNB
Expected non-
TECHNOLOG 1,289,511.78 1,289,511.78 1,297,540.85 1,297,540.85 100.00%
recoverable
Y INC.
Guizhou
Zhongjiang
Expected non-
Intelligent 397,428.70 397,428.70 397,428.70 397,428.70 100.00%
recoverable
Technology
Co., Ltd.
Expected non-
New bio 375,838.74 375,838.74 333,561.69 333,561.69 100.00%
recoverable
Expected non-
Others 49,305.19 49,305.19 49,305.19 49,305.19 100.00%
recoverable
Total 12,384,636.67 10,624,147.18 4,019,800.32 4,019,800.32
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year 1,222,219.03 61,110.90 5.00%
1-2 years 83,689.25 8,368.95 10.00%
2-3 years 42,760.80 12,828.24 30.00%
Over 3 years 1,563,618.03 1,563,618.03 100.00%
Total 2,912,287.11 1,645,926.12
Explanation of the basis for determining the portfolio:
Category name of bad debt reserve made by portfolio: deposits, security deposits, employee loans, etc.
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year 23,250,088.78
1-2 years 3,754,939.91
2-3 years 2,115,930.24
Over 3 years 8,536,673.22
Total 37,657,632.15
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1,635,333.22 10,624,147.18 12,259,480.40
1, 2024
Balance as of January
1, 2024 in the current
163
ZKTeco 2024 Half Year Report
period
Provision in current
2,420.72 1,941,963.89 1,944,384.61
period
Canceled after
verification in the 8,512,062.77 8,512,062.77
current period
Other changes 8,172.18 -34,247.98 -26,075.80
Balance as of June 30,
1,645,926.12 4,019,800.32 5,665,726.44
2024
Classification basis and bad debt reserve provision ratio for each stage
Changes in book balance with major changes in loss reserves during the current period
□ Applicable Not applicable
4) Bad debt reserves withdrawn, recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance
Balance Provision Others
reversal cancellation
Withdrawing
bad debt
10,624,147.18 1,941,963.89 8,512,062.77 -34,247.98 4,019,800.32
reserves by
individual item
Bad debt
reserve made
1,635,333.22 2,420.72 8,172.18 1,645,926.12
by aging
portfolio
Total 12,259,480.40 1,944,384.61 8,512,062.77 -26,075.80 5,665,726.44
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Other receivables actually written off 8,512,062.77
Other major receivable written off:
164
ZKTeco 2024 Half Year Report
Unit: RMB
Whether the
Verification and
Nature of other payment is
cancellation
Company name accounts Write-off amount Write-off reason incurred due to
programs that have
receivable related
been performed
transactions
Shenzhen Zhongan
Intelligent Control Bad debt write off
Current account 6,012,062.77 Nonrecoverable No
Technology Co., process
Ltd.
Shenzhen
Zhikongtaike
Bad debt write off
Biometric Current account 2,500,000.00 Nonrecoverable No
process
Technology Co.,
Ltd.
Total 8,512,062.77
Description for writing off other receivables:
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
Customer 1 Export tax refund 7,917,027.85 Within 1 year 17.76%
Customer 2 Guarantee deposit 4,800,000.00 Over 3 years 10.76%
Customer 3 Current account 1,941,963.89 2-3 years 4.36% 1,941,963.89
Within 1 year, 1-2
years
Customer 4 Current account 1,660,163.97 3.72% 1,530,923.59
2-3 years, more
than 3 years
Customer 5 Current account 1,297,540.85 Over 3 years 2.91% 1,297,540.85
Total 17,616,696.56 39.51% 4,770,428.33
6. Prepayments
(1) Prepayments listed by aging
Unit: RMB
Ending Balance Beginning Balance
Aging
Amount Proportion Amount Proportion
Within 1 year 25,622,714.42 95.94% 22,706,163.01 96.80%
1-2 years 1,024,297.16 3.84% 580,816.58 2.48%
2-3 years 36,512.95 0.14% 20,400.64 0.09%
Over 3 years 20,899.01 0.08% 150,527.01 0.63%
Total 26,704,423.54 23,457,907.24
165
ZKTeco 2024 Half Year Report
Explanation of the reasons why prepayments with an aging of over 1 year and significant amounts were not settled in a timely
manner:
(2) Prepayments of the top five ending balances collected by prepayment object
Proportion to
Reasons for
Company name Ending Balance total prepayment Prepayment time
unsettlement
(%)
Supplier 1 2,928,176.77 10.97 Within 1 year Project unsettled
Supplier 2 2,037,124.38 7.63 Within 1 year Project unsettled
Supplier 3 1,640,000.00 6.14 Within 1 year Project unsettled
Supplier 4 1,084,221.85 4.06 Within 1 year Project unsettled
Supplier 5 950,518.92 3.56 Within 1 year Project unsettled
Total 8,640,041.92 32.36 --- ---
Other explanations:
7. Inventories
Whether the Company needs to comply with disclosure requirements in the real estate industry
No
(1) Inventories classification
Unit: RMB
Ending Balance Beginning Balance
Inventories Inventories
depreciation depreciation
reserves or reserves or
Item contract contract
Book balance Book value Book balance Book value
performance performance
cost cost
impairment impairment
reserves reserves
Raw materials 103,807,167.91 3,566,622.78 100,240,545.13 131,431,792.72 2,989,549.95 128,442,242.77
Products in
15,922,377.03 0.00 15,922,377.03 8,583,812.25 8,583,812.25
process
Inventory
263,754,845.24 14,896,839.08 248,858,006.16 238,881,580.26 12,576,970.86 226,304,609.40
goods
Sending goods 9,980,500.33 153,017.86 9,827,482.47 9,129,100.21 174,341.27 8,954,758.94
Consigned
processing 375,202.40 0.00 375,202.40 429,360.95 429,360.95
materials
Total 393,840,092.91 18,616,479.72 375,223,613.19 388,455,646.39 15,740,862.08 372,714,784.31
(2) Inventories depreciation reserves and contract performance cost impairment reserves
Unit: RMB
Item Beginning Increase in current period Decrease in current period Ending Balance
166
ZKTeco 2024 Half Year Report
Balance Reversal or
Provision Others Others
reselling
Raw materials 2,989,549.95 603,963.29 -21,754.14 5,136.32 3,566,622.78
Products in
0.00
process
Inventory
12,576,970.86 4,495,467.90 -242,981.32 1,932,618.36 14,896,839.08
goods
Sending goods 174,341.27 97,493.59 118,817.00 153,017.86
Total 15,740,862.08 5,196,924.78 -264,735.46 2,056,571.68 18,616,479.72
Provision for inventories depreciation made by portfolio
Unit: RMB
End of the period Opening
Portfolio Name Provision ratio Provision ratio
Revaluation Beginning Revaluation
Ending Balance for inventories for inventories
reserve Balance reserve
depreciation depreciation
Provision standards for inventories depreciation reserves made by portfolio
8. Non-current assets due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Debt investment due within one year 9,456,009.28 16,902,617.83
Other creditor's right investment due
within one yea
Long-term receivables due within one
398,303.63 354,996.91
year
Total 9,854,312.91 17,257,614.74
(1) Debt investment due within one year
Applicable □ Not applicable
1) Information on debt investment due within one year
Unit: RMB
Ending Balance Beginning Balance
Portfolio Name Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Certificates of
11,060,888.54 11,060,888.54
Deposit (CD)
Term deposits 9,456,009.28 9,456,009.28 5,841,729.29 5,841,729.29
Total 9,456,009.28 9,456,009.28 16,902,617.83 16,902,617.83
Changes in provision for depreciation of debt investments due within one year in the current period
Unit: RMB
167
ZKTeco 2024 Half Year Report
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
(2) Other creditor's debt investment due within one year
□ Applicable Not applicable
9. Other current assets
Unit: RMB
Item Ending Balance Beginning Balance
Income tax prepaid amount presented as
6,109,751.61 6,221,029.24
net amount after offsetting
Value added tax deduction amount 17,066,412.59 19,249,699.10
Other prepaid taxes 1,939,440.96 395,080.94
Total 25,115,605.16 25,865,809.28
Other explanations:
10. Debt investment
(1) Information on debt investment
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Bank CD -
45,654,578.12 45,654,578.12 57,795,333.29 57,795,333.29
Principal
Bank CD -
606,675.98 606,675.98 1,391,881.44 1,391,881.44
Interest
Debt
investment due -9,456,009.28 -9,456,009.28 -16,902,617.83 -16,902,617.83
within one year
Total 36,805,244.82 36,805,244.82 42,284,596.90 42,284,596.90
Changes in provision for depreciation of debt investments in the current period
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
(2) Important debt investments at the end of the period
Unit: RMB
Ending Balance Beginning Balance
Debt Effective Effective
items Face Coupon Due Overdue Face Coupon Due Overdue
interest interest
value rate Date principal value rate Date principal
rate rate
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ZKTeco 2024 Half Year Report
(3) Provision for impairment
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1, 2024 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
(4) Actual verification of debt investments in the current period
Unit: RMB
Item Write-off amount
Information on important debt investment verification
Explanation of debt investment verification:
Changes in book balance with major changes in loss reserves during the current period
□ Applicable Not applicable
Other explanations:
11. Long-term receivables
(1) Information on long-term receivables
Unit: RMB
Ending Balance Beginning Balance
Discount rate
Item Bad debt Bad debt
Book balance Book value Book balance Book value range
reserve reserve
Employee
3,806,228.60 3,806,228.60 2,802,225.14 2,802,225.14 4.2%-4.3%
housing loan
Long-term
receivables
-398,303.63 -398,303.63 -354,996.91 -354,996.91
due within
one year
Total 3,407,924.97 3,407,924.97 2,447,228.23 2,447,228.23
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Categor
y Accrual Book Accrual Book
Proporti value Proporti value
Amount Amount proporti Amount Amount proporti
on on
on on
Including:
169
ZKTeco 2024 Half Year Report
Including:
Provision for bad debt reserve based on a general model of expected credit losses
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1, 2024 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
(3) Bad debt reserves withdrawn, recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance
Balance Provision Others
reversal cancellation
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Other explanations:
(4) Long-term receivables actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important long-term receivable verification:
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanation of long-term receivable verification:
12. Long-term equity investment
170
ZKTeco 2024 Half Year Report
Unit: RMB
Increase or decrease in the current period
Beginning Other Ending
Beginning Investment Cash Ending
balance of comprehe balance of
Investee balance profit or loss Changes dividends or balance (book
impairment Additional Reduced nsive Impairment impairment
recognized in other profits Others value)
(book value) investment investment income provision
provision under equity equities declared to provision
adjustmen
method pay
ts
I. Joint ventures
II. Joint venture
Silk ID SystemsInc. 274,331.88 281,599.25 -275,151.91 820.03 0.00 0.00
CV Squared,Inc. 3,741,608.66 -7,578.41 23,272.45 3,757,302.70
ZKTECO SMART
CITY
1,765,948.08 -351,211.07 9,861.99 1,424,599.00
(THAILAND) CO.,
LTD.
Xiamen Xingniu
Yunyu Venture
Capital Partnership 24,000,000.00 -110,397.50 23,889,602.50
Enterprise (Limited
Partnership)
Subtotal 29,781,888.62 281,599.25 0.00 0.00 -744,338.89 0.00 0.00 0.00 0.00 33,954.47 29,071,504.20
Total 29,781,888.62 281,599.25 0.00 0.00 -744,338.89 0.00 0.00 0.00 0.00 33,954.47 29,071,504.20
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ZKTeco 2024 Half Year Report
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
Other explanations: mainly due to exchange rate conversion differences.
13. Investment real estate
(1) Investment real estate adopting cost measurement model
Applicable □ Not applicable
Unit: RMB
Houses and Construction in
Item Land use rights Total
buildings progress
I. Original book value
1. Beginning Balance 34,416,026.15 34,416,026.15
2. Increase in current
period
(1) Outsourcing
(2) Transferred
from inventories, fixed
assets, and construction in
progress
(3) Increase in
business merger
3. Decrease in current
period
(1) Disposal
(2) Other
transfers out
4. Ending balance 34,416,026.15 34,416,026.15
II. Accumulated
depreciation and
accumulated amortization
1. Beginning Balance 11,270,537.30 11,270,537.30
2. Increase in current
820,586.04 820,586.04
period
(1) Provision or 820,586.04 820,586.04
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ZKTeco 2024 Half Year Report
amortization
3. Decrease in current
period
(1) Disposal
(2) Other
transfers out
4. Ending balance 12,091,123.34 12,091,123.34
III. Provision for
impairment
1. Beginning Balance
2. Increase in current
period
(1) Provision
3. Decrease in current
period
(1) Disposal
(2) Other
transfers out
4. Ending balance
IV. Book value
1. Ending book value 22,324,902.81 22,324,902.81
2. Beginning book
23,145,488.85 23,145,488.85
value
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
Other explanations:
(2) Investment real estate adopting fair value measurement model
□ Applicable Not applicable
(3) Converted to investment real estate and measured at fair value
Unit: RMB
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ZKTeco 2024 Half Year Report
Accounting Impact on other
Conversion Approval Impact on
Item subject before Amount comprehensive
reason procedure profit and loss
conversion income
(4) Investment real estate without completed property ownership certificate
Unit: RMB
Reasons for not completing the property
Item Book value
ownership certificate
Other explanations:
14. Fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Fixed assets 466,413,000.41 470,167,242.89
Disposal of fixed assets -45,451.60
Total 466,413,000.41 470,121,791.29
(1) Status of fixed assets
Unit: RMB
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment vehicles
others
I. Original book
value:
1. Beginning
436,302,048.48 53,924,758.04 12,969,475.15 105,042,864.86 608,239,146.53
Balance
2. Increase in
7,046,236.13 -181,383.18 107,787.61 4,936,440.56 11,909,081.12
current period
(1)
7,342,632.55 171,411.54 224,984.18 5,836,821.79 13,575,850.06
Purchase
(2)
Transferred from
construction in
progress
(3)
Increase in
business merger
(4) Differences in
foreign currency
-296,396.42 -352,794.72 -117,196.57 -900,381.23 -1,666,768.94
statement
translation
3. Decrease in
64,241.59 84,615.39 55,478.61 637,397.75 841,733.34
current period
(1)
Disposal or 64,241.59 84,615.39 55,478.61 637,397.75 841,733.34
retirement
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ZKTeco 2024 Half Year Report
4. Ending
443,284,043.02 53,658,759.47 13,021,784.15 109,341,907.67 619,306,494.31
balance
II. Accumulated
depreciation
1. Beginning
39,285,147.04 26,521,285.53 7,991,553.19 64,273,917.88 138,071,903.64
Balance
2. Increase in
6,103,618.40 2,247,228.11 597,816.45 6,498,377.09 15,447,040.05
current period
(1)
6,183,556.96 2,402,663.69 674,040.21 6,819,542.68 16,079,803.54
Provision
(2)
Differences in
foreign currency -79,938.56 -155,435.58 -76,223.76 -321,165.59 -632,763.49
statement
translation
3. Decrease in
46,980.10 73,259.56 92,404.97 412,805.16 625,449.79
current period
(1)
Disposal or 46,980.10 73,259.56 92,404.97 412,805.16 625,449.79
retirement
4. Ending
45,341,785.34 28,695,254.08 8,496,964.67 70,359,489.81 152,893,493.90
balance
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
current period
(1)
Provision
3. Decrease in
current period
(1)
Disposal or
retirement
4. Ending
balance
IV. Book value
1. Ending
397,942,257.68 24,963,505.39 4,524,819.48 38,982,417.86 466,413,000.41
book value
2. Beginning
397,016,901.44 27,403,472.51 4,977,921.96 40,768,946.98 470,167,242.89
book value
(2) Fixed assets without completed property ownership certificate
Unit: RMB
Item Book value Reasons for not completing the property
175
ZKTeco 2024 Half Year Report
rights certificate
Houses and buildings of Hybrid
Biometrics IoT Intelligent Industrial 196,885,151.93 In progress
Base Project
Other explanations:
(3) Impairment test of fixed assets
□ Applicable Not applicable
(4) Disposal of fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Transportation vehicles -45,451.60
Total -45,451.60
Other explanations:
15. Construction in progress
Unit: RMB
Item Ending Balance Beginning Balance
Construction in progress 212,440,624.60 138,986,483.73
Engineering materials
Total 212,440,624.60 138,986,483.73
(1) Construction in progress
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Hybrid
Biometrics IoT
Intelligent 23,675,058.84 23,675,058.84 22,612,110.24 22,612,110.24
Industrial Base
Project
Multimodal
Biometrics
Digitalization
129,258,046.42 129,258,046.42 87,417,407.70 87,417,407.70
Industrial Base
Construction
Project
American
Manufacturing
Factory 4,171,587.64 4,171,587.64 2,746,178.39 2,746,178.39
Construction
Project
Thai factory
55,335,931.70 55,335,931.70 26,210,787.40 26,210,787.40
construction
176
ZKTeco 2024 Half Year Report
and office
buildings
Total 212,440,624.60 212,440,624.60 138,986,483.73 138,986,483.73
(2) Current changes in important construction in progress
177
ZKTeco 2024 Half Year Report
Unit: RMB
Proporti
Amount
on of
transferre
Other accumul Accumulated Including:
d to fixed Engineer
Increase in decreases in Ending ated amount of current interest Current interest
Project Name Budget amount Beginning Balance assets in ing Source of Funds
current period the current Balance project interest capitalized capitalization rate
the progress
period investm capitalization amount
current
ent to
period
budget
Hybrid Biometrics IoT Under
Intelligent Industrial Base 214,042,000.00 22,612,110.24 1,062,948.60 0.00 0.00 23,675,058.84 110.57% construct 2,359,113.42 0.00 1
Project ion
Multimodal Biometrics Under
Digitalization Industrial 284,566,264.91 87,417,407.70 41,840,638.72 0.00 0.00 129,258,046.42 45.42% construct 0.00 0.00 2
Base Construction Project ion
Under
Thai factory construction 3
109,095,400.00 26,210,787.40 31,143,887.87 0.00 2,018,743.57 55,335,931.70 52.57% construct 0.00 0.00
and office buildings
ion
Total 607,703,664.91 136,240,305.34 74,047,475.19 0.00 2,018,743.57 208,269,036.96 2,359,113.42 0.00
Note:
1. Fundraising, self owned funds, and bank loans
2. Fundraising and self owned funds
3. Own funds
178
ZKTeco 2024 Half Year Report
(3) Impairment test of construction in progress
□ Applicable Not applicable
16. Right-of-use assets
(1) Information on right-of-use assets
Unit: RMB
Electronic equipment
Item Houses and buildings Transportation vehicles Total
and others
I. Original book value
1. Beginning
104,168,448.02 2,613,027.10 23,200.93 106,804,676.05
Balance
2. Increase in
19,856,763.01 19,856,763.01
current period
(1) Lease 19,856,763.01 19,856,763.01
3. Decrease in
23,409,302.23 194,806.29 23,604,108.52
current period
(1) Expiration of lease 11,453,959.20 11,453,959.20
(2) Lease change 2,363,797.94 2,363,797.94
(3) Termination of
7,204,584.29 158,523.89 7,363,108.18
lease
(4) Differences in
foreign currency 2,386,960.80 36,282.40 2,423,243.20
statement translation
4. Ending balance 100,615,908.80 2,418,220.81 23,200.93 103,057,330.54
II. Accumulated
depreciation
1. Beginning
66,794,766.61 1,327,043.41 13,147.17 68,134,957.19
Balance
2. Increase in
13,944,055.20 499,869.78 2,320.10 14,446,245.08
current period
(1) Provision 13,944,055.20 499,869.78 2,320.10 14,446,245.08
3. Decrease in
22,661,793.84 199,819.75 22,861,613.59
current period
(1) Disposal
(2) Expiration of lease 11,607,290.62 11,607,290.62
(3) Lease change 3,580,782.62 3,580,782.62
(4) Termination of
5,963,298.25 115,590.32 6,078,888.57
lease
(5) Differences in
foreign currency 1,510,422.35 84,229.43 1,594,651.78
statement translation
4. Ending balance 58,077,027.97 1,627,093.44 15,467.27 59,719,588.68
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
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ZKTeco 2024 Half Year Report
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
4. Ending balance
IV. Book value
1. Ending book
42,538,880.83 791,127.37 7,733.66 43,337,741.86
value
2. Beginning book
37,373,681.41 1,285,983.69 10,053.76 38,669,718.86
value
(2) Impairment test of right-of-use assets
□ Applicable Not applicable
Other explanations:
17. Intangible assets
(1) Intangible assets
Unit: RMB
Non-patent
Item Land use rights Patent rights Software Others Total
technology
I. Original book
value
1. Beginning
71,989,469.29 13,302,286.08 116,032.85 85,407,788.22
Balance
2. Increase in
-577,356.68 25,796,811.46 499.26 25,219,954.04
current period
(1) Purchase 25,983,215.83 25,983,215.83
(2) Internal
R&D
(3) Increase in
business
merger
(4) Differences
in foreign
currency -577,356.68 -186,404.37 499.26 -763,261.79
statement
translation
3. Decrease in
111,759.45 111,759.45
current period
(1) Disposal 5,564.75 5,564.75
(2) Decrease in 106,194.70 106,194.70
180
ZKTeco 2024 Half Year Report
business
merger
4. Ending
71,412,112.61 38,987,338.09 116,532.11 110,515,982.81
balance
II. Accumulated
amortisation
1. Beginning
11,344,981.45 7,995,689.88 50,745.21 19,391,416.54
Balance
2. Increase in
621,076.95 927,262.25 7,993.86 1,556,333.06
current period
(1) Provision 621,076.95 978,473.69 7,011.38 1,606,562.02
(2) Differences
in foreign
currency -51,211.44 982.48 -50,228.96
statement
translation
3. Decrease in
43,315.12 43,315.12
current period
(1) Disposal 1,279.90 1,279.90
(2) Decrease in
business 42,035.22 42,035.22
merger
4. Ending
11,966,058.40 8,879,637.01 58,739.07 20,904,434.48
balance
III. Provision
for impairment
1. Beginning
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
4. Ending
balance
IV. Book value
1. Ending book
59,446,054.21 30,107,701.08 57,793.04 89,611,548.33
value
2. Beginning
60,644,487.84 5,306,596.20 65,287.64 66,016,371.68
book value
The proportion of intangible assets formed through internal research and development of the company to the balance of intangible
assets at the end of this period is: 0.00%
18. Goodwill
(1) Original book value of goodwill
Unit: RMB
181
ZKTeco 2024 Half Year Report
Name of Increase in the current period Decrease in the current period
invested entity
Beginning Formed by
or matters Exchange rate Exchange rate Ending Balance
Balance business Disposals
forming fluctuations fluctuations
goodwill merger
ZKTECO (M)
173,149.07 1,078.10 174,227.17
SDN. BHD.
ZK
INVESTIMEN
TOS DO 331,654.65 2,065.03 333,719.68
BRASIL
LTDA.
Total 504,803.72 3,143.13 507,946.85
(2) Information related to the asset group or portfolio of asset groups where goodwill is located
Composition and basis of the
Is it consistent with previous
Name asset group or portfolio to Operating segments and basis
years
which it belongs
It can bring independent cash
ZKTECO (M) SDN.BHD. flow and can be recognized as Not applicable Yes
a separate asset group
It can bring independent cash
ZK INVESTIMENTOS DO
flow and can be recognized as Not applicable Yes
BRASIL LTDA.
a separate asset group
Changes in asset group or asset portfolio
Objective facts and basis that
Name Composition before change Composition after change
lead to changes
Other explanations:
Asset group or portfolio of asset groups
Book value Has there been
of goodwill Main components Book value Determination method any change in the
current period
An asset group or portfolio of asset groups that can
independently generate cash flow, taking into account the Conversion rate
ZKTECO（M）
174,227.17 692,283.84 synergistic effects of business mergers and the management's changes, no other
SDN.BHD.
management or monitoring of production and operating changes
activities
An asset group or portfolio of asset groups that can
independently generate cash flow, taking into account the Conversion rate
ZK INVESTIMENTOS
333,719.68 2,346,157.33 synergistic effects of business mergers and the management's changes, no other
DO BRASIL LTDA.
management or monitoring of production and operating changes
activities
(3) Specific method for determining the recoverable amount
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable Not applicable
182
ZKTeco 2024 Half Year Report
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
(4) Completion of performance commitments and corresponding impairment of goodwill
When goodwill is formed, there is a performance commitment and the reporting period or the previous period in the reporting period
is within the performance commitment period
□ Applicable Not applicable
Other explanations:
19. Long-term deferred expenses
Unit: RMB
Amortization
Increase in current Other reduced
Item Beginning Balance amount for the Ending Balance
period amounts
current period
Decoration works 2,513,047.50 1,079,120.14 704,847.22 16,412.05 2,870,908.37
Employee housing
loan deferred 641,657.60 201,307.01 98,498.32 0.00 744,466.29
interest
Others 614,142.71 3,664,089.96 899,859.25 1,519.16 3,376,854.26
Total 3,768,847.81 4,944,517.11 1,703,204.79 17,931.21 6,992,228.92
Other explanations: The increase in the current period is mainly due to the usage fee of SAP system software.
20. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets not offset
Unit: RMB
Ending Balance Beginning Balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for
29,193,250.62 4,688,215.35 36,366,162.24 5,804,206.98
impairment of assets
Unrealized profits from
98,229,818.50 18,709,702.26 98,721,713.02 17,452,699.91
internal transactions
Deductible losses 257,616,279.59 38,528,718.35 207,081,168.58 31,091,802.32
Withholding rebates 8,667,641.69 1,188,716.84 15,007,767.78 2,143,716.17
Estimated liabilities 600,000.00 90,000.00
Share-based payments 3,102,671.00 478,374.37 7,866,303.64 1,177,039.86
Provision for
13,257,659.13 2,464,130.98 11,003,159.27 1,906,570.77
inventories write-down
Deferred income 1,760,815.34 264,122.30 1,853,549.62 278,032.44
Lease liabilities 42,683,832.34 8,590,798.69 35,689,297.38 7,313,490.56
Total 454,511,968.21 74,912,779.14 414,189,121.53 67,257,559.01
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ZKTeco 2024 Half Year Report
(2) Non-offsetting deferred income tax liabilities
Unit: RMB
Ending Balance Beginning Balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Changes in fair value
of trading financial 1,772,962.85 265,944.43 755,429.17 113,314.37
instruments
Accelerated
depreciation of fixed 21,509,519.83 3,226,427.97 22,133,567.26 3,320,431.55
assets
Right-of-use asset 41,557,512.92 8,209,692.35 34,457,850.98 6,895,307.56
Total 64,839,995.60 11,702,064.75 57,346,847.41 10,329,053.48
(3) Deferred income tax assets or liabilities listed at net amount after offset
Unit: RMB
Amount of mutual Amount of mutual
Ending balance of Beginning balance of
offset between deferred offset between deferred
deferred income tax deferred income tax
Item income tax assets and income tax assets and
assets and liabilities assets and liabilities
liabilities at the end of liabilities at the
after offset after offset
period beginning of period
Deferred income tax
74,912,779.14 67,257,559.01
assets
Deferred income tax
11,702,064.75 10,329,053.48
liabilities
(4) Details of unconfirmed deferred income tax assets
Unit: RMB
Item Ending Balance Beginning Balance
Deductible temporary difference 27,008,821.92 12,690,171.04
Deductible losses 76,306,028.58 67,373,596.51
Total 103,314,850.50 80,063,767.55
(5) The deductible losses of unrecognized deferred income tax assets will expire in the following years
Unit: RMB
Year Closing amount Opening amount Remarks
2024 5,121,337.08 15,985,752.57
2025 4,520,134.11 6,481,611.28
2026 5,445,628.27 3,921,974.11
2027 8,887,116.23 10,275,824.68
2028 19,267,910.69 14,889,082.61
2029 4,581,547.40 2,887,686.36
2030 and beyond 28,482,354.80 12,931,664.90
Total 76,306,028.58 67,373,596.51
Other explanations:
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ZKTeco 2024 Half Year Report
21. Other non-current assets
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Prepayment for
822,241.76 822,241.76 787,973.04 0.00 787,973.04
decoration
Prepaid
equipment 339,600.00 339,600.00 370,641.60 0.00 370,641.60
payment
Prepayment for
15,725,991.21 0.00 15,725,991.21
software
Total 1,161,841.76 1,161,841.76 16,884,605.85 0.00 16,884,605.85
Other explanations:
22. Assets with restricted ownership or use right
Unit: RMB
End of the period Opening
Item Restricte Restricted Restrict Restricted
Book balance Book value Book balance Book value
d type situation ed type situation
Bank Bank
acceptance acceptance
bill margin bill margin
of RMB of RMB
46,267,829. 46,693,268.
Deposit, Deposit,
38, funds in 67, funds in
funds in funds in
Monetary transit of transit of
66,061,554.23 66,061,554.23 transit, 54,954,670.48 54,954,670.48 transit,
funds RMB RMB
frozen frozen
18,993,724. 7,461,401.8
funds funds
85, frozen 1, frozen
litigation litigation
funds of funds of
RMB RMB
800,000.00 800,000.00
Fixed Mortgag See other Mortgag See other
204,397,423.28 196,885,151.93 204,397,423.28 199,029,492.12
assets e explanations e explanations
Intangible Mortgag See other Mortgag See other
49,453,695.00 43,354,405.95 49,453,695.00 43,848,942.89
assets e explanations e explanations
Constructi
Mortgag See other Mortgag See other
on in 153,098,258.15 153,098,258.15 110,185,544.37 110,185,544.37
e explanations e explanations
progress
Total 473,010,930.66 459,399,370.26 418,991,333.13 408,018,649.86
Other explanations:
On December 16, 2019, the subsidiary of the Company, ZKTECO (GUANGDONG) CO., LTD, signed a "Fixed Asset Loan
Contract" with the number of DY (3100) 2019 GD Zi No. 013346 and a maximum mortgage contract with the number of DY (3100)
2019 GD Zi No. 024957 with the Dongguan Branch of Bank of Dongguan Co., Ltd., agreeing to a loan amount of RMB 206 million
and a loan term from December 16, 2019 to December 15, 2029, and agree that the land with the number Y (2018) DGBDCQ No.
0259880 is used as collateral, and the Company has signed a contract with Dongguan Branch of Bank of Dongguan Co., Ltd. with the
185
ZKTeco 2024 Half Year Report
number DY (3100) 2019 ZGB Zi No. 024956, with a maximum guarantee amount of RMB 250 million. Considering that the land area
of the Company's collateral has changed and a new real estate certificate has been obtained for the collateral, on October 19, 2020, the
subsidiary of the Company, ZKTECO (GUANGDONG) CO., LTD, has signed a supplementary agreement with the number
20201013001 with Dongguan Branch of Bank of Dongguan Co., Ltd., which stipulates to change the collateral to Y (2020) DGBDCQ
No. 0248681 land.
23. Notes payable
Unit: RMB
Category Ending Balance Beginning Balance
Commercial acceptance draft 0.00 0.00
Bank acceptance bill 148,568,276.33 122,573,544.09
Total 148,568,276.33 122,573,544.09
The total amount of unpaid notes payable at the end of this period is RMB 0.00.
24. Accounts payable
(1) Listing of accounts payable
Unit: RMB
Item Ending Balance Beginning Balance
Material payment 159,200,586.62 217,082,802.45
Equipment payment 1,456,874.59 932,731.16
Service fee 4,017,255.83 4,834,986.05
Project payment 649,193.64 18,294,116.38
Others 5,914,516.31 3,939,546.28
Total 171,238,426.99 245,084,182.32
(2) Important accounts payable with aging over 1 year or overdue
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Other explanations:
25. Other payables
Unit: RMB
Item Ending Balance Beginning Balance
Other payables 43,034,768.84 36,735,314.36
Total 43,034,768.84 36,735,314.36
(1) Other payables
1) List of other payables by nature of money
Unit: RMB
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ZKTeco 2024 Half Year Report
Item Ending Balance Beginning Balance
Employee reimbursement 6,011,618.61 5,222,956.92
Payment to be settled 4,380,993.29 3,980,996.11
Withholding and paying social security
322,292.08 331,708.81
and capital reserve on behalf of others
Current account 7,626,096.52 7,424,919.78
Collection and payment on behalf of
2,050,273.99 328,337.90
others
Guarantee deposit 2,912,220.50 3,653,667.64
Others 19,731,273.85 15,792,727.20
Total 43,034,768.84 36,735,314.36
(2) Important other accounts payable with aging over 1 year or overdue
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Other explanations:
26. Contract liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Advances on sales 70,472,302.17 65,331,106.17
Total 70,472,302.17 65,331,106.17
Significant contract liabilities with an aging of over 1 year
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Change
Item Reasons for changes
amount
27. Payroll payable
(1) List of payroll payable
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
I. Short-term
56,407,899.55 252,695,306.24 267,591,817.99 41,511,387.80
compensation
II. Post-employment
welfare - defined 222,202.43 15,781,463.69 15,783,253.48 220,412.64
contribution plan
III. Dismissal benefit 0.00 433,834.36 390,434.36 43,400.00
IV. Other welfares due 0.00 0.00 0.00 0.00
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ZKTeco 2024 Half Year Report
within one year
Total 56,630,101.98 268,910,604.29 283,765,505.83 41,775,200.44
(2) List of short-term compensation
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
1.Salary, bonus,
54,515,552.19 235,411,908.64 250,337,369.42 39,590,091.41
allowance and subsidy
2. Employee benefits 463,201.20 3,938,231.46 3,881,674.54 519,758.12
3.Social insurance 196,370.08 10,194,089.20 10,250,974.66 139,484.62
Including: medical
195,814.68 9,603,617.44 9,662,100.27 137,331.85
insurance premium
Work-related injury
555.40 361,526.00 359,928.63 2,152.77
insurance premium
Birth insurance
0.00 228,945.76 228,945.76 0.00
premium
4. Housing fund 54,239.09 2,906,136.27 2,875,830.67 84,544.69
5. Labor union
expenditure and
1,178,536.99 242,428.31 243,456.34 1,177,508.96
personnel education
fund
6. Others 2,512.36 2,512.36
Total 56,407,899.55 252,695,306.24 267,591,817.99 41,511,387.80
(3) List of defined contribution plan
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
1. Basic endowment
214,173.61 15,254,271.65 15,252,403.54 216,041.72
insurance expense
2.Unemployment
8,028.82 527,192.04 530,849.94 4,370.92
insurance
Total 222,202.43 15,781,463.69 15,783,253.48 220,412.64
Other explanations:
28. Taxes and dues payable
Unit: RMB
Item Ending Balance Beginning Balance
VAT 5,998,335.30 7,538,983.47
Consumption tax 34,079.54
Enterprise income tax 5,702,942.83 15,364,635.19
Individual income tax 1,883,569.93 3,712,496.39
Urban maintenance and construction tax 133,786.07 243,439.39
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ZKTeco 2024 Half Year Report
Property tax 777,191.15 496,029.92
Land use tax 52,360.37 7,368.53
Stamp duty 324,896.61 499,102.75
Education surcharge 127,811.07 234,127.14
Others 1,611,057.75 761,967.12
Total 16,611,951.08 28,892,229.44
Other explanations:
29. Non-current liabilities due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Long-term loans due within one year 964,048.11 957,265.72
Lease liabilities due within one year 21,662,062.76 20,137,416.64
Total 22,626,110.87 21,094,682.36
Other explanations:
30. Other current liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Sales rebates payable 8,667,641.69 15,007,767.78
Tax to be transferred to output tax 2,527,692.57 1,456,166.57
Total 11,195,334.26 16,463,934.35
Changes in short-term bonds payable:
Unit: RMB
Amort Whet
Accru
izatio her it
Begin ing Curre Endin
Coup Bond Issue Curre n of is a
Bond Face Issue ning intere nt g
on durati amou nt excess breac
name value Date Balan st at repay Balan
rate on nt issue and h of
ce face ment ce
discou contra
value
nt ct
Total
Other explanations:
31. Long-term loan
(1) Classification of long-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Credit borrowings 8,276,350.81 8,758,524.27
Unexpired interest payable 7,890.00 9,146.49
Long-term loans due within one year -964,048.11 -957,265.72
Total 7,320,192.70 7,810,405.04
Explanation of long-term loan classification:
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ZKTeco 2024 Half Year Report
Other explanations, including interest rate ranges: mainly due to the technology innovation fund syndicated loan obtained by XIAMEN
ZKTECO CO., LTD., a subsidiary of the Company. The contract stipulates that the borrower shall use each fund withdrawn for the
Company's R&D investment, with a loan term of 36 months. The interest shall be paid on a quarterly basis. The ending balance of loan
principal is RMB 7.89 million.
32. Lease liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Lease payment amount 52,578,581.24 43,637,253.89
Unrecognized financing charges -8,027,900.91 -3,786,551.04
Lease liabilities due within one year -21,662,062.76 -20,137,416.64
Total 22,888,617.57 19,713,286.21
Other explanations:
33. Estimated liabilities
Unit: RMB
Item Ending Balance Beginning Balance Cause of formation
Pending litigation 600,000.00
Total 600,000.00
Other descriptions, including important assumptions and estimation explanations related to important estimated liabilities:
The Company has set aside an estimated liability of RMB 600,000 for the trademark infringement and unfair competition dispute
between Zokon Industry and Shenzhen Xinjiacheng Intelligent Technology Co., Ltd. The court has finally ruled that the Company
shall compensate Zokon Industry for economic losses and reasonable expenses for rights protection, totaling RMB 600,000. In addition,
in the case of unfair competition dispute between the Company and Zokon Industry, the court finally ruled that Zokon Industry shall
compensate the Company and Shenzhen ZKTeco for a loss of RMB 2 million. The Company notified Zokon Industry and its attorneys
in March 2024 and the Shenzhen Intermediate People's Court in April 2024 to offset the debt related to the unfair competition dispute
between the Company and Zokon Industry in this case. That is, the amount payable by the Company to Zokon Industry in this case
was fully offset against the amount payable by Zokon Industry to the Company based on the Company's lawsuit against Zokon Industry
in the unfair competition dispute case.
34. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Beginning Balance Ending Balance Cause of formation
current period current period
Government Financial
1,853,549.62 92,734.28 1,760,815.34
subsidies allocation
Total 1,853,549.62 92,734.28 1,760,815.34
Other explanations: The government subsidies of the Company are detailed in Note XI Government subsidies 2. Liability items
involving government subsidies and 3. Governmental subsidies included in current profits and losses.
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ZKTeco 2024 Half Year Report
35. Share capital
Unit: RMB
Increase/decrease in this change (+, -)
Beginning Share Ending
Balance Issue new transferred Balance
Bonus Others Subtotal
shares from capital
reserve
194,679,508. 194,679,508.
Total Shares
00 00
Other explanations:
36. Capital reserve
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Capital premium (share
1,998,953,460.69 1,998,953,460.69
capital premium)
Other capital reserves 76,525,914.44 7,628,802.61 84,154,717.05
Total 2,075,479,375.13 7,628,802.61 2,083,108,177.74
Other descriptions, including changes in current period and reasons for changes:
The increase of capital reserve - other capital reserves in the current period is caused by the recognition of share-based payment
of Class II restricted share.
37. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Implementing equity
incentives for 784,700.00 58,898,528.10 59,683,228.10
repurchasing shares
Total 784,700.00 58,898,528.10 59,683,228.10
Other descriptions, including changes in current period and reasons for changes:
The Company held the 7th Session of the Third Board Meeting on November 10, 2023, and deliberated and approved the "Proposal
on Repurchasing Company Shares through Centralized Bidding Trading". The Company was agreed to use its own funds to repurchase
the issued RMB denominated ordinary shares of the Company through centralized bidding trading, for employee stock ownership plans
or equity incentives.
The total transaction amount from January 1, 2024 to February 1, 2024 is RMB 58,898,528.10 (excluding transaction costs). As
of February 1, 2024, the Company's share repurchase plan has been implemented, and the actual repurchase period is from November
30, 2023 to February 1, 2024. The Company has repurchased a total of 2,230,000 shares of the Company through a dedicated securities
account for share repurchases through centralized bidding trading. It accounts for 1.1455% of the total share capital of the Company
currently, with a maximum transaction price of RMB 31.40 per share and a minimum transaction price of RMB 23.20 per share. The
total transaction amount is RMB 59,683,228.10 (excluding transaction costs).
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ZKTeco 2024 Half Year Report
38. Other comprehensive income
Unit: RMB
Amount incurred in the current period
Less:
Less:
Profit
the net
and
amount
loss
that is
includ
included
ed in
in other
other
compreh
compr
ensive
Amount ehensi Less:
Beginning profits Attributable to Attributable Ending
Item incurred before ve income
Balance of prior parent to minority Balance
income tax in incom tax
period company after shareholder
the current e at expense
and tax after tax
period early s
retained
stage
earnings
and
transferr
transfe
ed into
rred in
the
the
current
curren
profits
t
and loss
period
I. Other
comprehensi
ve income to
be 28,000,959.19 -4,827,043.56 -5,722,101.19 895,057.63 22,278,858.00
reclassified
into profits
and losses
Translat
ion
difference of
foreign 28,000,959.19 -4,827,043.56 -5,722,101.19 895,057.63 22,278,858.00
currency
financial
statements
Total of other
comprehensi 28,000,959.19 -4,827,043.56 -5,722,101.19 895,057.63 22,278,858.00
ve income
Other explanations, including adjusting the effective portion of cash flow hedging gains and losses to the initial recognition amount of
the hedged item:
39. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Legal surplus reserve 60,455,422.50 60,455,422.50
Total 60,455,422.50 60,455,422.50
Description of surplus reserve, including changes in current period and reasons for changes:
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ZKTeco 2024 Half Year Report
40. Undistributed profits
Unit: RMB
Item Current period Previous period
Undistributed profits before adjustment
907,583,024.38 788,571,917.98
at end of the previous period
Total undistributed profits in the
adjustment beginning period (increase in 197,066.66
"+", decrease in "–")
Undistributed profits at the end of the
907,583,024.38 788,768,984.64
adjustment period
Plus: Net profits attributable to parent
78,637,727.33 177,263,675.15
company in this period
Less: withdrawal of legal surplus
6,477,417.56
reserves
Dividends payable on ordinary
86,602,278.60 51,972,217.85
shares
Undistributed profits at the end of the
899,618,473.11 907,583,024.38
period
Details of undistributed profits at the beginning of the adjustment period:
1) Due to the retrospective adjustment of the "Accounting Standards for Enterprises" and related new regulations, the undistributed
profit at the beginning of the period was affected by RMB 0.00.
2) Due to changes in accounting policies, the undistributed profit at the beginning of the period was RMB 0.00.
3) Due to significant accounting error correction, the undistributed profit at the beginning of the period was RMB 0.00.
4) Due to changes in the scope of consolidation caused by the same control, the undistributed profit at the beginning of the period was
RMB 0.00.
5) The total impact of other adjustments on the undistributed profit at the beginning of the period was RMB 0.00.
41. Operating income and operating cost
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 899,298,084.45 453,481,237.51 933,910,239.24 488,923,174.83
Other businesses 3,805,074.32 820,586.04 3,272,430.76
Total 903,103,158.77 454,301,823.55 937,182,670.00 488,923,174.83
Breakdown information of operating income and operating costs:
Unit: RMB
Division 1 Division 2 Total
Contract
classification Operating Operating Operating Operating Operating Operating
Operating cost Operating cost
income cost income cost income income
Business
type
Including:
Smart office
154,212,896.36 57,143,168.43 154,212,896.36 57,143,168.43
products
Smart 699,183,231.38 364,622,186.25 699,183,231.38 364,622,186.25
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ZKTeco 2024 Half Year Report
entrance and
exit
management
products
Smart
identity
45,901,956.71 31,715,882.83 45,901,956.71 31,715,882.83
verification
products
Other
3,805,074.32 820,586.04 3,805,074.32 820,586.04
products
Classification
by region of
operation
Including:
Domestic
278,001,949.77 186,993,704.51 278,001,949.77 186,993,704.51
sales
Overseas
625,101,209.00 267,308,119.04 625,101,209.00 267,308,119.04
sales
Market or
customer
type
Including:
Distribution 625,828,126.21 347,508,041.35 625,828,126.21 347,508,041.35
Direct sales 273,469,958.24 105,973,196.16 273,469,958.24 105,973,196.16
Others 3,805,074.32 820,586.04 3,805,074.32 820,586.04
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total 903,103,158.77 454,301,823.55 903,103,158.77 454,301,823.55
Information related to performance obligations:
Nature of goods Expected Types of
Time for
that the Is it the main refunds to quality
fulfilling Important
Item Company responsible customers assurance
performance payment terms
promises to person borne by the provided by the
obligations
transfer Company Company and
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ZKTeco 2024 Half Year Report
related
obligations
Other explanations:
The Company, as the main responsible person in accordance with the contract, timely fulfills the supply obligations according to
the customer's requirements for the category, standards and time. The Company provides a certain credit period of 30-90 days based
on the customer's industry status, financial strength, credit status and cooperation history. For overseas customers, the Company will
also refer to the credit report issued by Sinosure to the customer.
Information related to the transaction price allocated to the remaining performance obligations:
The corresponding income amount for performance obligations that have been signed but have not yet been fulfilled or completed at
the end of this reporting period is RMB 0.00.
Information related to variable consideration in the contract:
Significant contract changes or significant transaction price adjustments
Unit: RMB
Item Accounting treatment method Amount of impact on income
Other explanations:
42. Taxes and surcharges
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Urban maintenance and construction tax 1,313,026.35 1,240,447.26
Education surcharge 774,884.49 728,160.52
Property tax 790,526.59 804,766.17
Land use tax 53,192.27 53,192.27
Stamp duty 1,273,419.68 561,396.18
Local education surcharges 516,589.62 488,667.58
Other taxes and fees for overseas
8,309,729.91 5,173,139.87
companies
Others 12,948.09 14,849.22
Total 13,044,317.00 9,064,619.07
Other explanations:
43. Administrative expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 23,903,152.68 27,180,420.22
Taxes 198,914.56 201,783.21
Office allowance 1,394,754.13 1,273,534.13
Depreciation and amortization 6,046,891.71 5,369,758.22
Business entertainment expenses 1,236,467.04 995,574.87
Repair fee 324,653.19 284,365.87
Travel expense 1,572,016.50 899,595.71
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ZKTeco 2024 Half Year Report
Rent and utilities 1,453,580.87 1,855,286.91
Car expenses 358,274.00 571,076.11
Low-value consumables 292,293.53 148,322.51
Agency fees 3,688,497.16 3,274,197.97
Communications fee 298,281.74 758,248.80
Depreciation and amortization of right-
3,113,740.46 4,496,496.02
of-use assets
Share-based payments 719,846.67 3,010,579.74
Others 8,928,517.89 10,157,105.18
Total 53,529,882.13 60,476,345.47
Other explanations:
44. Selling expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 128,756,323.33 119,777,810.57
Depreciation and amortization 3,487,498.16 1,698,736.19
Exhibition and conference fees 6,216,072.66 5,477,387.25
Transport cost 842,504.06 921,267.65
Maintenance and testing fees 2,131,723.55 2,790,387.44
Service fees and commissions 8,048,945.97 4,861,913.43
Rental expenses 3,275,034.45 2,448,767.43
Business entertainment expenses 1,833,773.74 1,588,838.83
Travel expense 13,058,671.93 11,115,530.61
Office allowance 5,095,135.43 3,097,812.40
Insurance premium 2,993,136.00 2,916,330.62
Agency fees 6,985,958.39 6,110,506.41
Advertising expenses 13,042,036.99 11,827,049.32
Depreciation and amortization of right-
8,710,857.10 7,485,296.72
of-use assets
Share-based payments 3,741,494.90 6,725,599.03
Others 8,287,333.56 7,295,468.08
Total 216,506,500.22 196,138,701.98
Other explanations:
45. R&D expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 81,473,986.07 75,368,207.48
Depreciation and amortization 2,581,016.27 1,899,982.13
Office allowance 723,170.03 409,182.70
Travel expense 2,128,700.33 2,607,717.68
Business entertainment expenses 103,017.77 34,535.93
Rental fees and utilities 573,529.74 451,336.40
R&D material costs 2,567,775.42 2,697,441.96
Software and technical service fees 4,008,763.52 4,354,028.63
Depreciation and amortization of right-
882,806.79 1,197,842.90
of-use assets
Share-based payments 2,908,870.45 7,403,999.48
Others 7,698,371.81 4,559,826.43
Total 105,650,008.20 100,984,101.72
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ZKTeco 2024 Half Year Report
Other explanations:
46. Financial expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest expenses 1,576,340.90 1,807,293.55
Less: interest income 23,834,740.57 31,152,457.27
Exchange profits and losses 1,741,997.79 -6,564,554.23
Bank charge 947,989.18 1,014,262.29
Others 786,291.91 271,944.16
Total -18,782,120.79 -34,623,511.50
Other explanations:
47. Other income
Unit: RMB
Sources of other income generation Amount incurred in the current period Amount incurred in the previous period
Government subsidies related to daily
8,127,859.77 5,545,156.28
activities of the enterprise
Other items related to daily activities 239,983.22 218,257.86
Including: refund of individual income
239,983.22 218,257.86
tax handling fee
Total 8,367,842.99 5,763,414.14
48. Gains from changes in fair value
Unit: RMB
Sources of gains from changes in fair
Amount incurred in the current period Amount incurred in the previous period
value
Trading financial asset 4,288,802.32 3,616.44
Including:gains from changes in fair
value generated by derivative financial -92,617.82
instruments
Trading financial liabilities -7,049,098.87
Total 4,288,802.32 -7,045,482.43
Other explanations:
49. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Long-term equity investment income
989,323.74 1,092,924.55
accounted by equity method
Investment income from disposal of
-216,072.16
long-term equity investment
Investment income obtained from
2,058,736.39 2,191,535.51
financial products
Forward foreign exchange settlement and 68,155.00 -2,046,795.00
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ZKTeco 2024 Half Year Report
sales contract
Total 2,900,142.97 1,237,665.06
Other explanations:
50. Credit impairment loss
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Bad debt losses on accounts receivable -728,583.49 -2,604,890.77
Bad debt losses on other receivables -42,420.73 -154,814.43
Total -771,004.22 -2,759,705.20
Other explanations:
51. Losses from impairment of assets
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
I. Inventories depreciation loss and
contract performance cost impairment -5,196,924.78 -3,696,240.00
loss
II. Impairment losses on contract assets 2,400.00
Total -5,196,924.78 -3,693,840.00
Other explanations:
52. Income from asset disposal
Unit: RMB
Source of income from asset disposal Amount incurred in the current period Amount incurred in the previous period
Income from disposal of non-current
-76,794.85 -266,037.65
assets - fixed assets
Income from disposal of non-current
-6,718.26 20,177.94
assets - right-of-use assets
Total -83,513.11 -245,859.71
53. Non-operating income
Unit: RMB
Amount incurred in the Amount incurred in the Amount included in current
Item
current period previous period non-recurring profit and loss
Gains from scrapping and
5,007.30 290.17 5,007.30
damaging non-current assets
Penalty income 7,840.56 7,840.56
Others 2,443,402.07 280,752.19 2,443,402.07
Total 2,456,249.93 281,042.36 2,456,249.93
Other explanations:
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54. Non-operating expenditure
Unit: RMB
Amount incurred in the Amount incurred in the Amount included in current
Item
current period previous period non-recurring profit and loss
External donations 410,712.93 178,252.92 410,712.93
Extraordinary losses 457,628.84 457,628.84
Non-current assets damage
65,449.79 186,561.24 65,449.79
and retirement loss
Penalty expenses 3,280.71 45,606.31 3,280.71
Others 111,489.01 187,004.06 111,489.01
Total 1,048,561.28 597,424.53 1,048,561.28
Other explanations:
55. Income tax expenses
(1) Income tax expenses statement
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Current income tax expenses 11,186,808.91 17,332,087.13
Deferred income tax expenses -6,284,061.60 -7,981,844.47
Total 4,902,747.31 9,350,242.66
(2) Accounting profit and income tax expenses adjustment process
Unit: RMB
Item Amount incurred in the current period
Total profits 89,765,783.28
Income tax expenses calculated based on statutory/applicable
13,464,867.49
tax rates
The impact of different tax rates applicable to subsidiaries -2,637,991.52
The impact of adjusting previous period income tax -14,701.99
The impact of non-taxable income -5,556,260.59
The impact of non-deductible costs, expenses, and losses 3,565,651.40
The impact of deductible losses on unrecognized deferred
-1,212,894.02
income tax assets in the prior period of use
The impact of deductible temporary differences or deductible
losses on unrecognized deferred income tax assets in the 9,000,478.48
current period
Deduction of technology development expenses -11,671,158.38
Salary paid for the placement of disabled individuals with
-12,011.41
additional deductions
The impact of tax rate changes on the beginning deferred
-23,232.15
income tax
Income tax expenses 4,902,747.31
Other explanations:
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ZKTeco 2024 Half Year Report
56. Other comprehensive income
Please refer to Note 38. Other comprehensive income for details.
57. Cash flow statement items
(1) Cash relating to operating activities
Other cash received related to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest income 33,260,268.95 7,396,363.00
Government subsidies 4,952,825.13 3,269,551.83
Current account 1,844,175.02 10,479,582.74
Restricted funds such as restricted bill
deposit, guarantee deposit and funds in 808,538.31 28,500.00
transit
Others 1,826,694.08 2,010,793.34
Total 42,692,501.49 23,184,790.91
Description of other cash received relating to operating activities:
Other cash paid relating to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Expense payment 103,961,087.89 97,959,328.93
Current account 26,147,972.24 21,076,460.86
Restricted funds such as restricted bill
deposit, guarantee deposit and funds in 16,607,790.66 12,800.00
transit
Others 2,833,730.67 3,432,113.10
Total 149,550,581.46 122,480,702.89
Description of other cash paid relating to operating activities:
(2) Cash relating to investing activities
Other cash received related to investment activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Expiration of forward foreign exchange
68,155.00
settlement and sales
Total 68,155.00
Significant cash received relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposit and wealth management 522,835,114.48 509,707,506.64
Total 522,835,114.48 509,707,506.64
Description of other cash received relating to investing activities:
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ZKTeco 2024 Half Year Report
Other cash paid relating to investment activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Investment losses on forward foreign
2,046,795.00
exchange settlement and sales
Total 2,046,795.00
Significant cash paid relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposit and wealth management 649,403,947.08 554,750,509.91
Total 649,403,947.08 554,750,509.91
Description of other cash paid relating to investing activities:
(3) Cash relating to financing activities
Other cash received related to financing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Bill deposit 3,512,381.80
Total 3,512,381.80
Description of other cash received relating to financing activities:
Other cash paid in connection with financing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Lease liability payment amount 16,270,394.68 16,527,983.10
Share repurchase 58,898,528.10
Bill deposit 3,717,972.80
Total 78,886,895.58 16,527,983.10
Description of other cash paid relating to financing activities:
Information on changes in liabilities arising from financing activities
Applicable □ Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Beginning
Item Non cash Non cash Ending Balance
Balance Cash changes Cash changes
changes changes
Non-current
liabilities due 21,094,682.36 0.00 15,346,285.49 12,169,244.28 1,645,612.70 22,626,110.87
within one year
Long-term loan 7,810,405.04 0.00 15,374.92 69,458.32 436,128.94 7,320,192.70
Lease liabilities 19,713,286.21 0.00 35,777,374.57 4,526,150.40 28,075,892.81 22,888,617.57
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Total 48,618,373.61 0.00 51,139,034.98 16,764,853.00 30,157,634.45 52,834,921.14
(4) Description of cash flows presented as net amount
Basis for reporting net
Item Related facts Financial impact
amount
(5) Significant activities and financial impacts that do not involve current cash inflows and outflows but affect
the financial position of the enterprise or may affect the cash flow of the enterprise in the future
58. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Supplementary information Amount in current period Amount of previous period
1. Reconciliation of net profit to cash
flows from operating activities:
Net profit 84,863,035.97 99,808,805.46
Plus: provision for asset impairment 5,967,929.00 6,453,545.20
Depreciation of fixed assets,
consumption of oil and gas assets and 16,949,822.52 14,793,934.77
productive biological assets
Depreciation of right of use assets 14,446,245.08 14,326,297.01
Amortization of intangible assets 1,112,025.07 967,519.99
Long-term unamortized expenses 1,703,204.79 650,496.41
Loss from disposal of fixed
assets, intangible assets and other long- 83,513.11 245,859.71
term assets (gains expressed with "-")
Loss on retirement of fixed assets
60,442.48 186,271.07
(gains expressed with "-")
Loss from changes in fair value
-4,288,802.32 7,045,482.43
(gains expressed with "-")
Financial expenses (gains
-2,794,360.99 -1,746,936.23
expressed with "-")
Investment loss (gains expressed
-2,900,142.90 -1,237,665.06
with "-")
Decrease of deferred income tax
-7,856,218.33 -7,121,514.67
assets (increase expressed with "-")
Increases of deferred income tax
1,572,156.78 -461,480.54
liabilities (decrease expressed with "-")
Decrease of inventories (increase
-13,366,506.95 19,487,642.81
expressed with "-")
Decreases of operational
-32,843,911.15 -55,447,007.82
receivables (increase expressed with "-")
Increases of operating payables
-3,841,421.92 13,875,197.45
(decrease expressed with "-")
Others 7,765,311.61 18,903,579.13
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ZKTeco 2024 Half Year Report
Net cash flows from operating
66,632,321.85 130,730,027.12
activities
2. Major investment and financing
activities not relating to cash deposit and
withdrawal
Conversion of debt into capital
Convertible corporate bonds due
within one year
Fixed assets under financing lease
3. Net change of cash and cash
equivalents:
Ending balance of cash 966,470,088.72 1,039,925,141.52
Less: beginning balance of cash 1,317,020,553.02 1,077,608,258.10
Plus: ending balance of cash
equivalents
Less: beginning balance of cash
equivalents
Net increase in cash and cash
-350,550,464.30 -37,683,116.58
equivalents
(2) Composition of cash and cash equivalents
Unit: RMB
Item Ending Balance Beginning Balance
I. Cash 966,470,088.72 1,317,020,553.02
Including: Cash on hand 1,289,301.50 1,401,947.05
Bank deposit available for
962,031,005.18 1,302,024,477.33
payment at any time
Other monetary funds available
3,149,782.04 13,594,128.64
for payment at any time
III. Ending balance of cash and cash
966,470,088.72 1,317,020,553.02
equivalents
(3) Monetary funds that do not belong to cash and cash equivalents
Unit: RMB
Amount of previous Reasons for not being classified as
Item Amount in current period
period cash and cash equivalents
Principal of time deposits and
Not meeting the standards for cash
outstanding interest 286,725,925.24 618,949,731.28
and cash equivalents
receivable
Margin of bank acceptance Not meeting the standards for cash
46,267,829.38 46,693,268.67
draft and cash equivalents
Not meeting the standards for cash
Frozen litigation funds 800,000.00 800,000.00
and cash equivalents
Not meeting the standards for cash
Funds in transit 18,993,724.85 7,461,401.81
and cash equivalents
Total 352,787,479.47 673,904,401.76
Other explanations:
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59. Notes to items in the statement of changes in owner's equity
Explain the names and adjusted amounts of "other" items that have been adjusted to the ending balance of the previous year:
None
60. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Ending foreign currency Ending equivalent RMB
Item Conversion rate
balance Balance
Monetary funds 619,448,214.96
Including: USD 73,062,310.88 7.1268 520,700,477.18
EUR 4,775,347.94 7.6617 36,587,283.31
HKD 2,339,050.08 0.9127 2,134,804.23
GBP 262,126.55 9.0430 2,370,410.39
MYR 763,399.61 1.5095 1,152,336.09
INR 58,105,051.11 0.0854 4,960,922.43
COP 302,140,343.23 0.0017 514,864.92
MXN 2,894,229.76 0.3857 1,116,428.70
PEN 17,934.51 1.8586 33,332.20
TRL 1,688,966.69 0.2175 367,377.51
ZAR 19,117,336.00 0.3869 7,396,632.36
THB 20,473,438.29 0.1952 3,995,596.86
DNS 12,112,266.27 1.9462 23,573,434.29
IDR 3,837,402,227.54 0.0004 1,689,592.39
CLP 518,442,465.28 0.0075 3,864,890.96
ARS 41,238,125.93 0.0078 322,607.99
RUB 1,696,491.69 0.0841 142,689.43
UYU 240.00 0.1801 43.22
CRC 8,265.00 0.0136 112.18
GTQ 125.00 0.9174 114.67
KRW 213,792,895.00 0.0052 1,109,287.06
BRL 372,603.68 1.2955 482,690.21
SGD 501,263.49 5.2790 2,646,169.96
KES 2,464,327.27 0.0551 135,882.15
NGN 11,118,341.30 0.0047 51,959.47
VND 3,771,444,171.00 0.0003 1,055,811.78
AUD 2,140.55 4.7650 10,199.72
JPY 30,554,352.00 0.0447 1,366,940.60
DZD 11,400.00 0.0529 603.03
RSD 110.00 0.0658 7.23
MAD 865,687.09 0.7163 620,089.33
EGP 88,623.05 0.1484 13,150.09
CAD 197,320.47 5.2274 1,031,473.02
Accounts receivable 449,453,413.72
Including: USD 45,955,972.55 7.1268 327,519,025.16
EUR 1,713,455.72 7.6617 13,127,983.69
HKD
MYR 1,283,446.15 1.5095 1,937,335.69
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ZKTeco 2024 Half Year Report
INR 102,085,298.79 0.0854 8,715,890.26
COP 699,669,318.26 0.0017 1,192,277.67
MXN 36,766,683.21 0.3857 14,182,488.51
PEN 1,924,682.93 1.8586 3,577,121.56
TRL 5,989,497.19 0.2175 1,302,812.31
ZAR 12,163,522.48 0.3869 4,706,152.78
THB 60,746,530.02 0.1952 11,855,294.70
DNS 23,226,735.13 1.9462 45,204,910.63
IDR 345,219,990.00 0.0004 151,998.94
CLP 145,960,579.00 0.0075 1,088,108.63
ARS 1,084,257.69 0.0078 8,482.20
RUB 492,000.00 0.0841 41,381.40
KRW 1,565,614,112.00 0.0052 8,123,354.50
BRL 2,611,361.81 1.2955 3,382,894.05
SGD 149,355.66 5.2790 788,448.53
NGN 344,042,392.32 0.0047 1,607,817.26
VND 965,464,229.00 0.0003 270,280.68
JPY 14,961,656.00 0.0447 669,354.57
Long-term loan 272,302.65
Including: USD
EUR
HKD
Including: MYR 85,945.68 1.5095 129,733.24
ZAR 368,484.91 0.3869 142,569.41
Other receivables 16,509,030.01
Including: USD 878,141.34 7.1268 6,258,337.72
EUR 134,641.04 7.6617 1,031,579.25
MYR 55,460.00 1.5095 83,715.73
INR 16,925,356.84 0.0854 1,445,061.67
COP 223,529,886.28 0.0017 380,908.07
MXN 4,282,375.02 0.3857 1,651,895.93
PEN 474,329.05 1.8586 881,564.77
TRL 153,967.23 0.2175 33,490.36
ZAR 102,353.78 0.3869 39,601.40
THB 7,901,852.14 0.1952 1,542,125.71
DNS 221,795.68 1.9462 431,668.67
IDR 38,400,000.00 0.0004 16,907.36
CLP 91,538,767.00 0.0075 682,404.27
ARS 6,921,929.29 0.0078 54,150.61
RUB 921,066.87 0.0841 77,469.58
KRW 82,019,147.55 0.0052 425,565.03
BRL 342,486.71 1.2955 443,675.12
SGD 54,233.78 5.2790 286,300.12
KES 479,756.48 0.0551 26,453.61
NGN 16,277,790.91 0.0047 76,071.19
VND 314,468,182.00 0.0003 88,035.03
JPY 7,087,215.00 0.0447 317,067.82
CAD 10,050.00 5.2274 52,535.37
PKR 7,128,302.03 0.0256 182,445.62
Accounts payable 12,918,209.70
Including: USD 326,417.93 7.1268 2,326,315.30
EUR 227,378.36 7.6617 1,742,104.78
MYR 45,735.22 1.5095 69,036.38
INR 6,675,108.82 0.0854 569,910.82
COP 567,644.80 0.0017 967.30
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ZKTeco 2024 Half Year Report
MXN 10,032,832.73 0.3857 3,870,094.40
PEN 248,844.78 1.8586 462,490.74
ZAR 116.00 0.3869 44.88
THB 3,330,275.57 0.1952 649,936.68
DNS 939,475.70 1.9462 1,828,449.62
IDR 9,750,000.00 0.0004 4,292.88
CLP 63,101,727.00 0.0075 470,411.49
ARS 14,583,479.54 0.0078 114,087.31
RUB 29,050.11 0.0841 2,443.36
BRL 399,329.08 1.2955 517,311.68
NGN 14,179,284.43 0.0047 66,264.21
MAD 312,786.14 0.7163 224,047.87
Other payables 8,012,454.94
Including: USD 518,086.03 7.1268 3,692,295.53
HKD 65,000.00 0.9127 59,324.20
EUR 269,963.52 7.6617 2,068,379.50
MYR 13,789.08 1.5095 20,814.33
INR 1,545,378.07 0.0854 131,942.07
MXN 281,424.50 0.3857 108,557.51
PEN 4,324.42 1.8586 8,037.16
TRL 70,055.87 0.2175 15,238.28
ZAR 313,573.00 0.3869 121,323.61
THB 1,215,036.40 0.1952 237,126.54
DNS 18,900.00 1.9462 36,784.03
CLP 8,023,347.00 0.0075 59,812.54
ARS 6,031,597.47 0.0078 47,185.50
KRW 18,684,336.68 0.0052 96,945.66
BRL 100,000.00 1.2955 129,545.21
SGD 22,333.96 5.2790 117,900.97
KES 83,080.03 0.0551 4,581.00
NGN 27,594,421.35 0.0047 128,957.33
VND 977,645.00 0.0003 273.69
JPY 7,291,090.00 0.0447 326,188.78
MAD 46,800.78 0.7163 33,523.27
CAD 2,400.00 5.2274 12,545.76
EGP 2,560,647.41 0.1484 379,954.65
PKR 6,845,905.87 0.0256 175,217.82
Other explanations:
(2) Description of overseas operating entities, including for important overseas operating entities, disclosure
of their main overseas operating location, recording currency, and selection basis. Reasons for changes in the
recording currency should also be disclosed.
Applicable □ Not applicable
Subsidiaries Registered Recording currency Basis for adopting recording
place of currency
business
ZKTECO CO., LIMITED Hong Kong US Dollar Sales and procurement are mainly
priced in USD
Armatura Tech Co.,Ltd. Thailand THB Currency used in the place of
operation
ZKTECO SECURITY L.L.C Dubai DNS Currency used in the place of
operation
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ZKTeco 2024 Half Year Report
ZKTECO EUROPE SL Spain EUR Currency used in the place of
operation
ZK TECHNOLOGY LLC America US Dollar Currency used in the place of
operation
ZKTECO USA LLC America US Dollar Currency used in the place of
operation
ZKTECO BIOMETRICS INDIA PRIVATE LIMITED India INR Currency used in the place of
operation
ZKTECO PANAMA ,S.A. Panama US Dollar Sales and procurement are mainly
priced in USD
ZKTECO LATAM, S.A DE C.V. Mexico MXN Currency used in the place of
operation
ZK INTELLIGENT SOLUTIONS (PTY) LTD South Africa ZAR Currency used in the place of
operation
NGTECO CO.,LIMITED Hong Kong US Dollar Sales and procurement are mainly
priced in USD
VIII. R&D expenditures
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 81,473,986.07 75,368,207.48
Depreciation and amortization 2,581,016.27 1,899,982.13
Office allowance 723,170.03 409,182.70
Travel expense 2,128,700.33 2,607,717.68
Business entertainment expenses 103,017.77 34,535.93
Rental fees and utilities 573,529.74 451,336.40
R&D material costs 2,567,775.42 2,697,441.96
Software and technical service fees 4,008,763.52 4,354,028.63
Depreciation and amortization of right-
882,806.79 1,197,842.90
of-use assets
Share-based payments 2,908,870.45 7,403,999.48
Others 7,698,371.81 4,559,826.43
Total 105,650,008.20 100,984,101.72
Including: Expensed R&D expenditures 105,650,008.20 100,984,101.72
IX. Changes to the scope of consolidation
1. Changes in the scope of consolidation due to other reasons
Description of changes in the scope of consolidation caused by other reasons (for example, establishing new subsidiaries, liquidating
subsidiaries, etc.) and their related situations:
Shareholding Reason for
S/N Company Name Establishment Date Registered Capital
ratio (%) Change
ZKTECO BUSINESS New
1 May 15, 2024 SAR 25,000.00 100.00
SOLUTIONS COMPANY establishment
New
2 ZKTECO EGYPT LLC January 4, 2024 USD 120,000.00 100.00
establishment
Shenzhen Zhongjiang Intelligent
3 April 26, 2017 RMB 10,000,000.00 51.00 Liquidation
Technology Co., Ltd.
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Note: ZKTECO BUSINESS SOLUTIONS COMPANY has not yet paid the investment amount as of the end of the period. ZKTECO
EGYPT LLC has received an investment of USD 118,800 and has not yet paid the investment amount as of the end of the period.
X. Equity in other entities
1. Equity in subsidiaries
(1) Composition of the enterprise group
Unit: RMB
Main Percentage of shares
Name of Registration Nature of Acquisition
Registered Capital business
Subsidiaries place business Direct Indirect method
place
1. Xiamen
Zkteco
Software
Biometric
38,500,000.00 Xiamen Xiamen developme 100.00% 0.00% Acquisition
Identification
nt
Technology
Co., Ltd.
2. Shenzhen
ZKTeco
Biometric Sales of
1,000,000.00 Shenzhen Shenzhen 100.00% 0.00% Acquisition
Identification goods
Technology
Co., Ltd.
2.1.ZK
by
INVESTMEN 100.001 America America Established 0.00% 100.00%
investment
TS INC.
2.1.1.ZK
Not applicable Sales of by
TECHNOLO America America 0.00% 76.92%
goods investment
GY LLC
3. ZKTeco
Sales of by
Sales Co., 50,000,000.00 Dongguan Dongguan 100.00% 0.00%
goods investment
Ltd.
4. Hangzhou
ZKTeco
E- by
Hanlian E- 2,000,000.00 Hangzhou Hangzhou 100.00% 0.00%
commerce investment
commerce
Co., Ltd.
5. ZKCserv
Software
Technology by
1,000,000.00 Shenzhen Shenzhen developme 51.00% 0.00%
Limited Co., investment
nt
Ltd.
6. Dalian Software
by
ZKTeo CO., 3,000,000.00 Dalian Dalian developme 100.00% 0.00%
investment
Ltd. nt and sales
7. XIAMEN Software
by
ZKTECO 100,000,000.00 Xiamen Xiamen developme 100.00% 0.00%
investment
CO., LTD. nt and sales
7.1 ZKTeco
Huayun
Software
(Xiamen) by
3,693,880.00 Xiamen Xiamen developme 0.00% 51.00%
Integrated investment
nt
Circuit Co.,
Ltd.
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7.2.ZKTECO
VIETNAM
TECHNOLO Sales of by
4,550,000,000.0023 Vietnam Vietnam 0.00% 100.00%
GY goods investment
COMPANY
LIMITED
8. ZKTECO
Production
(GUANGDO by
800,000,000.00 Dongguan Dongguan and sales 100.00% 0.00%
NG) CO., investment
of goods
LTD
9. Xi'an
Sales of
ZKTeco Co., 1,060,000.00 Xi'an Xi'an 100.00% 0.00% Acquisition
goods
Ltd.
10. ZKTECO Hong
Hong Kong, Sales of by
CO., 15,000,000.001 Kong, 100.00% 0.00%
China goods investment
LIMITED China
10.1.ZKTEC
O TURKEY
ELEKTRONI
Sales of by
K SANAYI 1,200,000.0017 Turkey Turkey 0.00% 88.09%
goods investment
VE TICARET
LIMITED
SIRKETI.
10.2.ZKTEC
Sales by
O LATAM, 4,426,000.008 Mexico Mexico 0.00% 100.00%
services investment
S.A. DE C.V.
10.3.ZK Capital
SOFTWARE R&D increase and
3,748,688.008 Mexico Mexico 0.00% 100.00%
DE MEXICO, services equity
S.A. DE C.V. investment
10.4.ZKTEC
O Sales by
968,393,000.007 Columbia Columbia 0.00% 100.00%
COLOMBIA services investment
SAS
10.5.ZKTEC
Sales of
O （M） 646,000.0020 Malaysia Malaysia 0.00% 51.00% Acquisition
goods
SDN. BHD.
10.6.ZKTEC
O Capital
BIOMETRIC Sales of increase and
132,765,240.0016 India India 0.00% 99.15%
S INDIA goods equity
PRIVATE investment
LIMITED
10.7.ZKTEC
Sales of
O EUROPE 538,500.002 Spain Spain 0.00% 75.69% Acquisition
goods
SL
10.7.1.ZKTE
CO Sales by
60,000.002 Ireland Ireland 0.00% 75.69%
IRELAND services investment
LIMITED
10.7.2.ZKTec
Sales of by
o Deutschland 100,000.002 Germany Germany 0.00% 75.69%
goods investment
GmbH
10.7.3.ZKTE
Sales of by
CO ITALIA 350,000.002 Italy Italy 0.00% 71.37%
goods investment
S.R.L.
10.7.4.ZKTE 1,500,000.003 UK UK Sales of 0.00% 75.69% by
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ZKTeco 2024 Half Year Report
CO UK LTD goods investment
10.8.ZKTEC
O PERU
Sales
SOCIEDAD 1,273,675.0022 Peru Peru 0.00% 100.00% Acquisition
services
ANONIMA
CERRADA
10.9.ZKTEC
Sales of
O THAI CO., 10,000,000.005 Thailand Thailand 0.00% 99.80% Acquisition
goods
LTD.
10.10.ZKTeco Sales by
146,370,000.009 Chile Chile 0.00% 100.00%
Chile SpA services investment
10.10.1.SOLU
CIONES
INTEGRALE Sales by
60,000,000.009 Chile Chile 0.00% 100.00%
SY services investment
SISTEMAS
SpA
10.11.ZKTEC
Sales of
O SECURITY 300,000.0014 Dubai Dubai 0.00% 100.00% Acquisition
goods
L.L.C
10.12.ZKTEC
O Sales of
4,000,000.0026 Argentina Argentina 0.00% 60.00% Acquisition
ARGENTINA goods
S.A.
10.13.Limited
Liability
Company Sales of by
17,850,554.8018 Russia Russia 0.00% 100.00%
"ZKTeco goods investment
biometrics
and security"
10.14.ZKTEC
by
O Investment 80,000.001 America America Established 0.00% 100.00%
investment
Inc.
10.14.1.ZKTE Sales of by
Not applicable America America 0.00% 80.00%
CO USA LLC goods investment
10.14.2.Armat Sales of
118,960,000.0024 Korea Korea 0.00% 90.00% Acquisition
ura Co., Ltd. goods
10.14.3.ZKTe
Sales of by
co Japan Co., 100,000,000.0025 Japan Japan 0.00% 100.00%
goods investment
Ltd.
10.14.4.ARM Sales of by
Not applicable America America 0.00% 100.00%
ATURA LLC. goods investment
10.14.5.RALV Sales of by
10,000.001 Canada Canada 0.00% 100.00%
IE AI INC. goods investment
10.15.PT.
ZKTECO
Sales of by
BIOMETRIC 2,657,200,000.006 Indonesia Indonesia 0.00% 95.00%
goods investment
S
INDONESIA
10.16.ZK
INVESTIME
NTOS DO 611,440.0010 Brazil Brazil Established 0.00% 99.68% Acquisition
BRASIL
LTDA.
10.16.1.ZKTE
Sales of
CO DO 1,085,403.0610 Brazil Brazil 0.00% 74.76% Acquisition
goods
BRASIL S.A.
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ZKTeco 2024 Half Year Report
10.17.ZKTeco
Sales of by
Latam R&D 2,926,000.0026 Argentina Argentina 0.00% 98.09%
goods investment
S.A.
10.18.NGTEC Hong
Hong Kong, Sales of by
O CO., 10,000.004 Kong, 0.00% 100.00%
China goods investment
LIMITED China
10.19.ZKTEC
O Sales of by
100,000,000.0015 Nigeria Nigeria 0.00% 60.00%
BIOMETRIC goods investment
LIMITED
10.20.ZKTEC
Sales of by
O PANAMA, 360,000.001 Panama Panama 0.00% 99.86%
goods investment
S.A.
10.21.ZK
INTELLIGEN
Not applicable South Sales of by
T South Africa 0.00% 100.00%
Africa goods investment
SOLUTIONS
(PTY) LTD
10.22.ZKTEC
O
Sales of by
BIOMETRIC 10,910,000.0012 Kenya Kenya 0.00% 100.00%
goods investment
S KENYA
LIMITED
10.23.ZKTEC
Sales of by
O ROMANIA 250.0021 Romania Romania 0.00% 100.00%
goods investment
S.R.L
10.24ZKTEC
O BUSINESS Saudi Sales of by
25,000.0019 Saudi Arabia 0.00% 100.00%
SOLUTIONS Arabia goods investment
COMPANY
11. Hubei
Sales of by
ZKTeco Co., 10,000,000.00 Wuhan Wuhan 100.00% 0.00%
goods investment
Ltd.
12. Wuhan
ZKTeco
Sales of by
Perception 1,000,000.00 Wuhan Wuhan 0.00% 51.00%
goods investment
Technology
Co., Ltd.
13.ZKTECO
SG Sales of by
1,000,000.001 Singapore Singapore 100.00% 0.00%
INVESTMEN goods investment
T PTE. LTD.
13.1.ZKTEC
O Sales of by
500,000.0011 Singapore Singapore 0.00% 100.00%
SINGAPORE goods investment
PTE. LTD.
Production
13.2.Armatura
602,983,200.005 Thailand Thailand and sales 0.00% 99.99% Acquisition
Tech Co., Ltd.
of goods
13.3.ZKDIGI
Sales of by
MAX PTE. 20,000,000.001 Singapore Singapore 0.00% 80.00%
goods investment
LTD.
13.3.1.ZKDIG
IMAX Sales of by
10,000.001 Panama Panama 0.00% 80.00%
PANAMA, goods investment
S.A.
13.3.2.ZKDIG 10,000,000.007 Columbia Columbia Sales of 0.00% 80.00% by
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ZKTeco 2024 Half Year Report
IMAX goods investment
COLOMBIA
SAS
13.3.3.ZKDIG
South Sales of by
IMAX (PTY) Not applicable South Africa 0.00% 80.00%
Africa goods investment
LTD
13.3.4.PT.
ZKDIGIMAX Sales of by
10,010,000,000.006 Indonesia Indonesia 0.00% 56.00%
EXCEL goods investment
NOBLE
13.3.5
ZKDIGIMAX Sales of by
300,000.001 Xiamen Xiamen 0.00% 80.00%
CHINA CO., goods investment
LTD.
13.3.6.ZK
TECHNOLO Sales of by
1,515,000.0013 Morocco Morocco 0.00% 100.00%
GY goods investment
MOROCCO
13.3.7.ZKTE
Sales of by
CO EGYPT 120,000.001 Egypt Egypt 0.00% 100.00%
goods investment
LLC
Note: 1. USD
2. EUR
3. GBP
4. HKD
5. THB
6. IDR
7. COP
8. MXN
9. CLP
10. BRL
11. SGD
12. KES
13. MAD
14. AED
15. NGN
16. Rs
17. TRL
18. RUB
19. SAR
20. MYR
21. RON
22. PEN
23. VND
24. KRW
25. JPY
26. ARS
Explanation of the fact that shareholding percentage is different from the proportion of voting rights in the subsidiaries:
212
ZKTeco 2024 Half Year Report
None
Basis for holding half or less of the voting rights but still controlling the investee, and holding more than half of the voting rights but
not controlling the investee:
None
For important structured entities included in the consolidation scope, the basis for control is:
Basis for determining whether the Company is an agent or principal:
Other explanations: ZKDIGIMAX (PTY) LTD has registered capital with paid in capital, which has not been paid as of the end of the
period.
(2) Important partly-owned subsidiaries
Unit: RMB
Profit and loss Dividends declared for
Minority shareholding attributable to minority distribution to minority Closing balance of
Name of Subsidiaries
ratio shareholders in current shareholders in the minority interest
period current period
ZK TECHNOLOGY
23.08% 9,584,897.96 10,655,807.14 5,949,661.53
LLC
Explanation of the fact that shareholding percentage is different from the proportion of voting rights for minority shareholders in the
subsidiaries:
Other explanations:
(3) Main financial information of important partly-owned subsidiaries
Unit: RMB
Ending Balance Beginning Balance
Non-
Name of Non-
Non- Current Total Non- Current curre Total
Subsidiari Current Total current Current Total
current liabilitie liabilitie current liabilitie nt liabilitie
es assets assets liabiliti assets assets
assets s s assets s liabili s
es
ties
ZK
TECHNO 50,098,4 1,292,4 51,390,9 28,076,0 755,75 28,831,7 61,698,4 440,32 62,138,7 36,590,5 36,590,5
0.00
LOGY 92.78 68.63 61.41 07.15 5.59 62.74 39.58 9.48 69.06 88.71 88.71
LLC
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Name of Total Cash flow from Total Cash flow from
Operating Operating
Subsidiaries Net profit comprehensive operating Net profit comprehensive operating
income income
income activities income activities
ZK
56,247,880.47 31,949,659.82 32,228,136.86 38,230,718.47 74,892,637.61 44,089,564.44 45,848,858.91 50,898,526.54
TECHNOLOGY
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ZKTeco 2024 Half Year Report
LLC
Other explanations:
2. Transactions resulting in change of owners' equity in subsidiaries and the subsidiaries still being under
control
(1) Change of owners' equity in subsidiaries
The local registered capital of our subsidiary ZKTeco Latam R＆D S.A. of the Company was originally ARS7,000,000.00, with
98% equity of ZKTECO CO., LIMITED. However, the paid in capital ARS2,786,000.00 was not fully paid, and ZKTECO
ARGENTINA S.A. held 2% equity and fully paid the investment ARS140,000.00. According to the Company's decision, ZKTeco
Latam R＆D S.A. completed the capital reduction procedures locally in Argentina in January 2024. The local registered capital was
changed from ARS7,000,000.00 to ARS2,926,000.00, and the total number of shares decreased from 7,000 to 2,926, with ZKTECO
ARGENTINA S.A. holding 140 shares and ZKTECO CO., LIMITED holding 2,786 shares. After the capital decrease, the paid in
capital amount of ZKTeco Latam R＆D S.A. remained unchanged, but the shareholding ratio of ZKTECO CO., LIMITED in ZKTeco
Latam R&D S.A. increased from 98% to 95.22%, and the shareholding ratio of ZKTECO ARGENTINA S.A. increased from 2% to
4.78%.
3. Equity in joint arrangements or associates
(1) Important joint ventures or associates
Percentage of shares Accounting
treatment
Name of joint
Main business Registration Nature of methods for
venture or
place place business Direct Indirect investments in
associate
joint ventures
or associates
Xinhuaxin Software and
(Xi'an) information Long-term
Information Xi'an Xi'an technology 19.89% equity
Technology services investment
Co., Ltd. industry
Explanation of the fact that shareholding percentage is different from the proportion of voting rights in the joint ventures or associates:
None
Basis for holding less than 20% of voting rights but having significant impact, or holding 20% or more of voting rights but not having
significant impact:
(2) Major financial information of important associates
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Current assets 109,246.92 7,510,080.96
Non-current assets 307,582.52
Total assets 109,246.92 7,817,663.48
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ZKTeco 2024 Half Year Report
Current liabilities 200,000.00 20,381,375.86
Non-current liabilities
Total liabilities 200,000.00 20,381,375.86
Minority interests
Shareholders' equity attributable to the
-90,753.08 -12,563,712.38
parent company
Net asset share calculated based on
-18,047.52 -2,498,470.10
shareholding ratio
Adjustment matters
--Goodwill
--Unrealized profits from internal
transactions
--Others
Book value of equity investment in
associates
Fair value of equity investments in
associates with public offers
Operating income 1,143,428.23 2,854,572.43
Net profit 12,472,959.30 -5,411,549.51
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 12,472,959.30 -5,411,549.51
Dividends received from associates this
year
Other explanations:
Xinhuaxin (Xi'an) Information Technology Co., Ltd. completed its industrial and commercial deregistration on August 21, 2024.
(3) Summary financial information of unimportant joint ventures and associated enterprises
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Joint venture:
The total number of the following items
calculated based on shareholding ratio
Associates:
Total investment book value 29,071,504.20 29,781,888.62
The total number of the following items
calculated based on shareholding ratio
-- Net profit -1,006,921.81 -185,118.03
-- Other comprehensive income 91,638.47 252,450.00
--Total comprehensive incomes -915,283.34 67,331.97
Other explanations:
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ZKTeco 2024 Half Year Report
(4) Excess losses incurred by joint ventures or associates
Unit: RMB
Accumulated unrecognized Unrecognized losses in the
Name of joint venture or Accumulated unrecognized
losses accumulated in the current period (or net profit
associate losses at the end of this period
previous period shared in the current period)
Xinhuaxin (Xi'an)
Information Technology Co., -13,015,860.32 12,997,812.80 -18,047.52
Ltd.
ZKTECO SOLUTIONS INC. -716,468.40 -34,226.03 -750,694.43
PT. ZKTECO SECURITY
-427,490.18 -170,672.89 -598,163.07
INDONESIA
Other explanations:
Xinhuaxin (Xi'an) Information Technology Co., Ltd. completed its industrial and commercial deregistration on August 21, 2024.
XI. Government Subsidies
1. Government subsidies recognized by accounts receivable at the end of the reporting period
□ Applicable Not applicable
Reasons for not receiving the expected amount of government subsidies at the expected time point
□ Applicable Not applicable
2. Liability items involving government subsidies
Applicable □ Not applicable
Unit: RMB
Amount
Newly added included in Amount of
Other
subsidy non- other income
Accounting Beginning changes in Ending Assets/Incom
amount in operating transferred in
Subject Balance the current Balance e-related
current income for the current
period
period the current period
period
Deferred Assets-
1,853,549.62 92,734.28 1,760,815.34
income related
Total 1,853,549.62 92,734.28 1,760,815.34
3. Government subsidies included in current profits and losses
Applicable □ Not applicable
Unit: RMB
Accounting Subject Amount incurred in the current period Amount incurred in the previous period
Value added tax is collected and
2,163,132.04 2,751,057.22
refunded immediately
Dongguan Economic and Information
Technology Bureau "Human 29,499.54 29,499.58
Replacement by Machine" Fund
Automation Project Subsidy of
30,298.38 30,298.36
Dongguan Bureau of Industry and
216
ZKTeco 2024 Half Year Report
Information Technology
Industrial Support and Transformation
and Upgrading Special Fund (Integration
of Informatization and Industrialization) 10,982.96 11,325.09
of Dongguan Bureau of Industry and
Information Technology
Subsidy for Residency and Decoration of
Management Committee of Xiamen
13,924.20 13,924.20
Torch High-Tech Industry Development
Zone
Subsidy for Exhibition Hall Decoration
of Management Committee of Xiamen
8,029.20 8,029.20
Torch High-Tech Industry Development
Zone
Stabilization allowance 91,619.56 90,930.44
Value added tax deduction 1,174,248.07 3,053.49
Rewards for high-tech enterprise
500,000.00
recognition
One-time job expansion subsidy 69,500.00 45,000.00
Subsidies for enterprise R&D expenses 400,000.00
Support Fund for Increasing R&D
Investment of the Management
3,152,800.00
Committee of Xiamen Torch High-Tech
Industry Development Zone
Singapore Employment Support Scheme 94,745.70
One-time Training Subsidy for Retention
145,880.57
of Workers of Social Security Bureau
2022 Provincial Special Fund for
Promoting High Quality Economic
1,101,719.86
Development of Bureau of Commerce of
Dongguan City
Graduates' Social Security Subsidies 32,449.14 29,797.67
Special Fund for 2023 Central Foreign
Economic and Trade Development of
Guangdong Province (Promoting Foreign 13,366.81
Investment Cooperation) - Policy Credit
Insurance Subsidy
Economic Development Bureau's 100
RMB 100 Million Enterprise Cultivation 200,000.00
Fund
2022 National Intellectual Property
Advantage Enterprise Award of Xiamen 200,000.00
Municipal Market Supervision Bureau
Employment Subsidies for Poverty
18,600.00
Alleviation Population
Export Credit Insurance Purchase
Promotion Project of Provincial Special
Fund for Promoting High Quality
1,076,345.85
Development of Economy in 2024
(Promoting the Development of Foreign
Trade)
Social Security Subsidies for Individuals
30,738.64
Facing Employment Difficulties
Others 12,325.38 89,894.90
Total 8,127,859.77 5,545,156.28
Other explanations:
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ZKTeco 2024 Half Year Report
XII. Risks Related to Financial Instruments
1. Various risks arising from financial instruments
1. Credit risk
Credit risk refers to the risk of financial losses incurred by the Company due to the counterparty's failure to fulfill contract
obligations. The management has established appropriate credit policies and continuously monitors the exposure to credit risk.
The Company has adopted a policy of only trading with reputable counterparties. In addition, the Company evaluates the credit
qualifications of customers based on their financial position, the possibility of obtaining guarantees from third parties, credit records,
and other factors such as current market conditions, and sets corresponding credit periods. The Company continuously monitors the
notes receivable, accounts receivable balance, and collection. For customers with poor credit records, the Company will use written
reminders, shorten or cancel credit periods, etc. to ensure that the Company does not face significant credit losses. In addition, the
Company reviews the recovery of financial assets on each balance sheet date to ensure that sufficient provisions for expected credit
losses have been made for the relevant financial assets.
The credit risk of other financial assets of the Company, including monetary funds, other receivables, debt investments, etc., arises
from counterparty defaults, and the maximum credit risk exposure is the carrying amount of each financial asset on the balance sheet.
The Company has not provided any other guarantee that may expose the Company to credit risk.
The monetary funds held by the Company are mainly deposited in state-owned holding banks and other large and medium-sized
commercial banks and other financial institutions. The management believes that these commercial banks have a high reputation and
good asset status, there is no significant credit risk, and there will be no significant losses caused by the default of the counterparty.
The Company's policy is to control the amount of deposits held in deposits based on the market reputation, business scale, and financial
background of well-known financial institutions, in order to limit the credit risk amount to any individual financial institution.
As part of the Company's credit risk asset management, the Company uses aging to assess impairment losses on accounts
receivable and other receivables. The Company's accounts receivable and other receivables involve a large number of customers, and
the aging information can reflect the solvency and bad debt risk of these customers for accounts receivable and other receivables. The
Company calculates the historical actual bad debt rate for different aging periods based on historical data, and takes into account current
and future economic forecasts, such as forward-looking information like national GDP growth rate, total infrastructure investment, and
national monetary policy, to adjust the expected loss rate. For long-term receivables, the Company takes into account the settlement
period, payment period stipulated in the contract, the financial position of the debtor, and the economic situation of the debtor's industry,
and adjusts the expected credit loss based on the forward-looking information mentioned above.
As of June 30, 2024, the book balances and expected credit impairment losses of related assets are as follows:
Unit: RMB
Item Book balance Impairment provision
Accounts receivable 505,242,359.77 34,924,858.45
Other receivables 44,589,719.58 5,665,726.44
Debt investment (including debt investment due within one year) 46,261,254.10
Long-term receivables (including payments due within one year) 3,806,228.60
Total 599,899,562.05 40,590,584.89
Due to the fact that the Company's receivable risk points are distributed among multiple partners and customers, as of June 30,
2024, 23.43% (December 31, 2023: 22.14%) of the Company's receivables and ending balance of contract assets came from the top
five customers with outstanding balances, and the Company did not have significant credit concentration risks.
The Company's maximum credit risk exposure is the book value of each financial asset in the balance sheet.
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ZKTeco 2024 Half Year Report
For the bank financial products invested by the Company, the counterparty must have a credit rating higher than or equal to that
of the Company. Given the good credit rating of the counterparty, the Company's management does not anticipate that the counterparty
will be unable to fulfill its obligations.
2. Liquidity risk
The liquidity risk refers to the risk of capital shortage of the Company taking place in the course of cash payment or settlement
via other financial assets. The policy of the Company is to ensure that there is sufficient cash for the payment of the matured debts.
Each member enterprise of the Company is responsible for its cash flow forecast. The Finance Department under the Company
continuously monitors the Company's short-term and long-term funding needs at the company level based on the cash flow forecast
results of each member enterprise, to ensure the maintenance of sufficient cash reserves; simultaneously, the Finance Department
continuously monitors whether it complies with the provisions of the loan agreement and obtains commitments from major financial
institutions to provide sufficient reserve funds to meet short-term and long-term funding needs. In addition, the Company has entered
into financing and credit agreements with major correspondent banks to provide support for the Company's obligations related to
commercial bills. As of June 30, 2024, the Company has obtained credit lines from multiple domestic banks, with a total amount of
RMB 1.4 billion, of which RMB 210.8004 million has been used.
As of June 30, 2024, the Company's financial liabilities and off balance sheet guarantee items are presented as undiscounted
contract cash flows over the remaining term of the contract as follows:
Unit: RMB
Ending Balance
Item
Within 1 year 1-5 years Over 5 years Total
Notes payable 148,568,276.33 148,568,276.33
Accounts payable 171,238,426.99 171,238,426.99
Other payables 43,034,768.84 43,034,768.84
Non-current liabilities due
22,626,110.87 22,626,110.87
within one year
Other current liabilities 11,195,334.26 11,195,334.26
Lease liabilities 22,888,617.57 22,888,617.57
Long-term loan 7,320,192.70 7,320,192.70
Total 396,662,917.29 30,208,810.27 426,871,727.56
3. Market risk
(1) Exchange rate risk
The main business of the Company is operated within the territory of China, which is settled in RMB. However, there are still
exchange risks in the foreign currency assets and liabilities recognized and future foreign currency transactions of the Company (the
valuation currency for foreign currency assets and liabilities, as well as foreign currency transactions, is mainly USD). The Finance
Department of the Company is responsible for monitoring the scale of foreign currency transactions and foreign currency assets and
liabilities to minimize the exchange rate risk faced.
The foreign currency financial assets and foreign currency financial liabilities of the Company at the end of the period are
presented in Note V Note 60. Foreign currency monetary items.
(2) Interest rate risk
The Company's interest rate risk mainly arises from bank loans, etc. Floating-rate financial liabilities expose the Company to cash
flow interest rate risk while fixed-rate financial liabilities expose the Company to fair value interest rate risk. The Company determines
the relative proportion of contracts with fixed interest rate and contracts with floating interest rate according to the current market
environment.
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ZKTeco 2024 Half Year Report
The Finance Department of the Company continuously monitors the Company's interest rate level. The increases in interest rate
will increase the costs of the new interest-bearing debts and the interest expenses of interest-bearing debts failing to be paid up by the
Company and subject to the interest calculation at floating interest rate, and will, significantly and adversely, affect the Company's
financial results; the management will make an adjustment according to the latest market conditions to reduce the interest rate risks.
XIII. Disclosure of Fair Value
1. Ending fair value of assets and liabilities measured at fair value
Unit: RMB
Fair value at the end of the period
Item First level fair value Second level fair value Third level fair value
Total
measurement measurement measurement
I. Continuous fair value
-- -- -- --
measurement
(I) Trading financial
545,824,974.27 545,824,974.27
assets
1. Financial assets
measured at fair value
and whose changes are 545,824,974.27 545,824,974.27
included in the current
profits and losses
(1) Debt instrument
545,824,974.27 545,824,974.27
investment
Total assets
continuously measured 545,824,974.27 545,824,974.27
at fair value
II. Continuous fair
-- -- -- --
value measurement
2. Basis for determining the market value of continuous and non-continuous first level fair value
measurement items
None
3. Qualitative and quantitative information on valuation techniques and important parameters used for
continuous and non-continuous second level fair value measurement items
The Company divides its bank financial products into financial assets measured at fair value and whose changes are included in
the current profits and losses, and subsequently measures them at fair value. At the end of the period, the expected income is calculated
based on the expected return rate of the bank financial products, and it is used as the fair value with the principal at the end of the
period.
4. Qualitative and quantitative information on valuation techniques and important parameters used for
continuous and non-continuous third level fair value measurement items
None
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ZKTeco 2024 Half Year Report
5. Information on adjustment between beginning book value and ending book value of items subject to Level
3 on a going fair value measurement and sensitivity analysis of non-observable parameters
None
6. Continuous fair value measurement items that undergo conversion between different levels during the
current period, the reasons for conversion, and the policy for determining the conversion time point
None
7. Changes in valuation techniques and reasons for such changes during the current period
None
8. Fair value of financial assets and liabilities not measured at fair value
Financial assets and liabilities not measured at fair value mainly include accounts receivable, short-term loans, payables, non-
current liabilities due within one year, and long-term loans. The difference between the carrying amounts of financial assets and
liabilities not measured at fair value and fair value is very small.
9. Other
None
XIV. Related Parties and Related Party Transactions
1. Information of the parent company of the enterprise
Share proportion Proportion of
Name of the parent held by parent voting rights of the
Registration place Nature of business Registered Capital
company company in the parent company to
enterprise the Company
Shenzhen ZKTeco
Times Investment Shenzhen Established RMB 9 million 30.05% 30.05%
Co., Ltd.
Explanation of the parent company of the enterprise
None
The ultimate controller of this enterprise is Che Quanhong.
Other explanations:
None
2. Subsidiaries of the enterprise
The situation of the Company's subsidiaries is detailed in Note X 1. Equity in subsidiaries.
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ZKTeco 2024 Half Year Report
3. Information of joint ventures and associates of the enterprise
For important joint ventures or associates of the enterprise, please refer to Note X 3. Equity in joint venture arrangements or associates.
Related party transactions with the Company occurred in the current period, the information of other joint ventures or associates that
have formed balances through related party transactions with the Company in the early stage is as follows:
Name of joint venture or associate Relationship with the enterprise
ZKTECO SMART CITY (THAILAND) CO., LTD. Joint venture
PT. ZKTECO SECURITY INDONESIA Joint venture
ZKTECO SOLUTIONS INC. Joint venture
CV Squared, Inc. Joint venture
Guizhou Zhongjiang Intelligent Technology Co., Ltd. Joint venture
Xinhuaxin (Xi'an) Information Technology Co., Ltd. Joint venture
Xiamen Xingniu Yunyu Venture Capital Partnership Enterprise
Joint venture
(Limited Partnership)
Silk ID Systems Inc. Joint venture
Other explanations:
(1) Xinhuaxin (Xi'an) Information Technology Co., Ltd. completed its industrial and commercial deregistration on August 21, 2024.
(2) Due to changes in market demand, the shareholders' meeting of Silk ID Systems Inc. has decided to liquidate and deregister the
Company. The Company completed its investment registration deregistration with the Bureau of Commerce in China in May 2024.
4. Conditions of other affiliated parties
Names of other related parties Relationship between other related parties and the enterprise
An enterprise controlled by the minority shareholder Fernando
Ducay Real of subsidiary ZKTECO EUROPE SL; Fernando
PSD SECURITY, S.L. Ducay Real also holds 27.38% of the capital contribution share
of JYLX, which holds 2.39% of the Company's shares (as of
June 30, 2024)
Liu Jiajia Former supervisor
Shenzhen Huijiang Industrial Group Co., Ltd. A shareholder holding 49.00% equity in Shenzhen Zhongjiang
Wu Xinke Former supervisor
Yang Xianfeng Supervisor
Wu Xiongxiong Supervisor of the controlling shareholder ZKTeco Times
Shenzhen Zhongjiang Intelligent Technology Co., Ltd. Subsidiaries in the process of compulsory liquidation
Other explanations: The Company acquired all the minority shareholders' equity of subsidiary ZK SOFTWARE DE MEXICO, S.A.
DE C.V. in August 2023. TVCENLINEA.COM SA DE CV was a company controlled by minority shareholders. According to the
relevant provisions of the "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange", from August
2023 to August 2024, TVCENLINEA.COM SA DE CV was still be considered as a related party of the listed company. During this
period, the transactions between TVCENLINEA.COM SA DE CV and the listed company still constitute related party transactions.
Therefore, the transactions between the Company and TVCENLINEA.COM SA DE CV from January to June 2024 constitute related
party transactions.
5. Related party transactions
(1) Related party transactions for purchasing and selling goods, providing and receiving labor services
Table of Purchasing Goods/Accepting Labor Services
Unit: RMB
Content of related Amount incurred Approved Does it exceed the Amount incurred
Related party
party transaction in the current transaction limit transaction limit in the previous
222
ZKTeco 2024 Half Year Report
period period
TVCENLINEA.C
Purchasing goods 1,903,206.24 3,500,000.00 No 1,523,554.19
OM, SA DE CV
PSD SECURITY,
Purchasing goods 0.00 10,000.00 No 9,150.04
S.L.
ZKTECO SMART
CITY
Purchasing goods 86,270.11 0.00 3,900.71
(THAILAND)
CO., LTD.
Xinhuaxin (Xi'an)
Information
Service fee 0.00 0.00 559,759.24
Technology Co.,
Ltd.
PT. ZKTECO
Marketing
SECURITY 0.00 0.00 127,473.68
expenses
INDONESIA
Selling goods/rendering labor service
Unit: RMB
Content of related party Amount incurred in the Amount incurred in the
Related party
transaction current period previous period
Xinhuaxin (Xi'an)
Information Technology Co., Selling goods 0.00 18,380.27
Ltd.
PT. ZKTECO SECURITY
Selling goods 867,424.05 852,201.76
INDONESIA
ZKTECO SMART CITY
Selling goods 411,149.62 1,108,553.37
(THAILAND) CO., LTD.
TVCENLINEA.COM, SA
Selling goods 38,110,767.51 20,076,960.61
DE CV
PSD SECURITY, S.L. Selling goods 2,331,543.67 1,920,743.51
ZKTECO SOLUTIONS
Selling goods 4,751,125.29 2,298,463.42
INC.
Description of related party transactions for purchasing and selling goods, providing and receiving labor services
Note: The expected daily related party transaction limit of the Company is the maximum amount that both parties may sign a
contract, and the actual amount incurred is determined based on the business development of both parties, resulting in a certain
difference between the actual amount incurred and the expected amount. The difference in amount is relatively small and does not meet
the criteria for review by the Board of Directors. The daily related party transactions of the Company in half year of 2024 were based
on the normal production and operation needs of the Company. The related party transactions comply with the principles of fairness,
openness, and impartiality, and there is a certain difference between the actual amount incurred and the expected amount. This is mainly
due to the Company's appropriate adjustments based on business conditions, and there is no situation that damages the Company and
shareholders' rights and interests, which will not affect the independence of the Company.
(2) Related party lease
The Company as lessor:
Unit: RMB
Confirmed rental income in Rental income recognized in
Name of leasee Types of leased assets
the current period the previous period
PT. ZKTECO SECURITY
Houses and buildings 140,413.28 139,163.10
INDONESIA
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ZKTeco 2024 Half Year Report
The Company as lessee:
Unit: RMB
Variable lease
Simplified rental fees payments not
Interest expenses on
for short-term leases included in the
Rent paid lease liabilities Increased right-of-use assets
and low value asset measurement of
assumed
Types of leases (if applicable) lease liabilities (if
Name of
leased applicable)
lessor
assets Amount Amount Amount Amount Amount Amount Amount
Amount Amount Amount
incurred incurred incurred incurred incurred incurred incurred in
incurred in incurred in incurred in
in the in the in the in the in the in the the
the current the previous the current
current previous current previous current previous previous
period period period
period period period period period period period
Houses
Che
and 0.00 0.00 0.00 0.00 656,283.06 1,282,566.12 12,249.36 41,308.72 -4,041,291.00 0.00
Quanzhong
buildings
Xinhuaxin
(Xi'an) Houses
Information and 22,935.78 0.00 0.00 0.00 0.00 93,256.20 0.00 -3,501.28 0.00 -79,054.58
Technology buildings
Co., Ltd.
Information of related leasing situation
(3) Compensation for key management personnel
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Remuneration of key management
3,787,829.58 4,541,331.25
personnel
6. Accounts receivable and payable to related parties
(1) Accounts receivable
Unit: RMB
Ending Balance Beginning Balance
Project Name Related party
Book balance Bad debt reserve Book balance Bad debt reserve
PT. ZKTECO
Accounts
SECURITY 5,552,145.44 664,536.26 4,972,664.59 499,062.11
receivable
INDONESIA
ZKTECO SMART
Accounts CITY
271,352.47 13,567.62 1,377,973.61 68,898.68
receivable (THAILAND)
CO., LTD.
ZKTECO
Accounts
SOLUTIONS 16,160,499.57 808,024.98 15,485,450.49 859,347.75
receivable
INC.
Guizhou
Accounts
Zhongjiang 334,800.21 334,800.21 334,800.21 334,800.21
receivable
Intelligent
224
ZKTeco 2024 Half Year Report
Technology Co.,
Ltd.
Accounts PSD SECURITY,
1,614,196.38 80,709.80 1,196,725.73 59,836.29
receivable S.L.
Shenzhen
Zhongjiang
Accounts
Intelligent 329,077.00 329,077.00
receivable
Technology Co.,
Ltd.
Other receivables Che Quanhong 131,771.27
Guizhou
Zhongjiang
Other receivables Intelligent 397,428.70 397,428.70 397,428.70 397,428.70
Technology Co.,
Ltd.
Xinhuaxin (Xi'an)
Information
Other receivables 31,395.00
Technology Co.,
Ltd.
Other receivables Yang Xianfeng 28,208.34 28,208.34
Other receivables He Yanting 20,000.00
Other receivables Wu Xiongxiong 47,884.02
Shenzhen
Zhongjiang
Other receivables Intelligent 1,941,963.89 1,941,963.89
Technology Co.,
Ltd.
(2) Accounts payable
Unit: RMB
Project Name Related party Closing book balance Opening book balance
Accounts ZKTECO SMART CITY (THAILAND) CO.,
26,708.72
payable LTD.
Other payables PSD SECURITY, S.L. 8,079.96
Other payables Shenzhen Huijiang Industrial Group Co., Ltd. 1,800,000.00
Other payables Wu Xinke 61,071.16
Other payables Wu Xiongxiong 62,109.13
Other payables Wu Xuejing 994
Contract
CV Squared,Inc. 1,275,140.00 1,275,140.00
liabilities
Contract
Silk ID Systems Inc. 53,387.06
liabilities
XV. Share-based Payment
1. Overall information of share-based payment
Applicable □ Not applicable
Unit: RMB
Grant object category Current grant Current exercise Unlocked in current Expired in current
225
ZKTeco 2024 Half Year Report
period period
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Directors, senior management,
middle managers and core
technology (business) backbone
employees of the Company
(including branches and
subsidiaries)
Total
Outstanding stock options or other equity instruments at the end of the period
Applicable □ Not applicable
Outstanding other equity instruments at the
Outstanding stock options at the period end
period end
Grant object category
Remaining term of the Range of exercise Remaining term of the
Range of exercise price
contract price contract
The remaining term of the
The exercise price for
share option contracts
the first grant of stock
Directors, senior issued by the Company for
options issued by the
management, middle the first time in 2022 is
Company in 2022 is
managers and core from January 1, 2024 to
RMB 14.12 per share,
technology (business) November 16, 2024. The
while the exercise price
backbone employees of remaining term of the share
for the reserved grant
the Company option contracts issued by
of stock options issued
(including branches the Company for the
by the Company in
and subsidiaries) reserved grant in 2022 is
2022 is RMB 14.12 per
from January 1, 2024 to
share.
June 21, 2025.
Other explanations:
2. Equity settled share-based payments
Applicable □ Not applicable
Unit: RMB
Method for determining the fair value of equity instruments on
Determination of Fair Value Based on the Black Scholes Model
the grant date
On each balance sheet date during the waiting period, the
Basis for Determining the Number of Exercisable Equity Company predicts based on the latest number of exercisable
Instruments rights, completion of performance indicators, personal
assessment status, and other subsequent information
Reasons for significant differences between the current
None
estimate and the previous estimate
Accumulated amount of equity settled share-based payments
49,684,557.70
recognized in capital reserve
The total amount of expenses recognized for equity settled
7,765,311.61
share-based payments in this period
Other explanations:
226
ZKTeco 2024 Half Year Report
On November 16, 2022, the Company held the 21st Session of the Second Board Meeting, and deliberated and approved the
"Proposal on Granting Restricted Shareto Incentive Objects of 2022 Restricted Share Incentive Plan for the First Time". The
independent directors of the Company expressed relevant opinions on this matter, and believed that the conditions for granting
stipulated in the Company's incentive plan had been met, the determined grant date was in line with relevant regulations, the scope of
incentive objects stipulated in the Company's restricted share incentive plan, and its subject qualification as the incentive object of the
Company's restricted share incentive plan was legal and effective. The Board of Supervisors verified the list of incentive objects granted
on the grant date and issued verification opinions.
On June 21, 2023, the Company held the Third Session of the Third Board Meeting, and deliberated and approved the "Proposal
on Adjusting the Granting Price and Quantity of 2022 Restricted Share Incentive Plan", "Proposal on Cancelling Some Granted but
Not Affiliated Restricted Shares", and "Proposal on Granting Reserved Restricted Shares to the Incentive Objects of 2022 Restricted
Share Incentive Plan". The independent directors of the Company have expressed relevant opinions on this matter, believing that the
grant date complies with the relevant provisions of the "Management Measures" and the Company's restricted share incentive plan
regarding the grant date. The Company and the incentive objects of reserved grant have not experienced any circumstances where
rights and interests cannot be granted, and the grant conditions stipulated in the Company's incentive plan have been met. The Board
of Supervisors verified the list of incentive objects granted on the grant date and issued verification opinions.
3. Cash settled share-based payments
□ Applicable Not applicable
4. Share-based payment fees in the current period
Applicable □ Not applicable
Unit: RMB
Grant object category Equity settled share-based payment fees Cash settled share-based payment fees
Directors, senior management, middle
managers and core technology (business)
7,765,311.61
backbone employees of the Company
(including branches and subsidiaries)
Total 7,765,311.61
Other explanations:
5. Modification and termination of share-based payment
None
6. Others
None
227
ZKTeco 2024 Half Year Report
XVI. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
There are no significant commitments that need to be disclosed by the Company.
2. Contingencies
(1) Significant contingencies on the balance sheet date
Contingencies arising from pending litigation or arbitration and their financial impact
1) Lease contract dispute with Guizhou Yiyun Big Data Service Co., Ltd.
The associate of the Company, Guizhou Zhongjiang Intelligent Technology Co., Ltd., has been sued for a leasing dispute with
Guizhou Yiyun Big Data Service Co., Ltd. As of the date of approval for the financial statements, this case has been adjudicated in the
second instance. The compulsory execution procedure has been terminated, and the subsidiary Shenzhen Zhongjiang Intelligent
Technology Co., Ltd. and its legal representative Tang Zhenzan have been restricted from high consumption.
The controlling subsidiary of the Company, Shenzhen Zhongjiang Intelligent Technology Co., Ltd. and He Siting, as a
shareholder of Guizhou Zhongjiang Intelligent Technology Co., Ltd., bear joint and several liability, with a litigation amount of ①
RMB 501,307.00 and the penalty for overdue payment (based on unpaid rent and calculated at an annual interest rate of 3.85%, from
April 23, 2020 to the date when the rent is fully paid); ② Pay a rent free period loss of RMB 100,000.00.
As of the date of approval for these financial statements, the controlling subsidiary of the Company, Shenzhen Zhongjiang
Intelligent Technology Co., Ltd., has become insolvent and the Company starts the compulsory liquidation. Guizhou Yiyun Big Data
Service Co., Ltd. has declared its creditor's rights to the liquidation team and received confirmation. The subsequent liquidation team
will distribute according to the actual property situation of Shenzhen Zhongjiang in accordance with the law, and the specific amount
available for distribution will be notified by the liquidation team.
Except for the above contingencies, as of June 30, 2024, the Company has no other important contingencies that should be
disclosed but not disclosed.
(2) The Company shall also provide a description if there are no important contingencies that need to be
disclosed
There are no significant contingencies that need to be disclosed by the Company.
3. Others
XVII. Events after the Balance Sheet Date
1. Important non adjustment matters
Unit: RMB
Number of impacts on The reason for the inability to
Item Content financial position and estimate the number of
operating results impacts
228
ZKTeco 2024 Half Year Report
2. Profit distribution
3. Description of other events after the balance sheet date
XVIII. Other Important Events
1. Other important transactions and matters that have an impact on investors' decisions
(1) ZKTECO filed a lawsuit against Zhongan Intelligent Control, Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen
regarding a loan contract dispute
On July 31, 2019, the Company filed a lawsuit against Shenzhen Zhongan Intelligent Control Technology Co., Ltd. (hereafter
referred to as "Zhongan Intelligent Control"), Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen in the Third People's Court of
Dongguan City, Guangdong Province regarding a loan contract dispute, requesting judgment that Zhongan Intelligent Control repay
the loan of RMB 7,757,380.00 and pay interest of RMB 262,560.75 (calculated from April 1, 2019 at an annual interest rate of 8.70%
and temporarily recorded until July 31, 2019); request judgment that Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen bear joint
and several payment responsibilities for the loan and interest; request that Zhongan Intelligent Control, Liu Yuntian, Yan Pingjin,
Zhang Peng, and Wang Gen pay an attorney fee of RMB 240,000.00, a guarantee fee of RMB 8,200.00, and all legal costs in this case
in the judgment.
The cause of action was in December 2017. Zhongan Intelligent Control borrowed RMB 7,000,000.00 from the Company for
business development reasons, with a repayment deadline of May 9, 2018. Afterwards, Zhongan Intelligent Control was unable to
repay the aforementioned loan, and after negotiation, the repayment date was changed to January 10, 2019. In October 2018, due to a
shortage of working capital, Zhongan Intelligent Control proposed to advance the mold opening fee of RMB 757,380.00 to the
Company, and the Company once again provided a loan of RMB 757,380.00 to Zhongan Intelligent Control. In April 2019, the
Company signed a supplementary agreement with Zhongan Intelligent Control, stipulating that the loan and interest would be repaid
on a monthly basis starting from April 2019. Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen would bear unlimited joint and
several guarantee liability. After the contract was signed, Zhongan Intelligent Control did not repay on time.
The case has been accepted by the Third People's Court of Dongguan City, Guangdong Province. The case number is (2019) Y
1973 MC No. 12578. On October 31, 2020, Zhongan Intelligent Control was sentenced to repay the loan of RMB 7,757,380.00 and
interest (with RMB 7,757,380.00 as the principal, calculated at an annual interest rate of 8.70% from April 1, 2019 to the actual payment
date). Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen bear joint and several liability for the repayment of the above-mentioned
debt scope. At the same time, Zhongan Intelligent Control shall bear the actual attorney fee of RMB 240,000.00 and preservation and
guarantee service fees of RMB 8,200.00 in this lawsuit.
On October 29, 2020, the People's Court of Longgang District, Shenzhen City, Guangdong Province accepted the bankruptcy
liquidation case of Zhongan Intelligent Control, with case number (2020) Y 0307 PS No. 33, and designated the bankruptcy
administrator for the case. According to the (2020) Y 0307 P No. 30-1 "Civil Ruling" issued by the People's Court of Longgang District,
Shenzhen on May 14, 2021, it was determined to confirm the creditor's rights recorded in the "Debt Statement of Shenzhen Zhongan
Intelligent Control Technology Co., Ltd.", and the amount of the Company's ordinary creditor's rights was RMB 9,150,710.78. On July
2, 2021, the People's Court of Longgang District, Shenzhen City issued the (2020) Y 0307 P No. 30-4 "Civil Ruling", declaring Zhongan
Intelligent Control's bankrupcy; on July 14, 2021, the People's Court of Longgang District, Shenzhen City issued the (2020) Y 0307 P
No. 30-5 "Civil Ruling", approving the bankruptcy property distribution plan of Zhongan Intelligent Control. After the completion of
the bankruptcy property distribution plan, the assets under the name of Zhongan Intelligent Control were insufficient to repay all of its
debts, and the Company did not receive repayment.
On July 20, 2021, the People's Court of Longgang District, Shenzhen City, Guangdong Province issued the (2020) Y 0307 P No.
30-8 "Civil Ruling", ruling to terminate the bankruptcy proceedings of Zhongan Intelligent Control. As of the date of approval of the
229
ZKTeco 2024 Half Year Report
financial report, Zhongan Intelligent Control has been deregistered. The balance after offsetting the original debt and credit of Zhongan
Intelligent Control has been completed according to the Company's verification process.
(2) ZKTECO filed a lawsuit against Zhikongtaike, Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen in the case
regarding equity transfer dispute
On July 31, 2019, the Company filed a lawsuit against Shenzhen Zhikongtaike Biometric Technology Co., Ltd. (hereinafter
referred to as "Zhikongtaike"), Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen in a dispute over equity transfer with the Third
People's Court of Dongguan City, Guangdong Province, requesting that Zhikongtaike pay the remaining equity transfer fee of RMB
2,500,000.00 and interest of RMB 84,616.44 (calculated from April 1, 2019 at an annual interest rate of 8.70% and temporarily recorded
until July 31, 2019), as well as liquidated damages of RMB 1,020,000.00 for non fulfillment of the agreement; request a judgment that
Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen bear joint and several payment responsibilities for the loan, interest, and
liquidated damages; request the judgment that Zhikongtaike, Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen pay the attorney
fee of RMB 110,000.00, the guarantee fee of RMB 3,600.00, and all legal costs in this case in the judgment.
The cause of action was in August 2016, when the Company and Zhikongtaike jointly invested to establish Shenzhen Zhongan
Intelligent Control Technology Co., Ltd. with a registered capital of RMB 10,000,000.00, the Company contributed RMB 5,100,000.00,
holding 51.00% of the shares, and Zhikongtaike contributed RMB 4,900,000.00, holding 49.00% of the shares. After the establishment
of Shenzhen Zhongan Intelligent Control Technology Co., Ltd., due to conflicts between the Company's and Zhongan Intelligent
Control's business philosophy, after mutual consultation, the Company withdrew from Shenzhen Zhongan Intelligent Control
Technology Co., Ltd. and transferred its equity to Zhikongtaike. On April 22, 2019, both parties signed an "Equity Transfer Agreement"
and a "Guarantee Contract" regarding the transfer of equity. It was agreed that the Company would transfer its 51% equity to
Zhikongtaike for RMB 5,100,000.00, and Zhikongtaike would pay RMB 2,600,000.00 in advance. The remaining RMB 2,500,000.00
would be paid and interest calculated over 21 months, and Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen would bear unlimited
joint and several guarantee liability for the payable amount. After the contract was signed, both parties completed the equity transfer
procedures as agreed, but Zhikongtaike did not make the remaining equity transfer payment as agreed.
The case has been accepted by the Third People's Court of Dongguan City, Guangdong Province, with case number (2019) Y
1973 MC No. 12579. On October 13, 2020, the court ruled that Zhikongtaike should pay the Company an equity transfer fee of RMB
2,500,000.00 and interest, as well as liquidated damages of RMB 1,020,000. Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen
shall be jointly and severally liable for the above-mentioned debt scope. At the same time, Zhikongtaike, Liu Yuntian, Yan Pingjin,
Zhang Peng, and Wang Gen shall bear the attorney fee of RMB 110,000.00 in this lawsuit.
On January 8, 2021, the Company submitted an application for compulsory execution to the Third People's Court of Dongguan
City, requesting the enforcement of the (2019) Y 1973 MC No. 12579 judgment against Zhikongtaike, Liu Yuntian, Yan Pingjin, Zhang
Peng, and Wang Gen. They shall repay the loan of RMB 2,500,000.00 and interest to the Company (with RMB 2,500,000.00 as the
principal, calculated at an annual interest rate of 8.70% from April 1, 2019 to the actual repayment date), and pay liquidated damages
of RMB 1,020,000.00, the attorney fee of RMB 110,000.00, and the guarantee fee of RMB 3,600.00 to the Company, and double the
debt interest during the delayed performance period.
On June 24, 2021, the Company reached an "Implementation Settlement Agreement" (hereinafter referred to as the "Original
Agreement") with Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen, agreeing that Liu Yuntian, Yan Pingjin, Zhang Peng, and
Wang Gen shall bear joint and several liability for the equity transfer payment of RMB 2,500,000.00 and interest (with RMB
2,500,000.00 as the principal, and calculated at an annual interest rate of 8.7% from April 1, 2019) and liquidated damages of RMB
1,020,000 for Zhikongtaike to the Company within one year from the date of signing the settlement agreement. At the same time, they
shall pay the attorney fee of RMB 110,000.00 and the guarantee fee of RMB 3,600.00.
The Company submitted an Implementation Settlement Agreement for compulsory measures against Liu Yuntian, Yan Pingjin,
Zhang Peng, and Wang Gen to the Third People's Court of Dongguan City, Guangdong Province. On July 21, 2021, the Company
applied to withdraw the enforcement application against Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen. On the same day, the
Third People's Court of Dongguan City, Guangdong Province issued an enforcement notice (2021) Y 1973 Z No. 3006 to the Company,
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ZKTeco 2024 Half Year Report
informing that the Company had not yet discovered any other property available for enforcement in Zhikongtaike, Liu Yuntian, Yan
Pingjin, Zhang Peng, and Wang Gen. The court requested the Company to provide it with property clues available for enforcement
within three days after receiving the enforcement notice, and if it failed to provide them within the time limit and did not provide other
opinions in writing, the execution procedure would be terminated.
On September 9, 2021, the Company received the (2021) Y 1973 Z No. 3006-1 document of ruling issued by the Third People's
Court of Dongguan City, Guangdong Province on July 22, 2021, ruling to terminate this execution procedure.
On June 24, 2022, the Company signed a settlement extension agreement with Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang
Gen, agreeing to extend the payment term by 6 months on the basis of the Original Agreement. Before December 24, 2022, Liu Yuntian,
Yan Pingjin, Zhang Peng, and Wang Gen shall pay all the payable amounts to the Company. The debt interest during the delayed
performance period shall be subject to the Original Agreement. If Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen fail to fulfill
their payment obligations on time, the Company has the right to apply to the court to resume compulsory enforcement measures against
them.
On December 24, 2022, the Company signed a settlement extension agreement with Liu Yuntian, Yan Pingjin, Zhang Peng, and
Wang Gen, agreeing to extend the payment term by 1 year on the basis of the Original Agreement. Before December 24, 2023, Liu
Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen shall pay all the payable amounts to the Company. The debt interest during the
delayed performance period shall be subject to the Original Agreement. If Liu Yuntian, Yan Pingjin, Zhang Peng, and Wang Gen fail
to fulfill their payment obligations on time, the Company has the right to apply to the court to resume compulsory enforcement measures
against them. As of the date of approval of the financial report, it has not yet been implemented. The original debt owed to Zhikongtaike
has been written off according to the Company's verification process.
2. Others
XIX. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 431,978,699.85 561,799,833.99
Within 1 year (including 1 year) 431,978,699.85 561,799,833.99
1-2 years 95,468,487.48 119,294,578.24
2-3 years 20,525,417.36 2,319,840.33
Over 3 years 3,314,039.26 2,226,726.86
3-4 years 1,434,508.13 919,305.45
4-5 years 769,314.75 59,185.72
Over 5 years 1,110,216.38 1,248,235.69
Total 551,286,643.95 685,640,979.42
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Category
Book balance Bad debt reserve Book value Book balance Bad debt reserve Book value
231
ZKTeco 2024 Half Year Report
Accrual Accrual
Proportio Proportio
Amount Amount proporti Amount Amount proporti
n n
on on
Account
s
receivabl
e with
individu 5,415,645.40 0.98% 4,399,645.40 81.24% 1,016,000.00 5,262,403.88 0.77% 4,246,403.88 80.69% 1,016,000.00
al
provisio
n for bad
debts
Includ
ing:
Account
s
receivabl
e with
insignifi
cant
single
amount 5,415,645.40 0.98% 4,399,645.40 81.24% 1,016,000.00 5,262,403.88 0.77% 4,246,403.88 80.69% 1,016,000.00
and bad
debt
reserve
withdra
wn
separatel
y
Receiva
ble with
combine
d
545,870,998.55 99.02% 7,192,198.76 1.32% 538,678,799.79 680,378,575.54 99.23% 6,625,955.69 0.97% 673,752,619.85
provisio
n for bad
debt
reserve
Includ
ing:
Related
party 428,970,002.96 77.81% 428,970,002.96 566,000,672.05 82.55% 566,000,672.05
portfolio
Aging
116,900,995.59 21.21% 7,192,198.76 6.15% 109,708,796.83 114,377,903.49 16.68% 6,625,955.69 5.79% 107,751,947.80
portfolio
Total 551,286,643.95 100.00% 11,591,844.16 2.10% 539,694,799.79 685,640,979.42 100.00% 10,872,359.57 1.59% 674,768,619.85
Category name of bad debt reserve made individually: accounts receivable with insignificant single amount and bad debt reserve
withdrawn separately
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Hainan Jialing Risk in
Digital 2,032,000.00 1,016,000.00 2,032,000.00 1,016,000.00 50.00% payment
Technology collection
232
ZKTeco 2024 Half Year Report
Co., Ltd.
Noble IT
Expected non-
Solutions Co., 415,485.70 415,485.70 418,072.70 418,072.70 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 371,452.20 371,452.20 373,765.03 373,765.03 100.00%
recoverable
Securit
Shanghai Leqi
Automation Expected non-
521,950.00 521,950.00 351,950.00 351,950.00 100.00%
Technology recoverable
Co., Ltd.
Shenzhen
Xuhui
Expected non-
Information 326,350.00 326,350.00 326,350.00 326,350.00 100.00%
recoverable
Technology
Co., Ltd.
Shenzhen
Zhongjiang
Expected non-
Intelligent 315,627.00 315,627.00 100.00%
recoverable
Technology
Co., Ltd.
Gansu Fourth
Expected non-
Construction 224,676.00 224,676.00 224,676.00 224,676.00 100.00%
recoverable
Group Co., Ltd.
VENDEMMIA
COMERCIO Expected non-
201,017.79 201,017.79 202,269.42 202,269.42 100.00%
INTERNACIO recoverable
NAL LTDA
Tianjin Eagle
Eye Expected non-
178,130.00 178,130.00 178,130.00 178,130.00 100.00%
Biotechnology recoverable
Co., Ltd.
Hainan
Zhongkong
Expected non-
IOT 176,689.00 176,689.00 176,689.00 176,689.00 100.00%
recoverable
Technology
Co., Ltd.
Wanqiao
Information Expected non-
165,900.00 165,900.00 165,900.00 165,900.00 100.00%
Technology recoverable
Co.,Ltd.
Baoneng Urban
Development
Expected non-
and 155,292.00 155,292.00 155,292.00 155,292.00 100.00%
recoverable
Construction
Group Co., Ltd.
PONTO RHJ Expected non-
100,061.62 100,061.62 100,684.65 100,684.65 100.00%
EIRELI - ME recoverable
Guizhou
Zhongjiang
Expected non-
Intelligent 77,919.46 77,919.46 77,919.46 77,919.46 100.00%
recoverable
Technology
Co., Ltd.
Qianxinan
Mengku Expected non-
74,672.00 74,672.00 74,672.00 74,672.00 100.00%
Business recoverable
Service Co.,
233
ZKTeco 2024 Half Year Report
Ltd.
INTELLISMA
RT Expected non-
74,495.84 74,495.84 74,959.68 74,959.68 100.00%
TECHNOLOG recoverable
Y INC.
Dongguan
Yukong
Expected non-
Security 53,703.00 53,703.00 53,703.00 53,703.00 100.00%
recoverable
Technology
Co., Ltd.
KWK
CELLPHONE
Expected non-
AND 37,505.80 37,505.80 37,739.33 37,739.33 100.00%
recoverable
ACCESSORIE
S
Iss Facility
Expected non-
Services 28,152.00 28,152.00 28,152.00 28,152.00 100.00%
recoverable
(Shanghai) Ltd.
ELECTRONIC
Expected non-
A GHANA 22,911.47 22,911.47 23,054.13 23,054.13 100.00%
recoverable
LIMITED
Nanjing Xianji
Expected non-
Technology 15,570.00 15,570.00 15,570.00 15,570.00 100.00%
recoverable
Co., Ltd.
Gansu Liujiaxia
Construction
and Installation Expected non-
6,490.00 6,490.00 6,490.00 6,490.00 100.00%
Engineering recoverable
Co., Ltd. Linxia
Branch
Guangdong
Expected non-
Pinjun Express 1,980.00 1,980.00 1,980.00 1,980.00 100.00%
recoverable
Co., Ltd.
Total 5,262,403.88 4,246,403.88 5,415,645.40 4,399,645.40
Category name of bad debt reserve made by portfolio: related party portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 428,970,002.96
Total 428,970,002.96
Explanation of the basis for determining the portfolio:
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 116,900,995.59 7,192,198.76 6.15%
Total 116,900,995.59 7,192,198.76
Explanation of the basis for determining the portfolio:
234
ZKTeco 2024 Half Year Report
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
□ Applicable Not applicable
(3) Bad debt reserves withdrawn, recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Redeem/redem Ending Balance
Balance Provision Others
reversal ption
Accounts
receivable with
insignificant
single amount
4,246,403.88 323,241.52 170,000.00 4,399,645.40
and bad debt
reserve
withdrawn
separately
Accounts
receivable with
significant
individual
amounts and
separate
provision for
bad debt
reserves
Accounts
receivable with
consolidated
provision for
bad debt 6,625,955.69 566,243.07 7,192,198.76
reserves
according to the
credit risk
characteristics
Total 10,872,359.57 889,484.59 170,000.00 11,591,844.16
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 0.00
235
ZKTeco 2024 Half Year Report
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanation of accounts receivable verification:
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending balance
Unit: RMB
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
Customer 1 238,770,808.23 238,770,808.23 43.29%
Customer 2 38,420,428.19 38,420,428.19 6.97%
Customer 3 38,092,485.67 38,092,485.67 6.91%
Customer 4 19,061,475.13 19,061,475.13 3.45%
Customer 5 19,003,040.27 19,003,040.27 3.44%
Total 353,348,237.49 353,348,237.49 64.06%
2. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Interest receivable 221,017.34 192,033.24
Dividends receivable 8,000,000.00 0.00
Other receivables 27,195,549.63 58,943,385.98
Total 35,416,566.97 59,135,419.22
(1) Interest receivable
1) Classification of interest receivable
Unit: RMB
Item Ending Balance Beginning Balance
Interest on related party loans 221,017.34 192,033.24
Total 221,017.34 192,033.24
2) Significant overdue interest
Unit: RMB
Whether impairment
Borrower Ending Balance Overdue time Overdue reason
occurred and its
236
ZKTeco 2024 Half Year Report
judgment basis
Other explanations:
There are no significant overdue interest situations in the current period
3) Disclosure by bad debt accrual method
□ Applicable Not applicable
4) Bad debt reserves withdrawn, recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance
Balance Provision Other changes
reversal cancellation
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Other explanations:
There is no provision, collection or reversal of accrued interest in the current period.
5) Interests receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important interests receivable verification
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanation of writing off:
There are no interests receivable actually written off in the current period.
Other explanations:
237
ZKTeco 2024 Half Year Report
(2) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or the investee) Ending Balance Beginning Balance
XIAMEN ZKTECO CO., LTD. 8,000,000.00 0.00
Total 8,000,000.00 0.00
2) Important dividends receivable with an aging of over 1 year
Unit: RMB
Whether impairment
Item (or the investee) Ending Balance Aging Reasons for unrecovery occurred and its
judgment basis
3) Disclosure by bad debt accrual method
□ Applicable Not applicable
4) Bad debt reserves withdrawn, recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance
Balance Provision Other changes
reversal cancellation
Total
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Total
Other explanations:
There are no bad debt reserves withdrawn, recovered or reversed in the current period.
4) Dividends receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important dividends receivable verification
238
ZKTeco 2024 Half Year Report
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanation of writing off:
There are no dividends receivable actually written off in the current period.
Other explanations:
(3) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 14,751,766.54 55,874,629.32
Guarantee deposit 1,861,601.75 1,865,135.74
Reserve funds and loans 4,682,051.50 3,250,242.13
Collection and payment on behalf of
3,882,559.11 1,863,217.32
others
Withholding and paying social security
910,969.54 1,032,014.38
and capital reserve on behalf of others
Export tax refund 3,366,012.31 3,537,610.99
Others 127,001.17 477,297.03
Total 29,581,961.92 67,900,146.91
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 12,814,765.31 41,743,089.72
1-2 years 2,034,086.01 13,945,238.29
2-3 years 9,541,667.37 715,606.32
Over 3 years 5,191,443.23 11,496,212.58
3-4 years 235,084.30 257,284.30
4-5 years 16,925.00 2,637,357.00
Over 5 years 4,939,433.93 8,601,571.28
Total 29,581,961.92 67,900,146.91
3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Category
Book balance Bad debt reserve Book value Book balance Bad debt reserve Book value
239
ZKTeco 2024 Half Year Report
Accrua
Accrual
Proporti Proporti l
Amount Amount proporti Amount Amount
on on proport
on
ion
Withdrawi
ng bad
debt
2,314,538.00 7.82% 2,314,538.00 100.00% 10,645,126.37 15.68% 8,884,636.88 83.46% 1,760,489.49
reserves by
individual
item
Including:
Other
accounts
receivable
with
insignifica
nt single
2,314,538.00 7.82% 2,314,538.00 100.00% 10,645,126.37 15.68% 8,884,636.88 83.46% 1,760,489.49
amount
and bad
debt
reserve
withdrawn
separately
Bad debt
reserve
withdrawn 27,267,423.92 92.18% 71,874.29 0.26% 27,195,549.63 57,255,020.54 84.32% 72,124.05 0.13% 57,182,896.49
by
portfolio
Including:
Related
party 12,386,319.55 41.87% 12,386,319.55 45,178,889.61 66.54% 45,178,889.61
portfolio
Portfolio
of
deposits,
security 14,450,618.66 48.85% 14,450,618.66 11,640,649.93 17.14% 11,640,649.93
deposits,
employee
loans, etc.
Aging
430,485.71 1.46% 71,874.29 16.70% 358,611.42 435,481.00 0.64% 72,124.05 16.56% 363,356.95
portfolio
Total 29,581,961.92 100.00% 2,386,412.29 8.07% 27,195,549.63 67,900,146.91 100.00% 8,956,760.93 13.19% 58,943,385.98
Category name of bad debt reserve made individually: other receivables with insignificant individual amounts but separate provision
for bad debt reserves
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Shenzhen
Zhongan
Intelligent
7,772,552.26 6,012,062.77 0.00 0.00 Written off
Control
Technology
Co., Ltd.
240
ZKTeco 2024 Half Year Report
Shenzhen
Zhikongtaike
Biometric 2,500,000.00 2,500,000.00 0.00 0.00 Written off
Technology
Co., Ltd.
Guizhou
Zhongjiang
Expected non-
Intelligent 323,268.92 323,268.92 323,268.92 323,268.92 100.00%
recoverable
Technology
Co., Ltd.
Dongguan
Zhenyu
Expected non-
Hardware 42,305.46 42,305.46 42,305.46 42,305.46 100.00%
recoverable
Products Co.,
Ltd.
Shenzhen
Xinyuantong Expected non-
3,500.00 3,500.00 3,500.00 3,500.00 100.00%
Electronics Co., recoverable
Ltd.
Shenzhen
Expected non-
Shanjing Optics 1,839.60 1,839.60 1,839.60 1,839.60 100.00%
recoverable
Co., Ltd.
Shenzhen
Great-island Expected non-
456.00 456.00 456.00 456.00 100.00%
Technology recoverable
Co., Ltd.
Expected non-
Wang Jinpeng 403.18 403.18 403.18 403.18 100.00%
recoverable
Guilin Boyou
Electronic Expected non-
400.95 400.95 400.95 400.95 100.00%
Technology recoverable
Co., Ltd.
Shenzhen
Mercedes Expected non-
380.00 380.00 380.00 380.00 100.00%
Technology recoverable
Co., Ltd.
Expected non-
Liu Mingyang 20.00 20.00 20.00 20.00 100.00%
recoverable
Shenzhen
Zhongjiang
Expected non-
Intelligent 1,941,963.89 1,941,963.89 100.00%
recoverable
Technology
Co., Ltd.
Total 10,645,126.37 8,884,636.88 2,314,538.00 2,314,538.00
Category name of bad debt reserve made by portfolio: related party portfolio, deposits, security deposits, employee loans and other
portfolios and aging portfolios
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 12,386,319.55 0.00 0.00%
Portfolio of deposits, security
14,450,618.66 0.00 0.00%
deposits, employee loans, etc.
Aging portfolio 430,485.71 71,874.29 16.70%
Total 27,267,423.92 71,874.29
Explanation of the basis for determining the portfolio:
241
ZKTeco 2024 Half Year Report
Category name of bad debt reserve made by portfolio:
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Explanation of the basis for determining the portfolio:
Category name of bad debt reserve made by portfolio:
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
72,124.05 8,884,636.88 8,956,760.93
1, 2024
Balance as of January
1, 2024 in the current
period
Provision in current
249.76 1,941,963.89 1,942,213.65
period
Reversals in the current
499.52 499.52
period
Canceled after
verification in the 8,512,062.77 8,512,062.77
current period
Balance as of June 30,
71,874.29 2,314,538.00 2,386,412.29
2024
Classification basis and bad debt reserve provision ratio for each stage
Changes in book balance with major changes in loss reserves during the current period
□ Applicable Not applicable
4) Bad debt reserves withdrawn, recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Category Beginning Current period change amount Ending Balance
242
ZKTeco 2024 Half Year Report
Balance Return or Write-off or
Provision Others
reversal cancellation
Other
receivables
with significant
individual
amounts and 6,012,062.77 6,012,062.77 0.00
separate
provision for
bad debt
reserves
Other
receivables
with provision
for bad debt
reserves based 72,124.05 249.76 499.52 71,874.29
on a
combination of
credit risk
characteristics
Other
receivables
with
insignificant
individual
2,872,574.11 1,941,963.89 2,500,000.00 2,314,538.00
amounts but
separate
provision for
bad debt
reserves
Total 8,956,760.93 1,942,213.65 499.52 8,512,062.77 2,386,412.29
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
0 0.00 0 0 0
There is no bad debt reserve reversal; or recovery amount in the current period.
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Current account 8,512,062.77
Other major receivable written off:
Unit: RMB
Company name Nature of other Write-off amount Write-off reason Verification and Whether the
243
ZKTeco 2024 Half Year Report
accounts cancellation payment is
receivable programs that have incurred due to
been performed related
transactions
Shenzhen Zhongan
Intelligent Control Bad debt write off
Current account 6,012,062.77 Nonrecoverable No
Technology Co., process
Ltd.
Shenzhen
Zhikongtaike
Bad debt write off
Biometric Current account 2,500,000.00 Nonrecoverable No
process
Technology Co.,
Ltd.
Total 8,512,062.77
Description for writing off other receivables:
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
Customer 1 Current account 6,580,000.00 2-3 years 22.24%
Customer 2 Export tax refund 3,366,012.31 Within 1 year 11.38%
Customer 3 Current account 1,941,963.89 2-3 years 6.56% 1,941,963.89
Customer 4 Current account 1,780,000.00 Over 5 years 6.02%
Customer 5 Current account 1,600,000.00 Over 5 years 5.41%
Total 15,267,976.20 51.61% 1,941,963.89
3. Long-term equity investment
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Investment in
1,305,900,453.10 5,100,000.00 1,300,800,453.10 1,249,046,481.87 1,249,046,481.87
subsidiaries
Investment in
affiliated and 23,889,602.50 23,889,602.50 24,000,000.00 24,000,000.00
joint ventures
Total 1,329,790,055.60 5,100,000.00 1,324,690,055.60 1,273,046,481.87 1,273,046,481.87
(1) Investment in subsidiaries
Unit: RMB
Beginning Increase or decrease in the current period Ending
Beginning
balance of Ending balance balance of
Investee balance (book Additional Reduced Impairment
impairment Others (book value) impairment
value) investment investment provision
provision provision
244
ZKTeco 2024 Half Year Report
Shenzhen
ZKTeco
Biometric
12,608,518.14 12,608,518.14
Identification
Technology Co.,
Ltd.
Hangzhou
ZKTeco Hanlian
2,079,297.92 13,756.73 2,093,054.65
E-commerce Co.,
Ltd.
ZKTECO CO.,
169,798,644.35 997,440.88 170,796,085.23
LIMITED
XIAMEN
ZKTECO CO., 105,554,987.20 943,280.04 106,498,267.24
LTD.
ZKTECO
(GUANGDONG) 803,657,033.72 783,307.23 804,440,340.95
CO., LTD
ZKTeco Sales
21,173,920.26 212,554.95 21,386,475.21
Co., Ltd.
Xiamen Zkteco
Biometric
Identification 38,986,734.80 1,618.44 38,988,353.24
Technology Co.,
Ltd.
ZKCserv
Technology 510,000.00 510,000.00
Limited Co., Ltd.
Dalian ZKTeo
4,008,987.32 199,907.86 4,208,895.18
CO., Ltd.
Xi'an ZKTeco
406,449.24 64,198.07 470,647.31
Co., Ltd.
Shenzhen
Zhongjiang
Intelligent 5,100,000.00 5,100,000.00 5,100,000.00
Technology Co.,
Ltd.
Hubei ZKTeco
3,516,219.44 1,078.96 3,517,298.40
Co., Ltd.
ZKTECO SG
INVESTMENT 81,645,689.48 53,636,828.07 135,282,517.55
PTE. LTD.
Total 1,249,046,481.87 56,853,971.23 5,100,000.00 1,300,800,453.10 5,100,000.00
(2) Investment in affiliated and joint ventures
Unit: RMB
Increase or decrease in the current period
Beginn
Invest Cash Ending
ing
Beginni ment Other Chan divid balanc
balanc Ending
ng Additi Reduc profit compreh ges ends Impair e of
Investo e of balance
balance onal ed or loss ensive in or ment Oth impair
r impair (book
(book invest invest recogn income other profit provisi ers ment
ment value)
value) ment ment ized adjustme equit s on provisi
provisi
under nts ies declar on
on
equity ed to
245
ZKTeco 2024 Half Year Report
metho pay
d
I. Joint ventures
0.00 0.00
II. Joint venture
Xiame
n
Xingni
u
Yunyu
Venture
Capital -
24,000,0 23,889,6
Partner 0.00 110,39
00.00 02.50
ship 7.50
Enterpr
ise
(Limite
d
Partner
ship)
-
Subtota 24,000,0 23,889,6
0.00 110,39
l 00.00 02.50
7.50
-
24,000,0 23,889,6
Total 110,39
00.00 02.50
7.50
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
(3) Other descriptions
In the current period, the Company increased the registered capital of its overseas subsidiaries by RMB 862,570.99 through
subsidiary ZKTECO CO., LIMITED, and increased the registered capital of its overseas subsidiaries by RMB 53,636,828.07 through
subsidiary ZKTECO SG INVESTMENT PTE. LTD. The subsidiary was granted a second-class restricted share incentive of RMB
2,354,572.17 to motivate personnel.
4. Operating income and operating cost
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 647,059,913.82 495,303,687.48 667,441,845.59 470,747,145.91
Other businesses 759,633.50 659,500.56
Total 647,819,547.32 495,303,687.48 668,101,346.15 470,747,145.91
246
ZKTeco 2024 Half Year Report
Breakdown information of operating income and operating costs:
Unit: RMB
Division 1 Division 2 Total
Contract
classification Operating Operating Operating Operating Operating Operating
Operating cost Operating cost
income cost income cost income income
Business
type
Including:
Smart office
78,211,761.25 61,091,104.86 78,211,761.25 61,091,104.86
products
Smart
entrance and
exit 523,031,106.98 392,179,673.87 523,031,106.98 392,179,673.87
management
products
Smart
identity
45,817,045.60 42,032,908.74 45,817,045.60 42,032,908.74
verification
products
Others 759,633.50 759,633.50
Classification
by region of
operation
Including:
Domestic
354,984,316.95 317,120,179.80 354,984,316.95 317,120,179.80
sales
Overseas
292,835,230.37 178,183,507.68 292,835,230.37 178,183,507.68
sales
Market or
customer
type
Including:
Distribution 582,839,413.21 453,361,005.42 582,839,413.21 453,361,005.42
Direct sales 64,220,500.61 41,942,682.06 64,220,500.61 41,942,682.06
Others 759,633.50 759,633.50
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
247
ZKTeco 2024 Half Year Report
channel
Including:
Total 647,819,547.32 495,303,687.48 647,819,547.32 495,303,687.48
Information related to performance obligations:
Types of
Nature of goods Expected quality
Time for
that the Is it the main refunds to assurance
fulfilling Important
Item Company responsible customers provided by the
performance payment terms
promises to person borne by the Company and
obligations
transfer Company related
obligations
Other explanations:
None
Information related to the transaction price allocated to the remaining performance obligations:
The corresponding income amount for performance obligations that have been signed but have not yet been fulfilled or completed at
the end of this reporting period is RMB 0.00.
Significant contract changes or significant transaction price adjustments
Unit: RMB
Item Accounting treatment method Amount of impact on income
Other explanations:
5. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Income from long-term equity
16,000,000.00 24,000,000.00
investment accounted with cost method
Long-term equity investment income
-110,397.50
accounted by equity method
Financial products 94,111.46 909,167.43
Forward foreign exchange settlement and
68,155.00 -2,046,795.00
sales contract
Total 16,051,868.96 22,862,372.43
6. Others
XX. Supplementary Information
1. Detailed statement of non-recurring profits and losses in the current period
Applicable □ Not applicable
Unit: RMB
248
ZKTeco 2024 Half Year Report
Item Amount Remarks
Losses and gains from disposal of non-current
-143,955.56
assets
Government subsidies included in current profits
and losses (except those closely related to the
normal business of the Company, which are in
line with national policies and regulations, 5,030,462.88
enjoyed according to determined standards, and
have a continuous impact on the Company's
profits and losses)
Profits and losses from fair value changes arising
from the holding of financial assets and financial
liabilities by non-financial enterprises, as well as Mainly due to investment income and
the gains and losses arising from the disposal of 6,105,510.00 fair value changes generated by financial
financial assets and financial liabilities except for products
effective hedging business related to the normal
operation of the Company
Capital occupancy fees charged to non-financial
21,195.11
enterprises included in current profits and losses
Reversal of the provision on receivables with
170,000.00
impairment test conducted on an individual basis
Other non-operating income and expenses other
1,468,131.14
than the above items
Less: income tax impact 1,278,125.03
Minority interest impact (after tax) -92,303.73
Total 11,465,522.27 --
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable Not applicable
The Company has no specific situation of other profit and loss items that meet the definition of non-recurring profits and losses.
Description on defining the non-recurring profit and loss items listed in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" as recurring profit and loss items
□ Applicable Not applicable
2. Net return on assets and EPS
Profit during the reporting Weighted average return on EPS
period net assets Basic EPS (RMB/share) Diluted EPS (RMB/share)
Net profit attributable to
ordinary shareholders of the 2.42% 0.4070 0.4050
Company
Net profit attributable to
ordinary shareholders of the
Company after deducting 2.07% 0.3477 0.3460
non-recurring profits and
losses
249
ZKTeco 2024 Half Year Report
3. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable Not applicable
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting
standards and Chinese accounting standards
□ Applicable Not applicable
(3) Explanation of the reasons for differences in accounting data between domestic and foreign accounting
standards. If differences in data audited by an overseas audit institution have already been adjusted, the
name of the overseas institution shall be indicated
□ Applicable Not applicable
4. Others
250
