Hangzhou Hikvision Digital Technology Co., Ltd.

2024 Half Year Report

January to June 2024

August 17, 2024

Hikvision 2024 Half Year Report

Section I Important Notes, Contents and DefinitionsThe Board of Directors, Board of Supervisors, directors, supervisors and senior management ofHangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the "Company") herebyguarantee that the information presented in this report shall be together be wholly liable for thetruthfulness, accuracy and completeness of its contents and free of any false records, misleadingstatements or material omissions, and will undertake individual and joint legal liabilities.Hu Yangzhong, the Company's legal representative, Jin Yan, the person in charge of theaccounting work, and Zhan Junhua, the person in charge of accounting department (accountingsupervisor) hereby declare and warrant that the financial statements in this half year report areauthentic, accurate and complete.All directors of the Company have attended the board meeting to review this report.The half year proposal of profit distribution or share distribution from capital reserve passed upondeliberation at the meeting of the Board of Directors (not applicable): The Company will notdistribute cash dividend, distribute bonus shares, or distribute shares from capital reserve during thecurrent reporting period.

Note:

This document is a translated version of the Chinese version 2024 Half Year Report (“2024年半年度报告”), and the published announcements in the Chinese version shall prevail. The completepublished Chinese 2024 Half Year Report may be obtained at www.cninfo.com.cn.

Hikvision 2024 Half Year Report

Please read the full half year report and pay particular attention to the following risk factors:

(1) Geopolitical risks: Global geopolitical uncertainty remains acute as the political landscape is beingfragmented and reshaped, and local wars continue. In recent years, the Company has continuously strengthenedour risk control and response capabilities, and flexibly adjusted resources based on business opportunities.However, our operations in some countries and regions may be adversely affected should geopoliticalenvironment continues to deteriorate.

(2) Global economic downside risks: In addition to slower growth and entrenched currency oversupply in somemajor economies, different regions across the world develop at different rates, presenting a hidden risk that isdifficult to eliminate. The Company disperses the risk of operating in a single region with a wide businesslayout and conducts business based on the actual situation of various countries and regions. However, theCompany's business will be impacted if another global economic recession arises

(3) Risks of domestic economic structural transformation: The infrastructure and real estate markets in Chinacontinue to undergo adjustments. The exports of some commodities are restricted by trade protection policiesof destination countries, and the advantage of a large labor force is weakened. The Chinese economy is in aprocess of transformation of development mode and alternation of new and old driving forces. The Companyempowers the digital transformation of the economy and society with AIoT technologies and products,promoting new developments in productivity. However, economic transformation cannot be achievedovernight, and structural pressure and resistance will persist for a long time. Any problems that occur duringthe process will still affect the Company's business operations.

(4) Supply chain risks: The integrity of the global supply system is undermined by geopolitics, and the timeliness

of the supply chain is affected by business cycles. The Company strives to develop a diversified supply networkand adjust inventory properly. However, our business stability may be affected if the supply chain is seriouslyinterrupted.

(5) Technology upgrading risks: With the rapid development of AI, big data, IoT and other technologies,technological applications are iterating quickly. The Company has some strength in technology fields such asIoT perception, AI, and big data, and keeps growing through business practices. However, if we cannot closelytrack the updates and changes of cutting-edge technologies and maintain business innovation and expansion,the uncertainty of the Company's future development will increase.

Hikvision 2024 Half Year Report

(6) Risks of internal management: The Company's continual business expansion and development of new

products and business services add complexity to internal management, posing new challenges to ourmanagement capabilities. The Company accumulates management experience through the development ofsystems and procedures with a focus on talent cultivation and construction. However, the Company's operationswill be adversely affected if our management capabilities cannot keep up with the business expansion.

(7) Legal and compliance risks: The world's multilateral trading system is greatly impacted by politics, and

business activities are required to comply with the complex laws and regulations of various regions. TheCompany has constantly strengthened the legal compliance system since countries around the world have stricterrequirements for data supervision and legal compliance capabilities. However, the Company's operations will beadversely affected if our legal compliance capabilities cannot keep up with the requirements.

(8) Risks of exchange rate fluctuations: The Company operates in multiple countries and regions, where

transactions are mainly settled in non-RMB currencies. Although the Company uses appropriate financialinstruments to reduce risks, exchange rate fluctuations will affect our financial performance due to the foreigncurrency exposure arising from sales, procurement, and financing.

(9) Financial risks caused by customers' reduced ability to pay: The flow of funds in commercial transactionsis affected by the economic environment. The Company has accumulated some cash reserves due to our soundcollection mechanism and stable business operations, and our financing costs are low. However, if the overallliquidity risk of the market increases, the Company's operations will be adversely affected as our paymentcollection maybe delayed.

(10) Risks of cybersecurity: The Company has always emphasized cybersecurity and taken active measures toenhance the security of our products and systems. However, computer viruses, malicious software, hacker attacksand other security incidents that deliberately attempt to damage the Company's systems or products may takeplace, causing potential cybersecurity issues.

(11) Risks of intellectual property (IP) rights: The Company has maintained considerable investment in R&D, andmade significant technological achievements. We have also implemented robust IP protection measures.However, the risk of IP disputes and infringement still exists.The above-mentioned alerts do not include all the potential risks for the Company. Investors are advised to investwith caution.

Hikvision 2024 Half Year Report

CONTENTS

Section I Important Notes, Contents and Definitions ...... 1

Section II Corporate Profile & Key Financial Data ...... 6

Section III Management Discussion and Analysis ...... 10

Section IV Corporate Governance ...... 28

Section V Environmental and Social Responsibility ...... 30

Section VI Significant Events ...... 31

Section VII Changes in Shares and Information about Shareholders ...... 44

Section VIII Information of Preferred Shares ...... 55

Section IX Bonds ...... 56

Section X Financial Report ...... 57

Section XI Documents Available for Reference ...... 185

Hikvision 2024 Half Year Report

Definitions

Hikvision 2024 Half Year Report

Section II Corporate Profile & Key Financial DataI. Corporate information

II. Contacts and contact information

III. Other relevant information

1. Company's contact information

Whether there is any change in the Company's registered address, office address, zip code, company website orcompany email address during the reporting period.

□Applicable √ Inapplicable

There is no change in the Company's registered address, office address, zip code, company website or companyemail address during the reporting period. Please refer to 2023 Annual Report for details.

2. Information disclosure and place of the report

Whether there is alteration in information disclosure and place of the report during the current reporting period.

□ Applicable √ Inapplicable

Hikvision 2024 Half Year Report

The media website and the securities exchange website for the disclosure of the Company Half Year report, andthe place where the Half Year Report is available for inspection remained unchanged during the reporting period.For details, please refer to the 2023 Annual Report.

3. Other relevant information

Whether other relevant information has changed during the current reporting period

□ Applicable √ Inapplicable

IV. Key accounting data and financial indicators

Whether the Company performed a retrospective adjustment or restatement of previous accounting data

√ Yes □ No

Reasons for retroactive adjustment or restatement of the previous accounting data

√ Consolidation under common control

The total share capital of the Company as of the previous trading day of the report disclosure:

Hikvision 2024 Half Year Report

V. Differences in accounting data between domestic and overseas accounting standards

1. Difference in the financial report of net profits and net assets according to the disclosure of InternationalFinancial Reporting Standards and China Accounting Standards

□ Applicable √ Inapplicable

There is no difference in the financial report of net profits and net assets according to the disclosure of InternationalFinancial Reporting Standards (IFRS) and China Accounting Standards in the reporting period.

2. Difference in the financial report of net profits and net assets according to the disclosure of OverseasAccounting Standards and China Accounting Standards

□ Applicable √ Inapplicable

There is no difference in the financial report of net profits and net assets according to the disclosure of OverseasAccounting Standards and China Accounting Standards in the reporting period.

3. Explanation of the differences in accounting data under domestic and overseas accounting standards

□ Applicable √ Inapplicable

VI. Items and amounts of non-recurring gains and losses

√ Applicable □ Inapplicable

Unit：RMB

Hikvision 2024 Half Year Report

The specific situation of other profit and loss items that meet the definition of non-recurring gains and losses：

□ Applicable √ Inapplicable

The company does not have any specific situations of profit and loss items that meet the definition of non-recurring gains and losses.

Explanation of the situation where the non-recurring gains and losses items listed in the 'InterpretativeAnnouncement No. 1 on Information Disclosure of Companies Issuing Securities Publicly — Non-recurring Gainsand Losses' are defined as recurring gains and losses items.

□ Applicable √ Inapplicable

The Company does not have any instances where the non-recurring gains and losses items listed in the 'InterpretativeAnnouncement No. 1 on Information Disclosure of Companies Issuing Securities Publicly — Non-recurring Gainsand Losses' are classified as recurring gains and losses items.

Hikvision 2024 Half Year Report

Section III Management Discussion and AnalysisI. The principal business of the Company during the reporting periodThere was no significant change for the principal business of the Company during the current reporting period.Please refer to 2023 Annual Report for details.II. Core competitiveness analysis

There was no significant change in the Company's core competitiveness during the current reporting period. Fordetails, Please refer to 2023 Annual Report.

III. Core business analysisWhether consistent with the Company's core business disclosure during the current reporting period

√Yes □ No

In the first half of 2024, the domestic market demand was relatively weak, with significant industry differentiation;the overseas market was generally stable, but conflicts persisted in some regions, and trade frictions among majoreconomies increased, testing the Company' global operations and compliance governance capabilities. Facing thecomplex environment both domestically and internationally, Hikvision adheres to the business philosophy of"professionalism, honesty, and integrity", maintains confidence, always focuses on the growth of its own capabilities,and continuously promotes the steady development of its business.

During the reporting period, the Company achieved revenue of RMB41.21 billion, with year over year growth of

9.68%; the net profits attributable to shareholders of the Company was RMB5.06 billion, a decrease of 5.13% overthe same period of the previous year; the net profit attributable to shareholders of the Company, after deducting non-recurring gains and losses, was RMB5.24 billion, an increase of 4.11% over the same period of the previous year.

(1) Continuously increase R&D investment to enhance competitive advantageDuring the reporting period, the Company continued to solidify its foundation in AIoT business, increasedinvestment in scenario-based digitalization business, continuously launched innovative multi-dimensional

Hikvision 2024 Half Year Report

perception products, and built new competitive strength in scenario-based digitalization, thereby supporting theCompany's long-term sustainable development. In the first half of 2024, the company's R&D investment reachedRMB5.70 billion, a year-on-year increase of 7.81%. The company will continue to build and improve thedifferentiated advantages of products and solutions, enhance market competitiveness with product innovationcapabilities, maintain the Company's advantageous position, and ensure the steady development of the business.

(2) Targeted deployment and optimization of marketing resources to improve operational efficiencyDuring the reporting period, the company continued to empower provincial business centers and urban branches inChina, strengthening the service capabilities of the business system, and promoted organizational changes toenhance internal operational efficiency. Based on the different economic development speeds and geopoliticalenvironments of various overseas regions, the Company has invested and allocated resources in a targeted mannerand optimized regional management.

(3) Deepen the transformation of the process management system to enhance operational efficiencyDuring the reporting period, the Company continued to deepen the transformation of process management,continuously promoting the synergy and integration of the organizational structure, stimulating the team'sinnovative potential, and ensuring the continuous improvement of organizational vitality and efficiency. TheCompany has been continuously strengthening the construction and improvement of the compliance system,ensuring effective control of risks, and solidifying the institutional guarantee for compliant operations, laying a solidfoundation for the Company's stable development.

(4) Innovative businesses consolidate competitive advantages and form stronger synergy with main businessDuring the reporting period, the overall revenue of the innovative business was RMB10.33 billion, a year-on-yearincrease of 26.13%, accounting for 25.06% of the Company's revenue. Innovative business subsidiaries such asEZVIZ, HikRobot, and HikMicro have established advantageous positions in their respective fields, and the overalldevelopment of the innovative business is good, becoming a strong engine for the Company's development. Themain business, together with the innovative business, forms the AIoT business portfolio, and the business synergycontinues to improve, helping the Company to achieve long-term sustainable development.

Hikvision 2024 Half Year Report

YoY changes in key financial data

Unit: RMB

Revenue structure

Unit：RMB

Hikvision 2024 Half Year Report

Revenue structure

Unit: RMB 100mn

Main business refers to the business parts other than innovative businesses

Other innovative businesses include the products and services of the innovative business subsidiaries, such as HikFire, Rayin andHikImaging. Same below.

The revenue from domestic main business and overseas main business only include Hikvision's main business's products andservices, excluding revenue from innovative businesses.

Innovative businesses’ revenue includes its domestic and overseas revenue.

The data listed in the footnote may differ slightly from the sum of the related individual data due to rounding.

Hikvision 2024 Half Year Report

Industries, products or regions accounting for more than 10% of the Company's revenue or operating profit

√ Applicable □ Inapplicable

Unit: RMB

When the statistical caliber of the Company's major business data is adjusted during the reporting period, theCompany's major business data would be adjusted according to the end of the reporting period in the most recentperiod.

□Applicable √ Inapplicable

Total operating costs structureClassified by industry

Unit: RMB

Classified by product/business

Hikvision 2024 Half Year Report

Unit: RMB

IV. Non-core business analysis

□Applicable √ Inapplicable

V. Analysis of assets and liabilities

1. Material changes of asset items

Unit：RMB

Hikvision 2024 Half Year Report

2. Main overseas assets

□ Applicable √ Inapplicable

Hikvision 2024 Half Year Report

3. Assets and liabilities measured at fair value

√ Applicable □ Inapplicable

Unit: RMB

Whether there were any material changes on the measurement attributes of major assets of the Company during the reporting period:

□ Yes √ No

4. Assets right restrictions as of the end of reporting period

Unit: RMB

Cash and bank balance

Hikvision 2024 Half Year Report

Accounts receivable

Fixed assets

Total

VI. Analysis of investments

1. Overview

√Applicable □ Inapplicable

2. Significant equity investment during the current reporting period

□Applicable √ Inapplicable

3. Significant non-equity investment during the current reporting period

√ Applicable □ Inapplicable

Hikvision 2024 Half Year Report

Unit: RMB

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Note: In accordance with the Company's Authorization Management System, new fixed asset investments in Xi'an Science and Technology Park Project, ShijiazhuangScience and Technology Park Project, and Wuhan Intelligence Industry Park Project were approved by the Strategy Committee of the Board of Directors.

4. Financial asset investment

4.1 Securities Investments

□ Applicable √ Inapplicable

There no such case in the reporting period.

4.2 Derivatives Investments

√ Applicable □ Inapplicable

1) Derivative investments for the purpose of hedging within the reporting period.

√ Applicable □ Inapplicable

Unit: 0,000 RMB

Hikvision 2024 Half Year Report

Hikvision 2024 Half Year Report

2) Derivative investments for speculative purposes during the reporting period.

□ Applicable √ Inapplicable

There is no derivative investments for speculative purposes during the reporting period.

5. Use of raised funds

□ Applicable √ Inapplicable

During the reporting period, there was no use of raised fundThe details of the use of funds raised by EZVIZ Network, the Company's holding subsidiary, was disclosed on August 10, 2024 in 2024 Half Year Report ofHangzhou EZVIZ Network Co., Ltd. on the website of Shanghai Stock Exchange ( www.sse.com.cn).VII. Disposal of significant assets and equity

1. Disposal of significant assets:

□ Applicable √ Inapplicable

There is no disposal of significant assets for the Company during the current reporting period.

Hikvision 2024 Half Year Report

2. Sale of significant equity:

□ Applicable √ Inapplicable

Hikvision 2024 Half Year Report

VIII. Analysis of major subsidiaries and holding companies

□Applicable √Inapplicable

The Company has no important holding company information that should be disclosed during the currentreporting period.

Information about obtaining and disposal of subsidiaries during the reporting period

√ Applicable □ Inapplicable

IX. Structural entities controlled by the Company

□ Applicable √ Inapplicable

X. Risks of the Company and risk response solutionsDuring the reporting period, the Company has been striving to identify various risk exposures, and actively adoptingcountermeasures to avoid and reduce risks:

(1) Geopolitical risks: Global geopolitical uncertainty remains acute as the political landscape is being

fragmented and reshaped, and local wars continue. In recent years, the Company has continuously strengthenedour risk control and response capabilities, and flexibly adjusted resources based on business opportunities.However, our operations in some countries and regions may be adversely affected should geopoliticalenvironment continues to deteriorate.

(2) Global economic downside risks: In addition to slower growth and entrenched currency oversupply in some

major economies, different regions across the world develop at different rates, presenting a hidden risk that isdifficult to eliminate. The Company disperses the risk of operating in a single region with a wide businesslayout and conducts business based on the actual situation of various countries and regions. However, theCompany's business will be impacted if another global economic recession arises

(3) Risks of domestic economic structural transformation: The infrastructure and real estate markets in China

continue to undergo adjustments. The exports of some commodities are restricted by trade protection policies

Hikvision 2024 Half Year Report

of destination countries, and the advantage of a large labor force is weakened. The Chinese economy is in aprocess of transformation of development mode and alternation of new and old driving forces. The Companyempowers the digital transformation of the economy and society with AIoT technologies and products,promoting new developments in productivity. However, economic transformation cannot be achievedovernight, and structural pressure and resistance will persist for a long time. Any problems that occur duringthe process will still affect the Company's business operations.

(4) Supply chain risks: The integrity of the global supply system is undermined by geopolitics, and the timelinessof the supply chain is affected by business cycles. The Company strives to develop a diversified supply networkand adjust inventory properly. However, our business stability may be affected if the supply chain is seriouslyinterrupted.

(5) Technology upgrading risks: With the rapid development of AI, big data, IoT and other technologies,technological applications are iterating quickly. The Company has some strength in technology fields such asIoT perception, AI, and big data, and keeps growing through business practices. However, if we cannot closelytrack the updates and changes of cutting-edge technologies and maintain business innovation and expansion,the uncertainty of the Company's future development will increase.

(6) Risks of internal management: The Company's continual business expansion and development of new

products and business services add complexity to internal management, posing new challenges to ourmanagement capabilities. The Company accumulates management experience through the development ofsystems and procedures with a focus on talent cultivation and construction. However, the Company's operationswill be adversely affected if our management capabilities cannot keep up with the business expansion.

(7) Legal and compliance risks: The world's multilateral trading system is greatly impacted by politics, andbusiness activities are required to comply with the complex laws and regulations of various regions. TheCompany has constantly strengthened the legal compliance system since countries around the world havestricter requirements for data supervision and legal compliance capabilities. However, the Company'soperations will be adversely affected if our legal compliance capabilities cannot keep up with the requirements.

(8) Risks of exchange rate fluctuations: The Company operates in multiple countries and regions, wheretransactions are mainly settled in non-RMB currencies. Although the Company uses appropriate financial

Hikvision 2024 Half Year Report

instruments to reduce risks, exchange rate fluctuations will affect our financial performance due to the foreigncurrency exposure arising from sales, procurement, and financing.

(9) Financial risks caused by customers' reduced ability to pay: The flow of funds in commercial transactions

is affected by the economic environment. The Company has accumulated some cash reserves due to our soundcollection mechanism and stable business operations, and our financing costs are low. However, if the overallliquidity risk of the market increases, the Company's operations will be adversely affected as our paymentcollection maybe delayed.

(10) Risks of cybersecurity: The Company has always emphasized cybersecurity and taken active measures toenhance the security of our products and systems. However, computer viruses, malicious software, hackerattacks and other security incidents that deliberately attempt to damage the Company's systems or productsmay take place, causing potential cybersecurity issues.

(11) Risks of intellectual property (IP) rights: The Company has maintained considerable investment in R&D,

and made significant technological achievements. We have also implemented robust IP protection measures.However, the risk of IP disputes and infringement still exists.The above-mentioned alerts do not include all the potential risks for the Company. Investors are advised to investwith caution.

Hikvision 2024 Half Year Report

Section IV Corporate GovernanceI. Annual General Meeting and Extraordinary General Meetings convened during thereporting Period

1. Annual General Meeting convened during the reporting period

2. Extraordinary general meetings convened at the request of preferred shareholders with resumed votingrights:

□ Applicable √ Inapplicable

II. Changes of directors, supervisors and senior management personnel

□ Applicable √ Inapplicable

There were no changes in the Company's directors, supervisors and senior management during the reporting period.For details, please refer to the 2023 annual report.

The company has completed the re-election of the board of directors, board of supervisors, and senior managementteam on August 2, 2024, with Chen zongnian, Qu liyang, Wu weiqi, Li shuhua, Guan qingyou, Hong tianfeng, Xulirong, and Jin duo having reached the end of their terms and left their positions.

The list of the newly elected directors, supervisors, and senior management can be found in the Announcement onResolutions of the 1

st

Extraordinary General Meeting of 2024, Announcement on Resolutions of the 1

stMeeting ofthe 6

th

session of the Board of Directors, and Announcement on Resolutions of the 1

st Meeting of the 6

th

session ofthe Board of Supervisors, which were published by the Company on www.cninfo.com.cn on August 3, 2024.

III. Profit distribution and capitalizing of capital reserves for the current reporting period

□ Applicable √ Inapplicable

The Company did not plan to distribute cash dividends, send bonus shares, or convert capital reserve into share

Hikvision 2024 Half Year Report

capital during the first half of 2024.

IV. The implementation of an Equity Incentive Plan, Employee Stock Incentive Plan, or otherincentive plans

√Applicable □ Inapplicable

1. During the reporting period, the Company reviewed and approved the Proposal on Terminating theImplementation of the 2021 Restricted Stock Plan and Repurchasing and Canceling Relevant Restricted Shares

On April 18, 2024 and May 10, 2024, the 20

th

meeting of the 5

th

session of the Board of Directors, the 18

th

meetingof the 5

th

session of the Board of Supervisors and 2023 Annual General Meeting reviewed and approved Proposalon Terminating the Implementation of the 2021 Restricted Stock Plan and Repurchasing and Canceling RelevantRestricted Shares. Given that the current operating environment has changed significantly from when the restrictedstock plan for 2021 year was established, it has become more difficult to implement this restricted stock plan toachieve the expected motivational purpose and effect. After careful consideration, it is agreed that the company willterminate the implementation of the 2021 Restricted Stock Plan and repurchase and cancel all restricted stocks thathave been granted but not yet unlocked. The number of restricted stocks proposed to be repurchased and cancelledthis time totals 97,402,605 shares, accounting for 1.0439% of the company's total share capital (9,330,600,931shares) before the repurchase and cancellation. On August 15, 2024, the aforementioned restricted stocks havecompleted the repurchase and cancellation procedures at the Shenzhen Branch of China Securities Depository andClearing Corporation Limited.

For details, please refer to the Announcement on Terminating the Implementation of the 2021 Restricted Stock Planand Repurchasing and Canceling Relevant Restricted Shares and the Announcement on the Completion ofRepurchase and Cancellation of Restricted Stocks Related to the 2021 Restricted Stock Plan published by theCompany on www.cninfo.com.cn on April 20, 2024 and August 17, 2024.

The Company carries out accounting treatment related to the restricted stock plan in accordance with therequirements of accounting standards such as "Enterprise Accounting Standards No. 11 — Share-based Payment".For specific details, please refer to the notes to the financial statements (XII. Share-based payments).

As of now, the Company does not have any outstanding restricted shares.

Hikvision 2024 Half Year Report

Section V Environmental and Social ResponsibilityI. Significant environmental issues

Whether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprises publishedby national environmental protection department.

□Yes √ No.

II. Social responsibilitiesDuring the reporting period, the Company has not yet carried out poverty alleviation and rural revitalization.

Hikvision 2024 Half Year Report

Section VI Significant EventsI. Complete and incomplete commitments of the Company and its actual controller,shareholders, related parties, acquirers, and other related parties for the commitments duringthe current reporting period.

□ Applicable √ Inapplicable

No such case during the current reporting period.II. The Company's funds used by the controlling shareholder or its related parties for non-operating purposes.

□ Applicable √ Inapplicable

No such case during the current reporting period.III. Illegal provision of guarantees for external parties

□ Applicable √ Inapplicable

No such case in the current reporting period.IV. Engagement and disengagement of the CPA firm

Has the half year report been audited?

□ Yes √ No

The Company's half year report has not been audited.V. Explanation given by the Board of Directors, supervisory committee and independentdirectors (if applicable) regarding the "non-standard auditor's report" issued by the CPA firmfor the current reporting period

□ Applicable √ Inapplicable

VI. Explanation given by the Board of Directors regarding the "non-standard auditor's report"for the prior reporting period

□ Applicable √ Inapplicable

VII. Bankruptcy and restructuring

□ Applicable √ Inapplicable

Hikvision 2024 Half Year Report

No such case during the reporting period.

VIII. Material litigationsMaterial litigation and arbitration

□ Applicable √ Inapplicable

The Company had no material litigation or arbitration during the current reporting period.Other litigation matters

□ Applicable √ Inapplicable

IX. Punishments and rectifications

□ Applicable √ Inapplicable

No such case during the reporting period.X. Integrity of the Company and its controlling shareholders and actual controllers

□ Applicable √ Inapplicable

XI. Significant related-party transaction

1. Related-party transactions arising from routine daily operations

√ Applicable □ Inapplicable

Hikvision 2024 Half Year Report

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Note 1: Enterprises controlled, jointly controlled or serving as directors or senior management personnel by affiliated natural persons of the Company (including directors, supervisors, seniormanagement of the Company, shareholders holding more than 5% of the shares of the Company and their close family members).Note 2: The data shown in the totals may differ slightly from the sum of the relevant individual data due to rounding.

Hikvision 2024 Half Year Report

2. Related-party transactions regarding purchase and disposal of assets or equity

□ Applicable √ Inapplicable

No such case in the reporting period.

3. Significant related-party transactions arising from joint investments on external parties

□ Applicable √ Inapplicable

No such case in the reporting period.

4. Related credit and debt transactions

□ Applicable √ Inapplicable

No related-parties' creditor's rights or debts during the reporting period.

5. Deals with related-party financial companies

√ Applicable □ Inapplicable

Deposit business

Credit or other financial services

Note: The above amount is the amount of entrusted loans issued by the Group to its subsidiaries through CETC Finance Co., Ltd.during the reporting period.

Hikvision 2024 Half Year Report

6. Transactions between the financial company controlled by the Company and related parties

□ Applicable √ Inapplicable

7. Other significant related party transactions

□ Applicable √ Inapplicable

No such case in the reporting period.XII. Significant contracts and their execution

1. Trusteeship, contracting and leasing

1.1 Trusteeship

□ Applicable √ Inapplicable

No such case in the reporting period.

1.2 Contracting

□ Applicable √ Inapplicable

No such case in the reporting period.

1.3 Leasing

□ Applicable √ Inapplicable

No such case in the reporting period.

Hikvision 2024 Half Year Report

2. Significant guarantees

√Applicable □ Inapplicable

Unit: 0,000 RMB

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3. Entrusted financial management

□Applicable √Inapplicable

No such case during the reporting period

4. Other significant contracts

□Applicable √ Inapplicable

The Company has no other significant contracts in the reporting period.XIII. Other significant events

√Applicable □ Inapplicable

1. The controlling shareholder of the Company disclosed and implemented the plan to increase the company's shares.On October 16, 2023, the Company received a notice from the Company's controlling shareholder, ChinaElectronics Technology HIK Group Co., Ltd. (hereinafter referred to as "CETHIK"), that CETHIK intended toincrease its holdings of the Company's shares through centralized bidding, block trading or other trading methodspermitted by laws and regulations through the Shenzhen Stock Exchange trading system, within 6 months fromOctober 17, 2023. The total amount of the increased shareholding would not be less than RMB 200 million and notmore than RMB 300 million, and the proposed increase price should not be higher than RMB 40 per share (inclusive).Specifically, the plan of increase shareholding would be implemented at the opportunity with the consideration ofthe fluctuation of Hikvision's stock price and the overall trend of the capital market.From January 4, 2024 to January 9, 2024, CETHIK increased its holdings of 6,271,400 shares of the companythrough centralized bidding trading through the Shenzhen Stock Exchange trading system, accounting for 0.0672%of the company's total share capital at the trading day, and the amount of additional shares was RMB200,160,059.77(excluding transaction fees), and therefore the shareholding increase plan was accomplished. For details, pleaserefer to Announcement on the Plan for the Company's Controlling Shareholders to Increase Their Shareholdings inthe Company (Announcement No.: 2023-033) and Announcement on the Completion of the Implementation of theCompany's Controlling Shareholders' Plan to Increase Their Shareholdings in the Company (Announcement No.2024-001) published by the Company on cninfo website (www.cninfo.com.cn) on October 17, 2023 and January10, 2024

2. The person acting in concert of the controlling shareholder of the Company disclosed and implemented the plan

Hikvision 2024 Half Year Report

to increase the Company's shares.After the close of trading on January 16, 2024, the Company received a notice from CETC Investment HoldingsCo., Ltd. (hereinafter referred to as "CETC Investment"), a person acting in concert of the CETHIK, the controllingshareholder of the Company, that on January 16, 2024, CETC Investment increased its holdings of 1,319,906 sharesof the Company through centralized bidding through the trading system of the Shenzhen Stock Exchange, with theamount of RMB40,363,848.49. CETC Investment intended to continue to increase its holdings of the Company'sshares within 6 months from January 16, 2024, with an increase of not less than RMB300 million and not more thanRMB600 million (including the amount of increase on January 16, 2024). There would be no fixed price range forthis increase plan, and CETC Investment would implement the shareholding increase plan at the opportunity withthe reasonable judgment of the Company's stock value.From January 16, 2024 to February 6, 2024, CETC Investment increased its holdings of 12,853,665 shares of theCompany through centralized bidding through the Shenzhen Stock Exchange trading system, accounting for 0.1378%of the Company's total share capital at the trading day, and the amount of additional shares was RMB400,027,006.81(excluding transaction fees), and therefore the shareholding increase plan was accomplished. For details, pleaserefer to the Announcement on the Increase of the Company's Shares and the Subsequent Shareholding Increase Planby the person acting in concert of the controlling shareholder of the Company ( Announcement No.: 2024-002) andthe Announcement on the Completion of the Company's Shareholding Increase Plan by the person acting in concertof the controlling shareholder of the Company (Announcement No.: 2024-005) published by the Company on cninfowebsite (www.cninfo.com.cn) on January 17, 2024 and February 7, 2024.

XIV. Significant events of the Company's subsidiaries

√Applicable □ Inapplicable

Matters Relating to Steady Promotion of the Spin-off of HikRobot to be Listed on the SZSE ChiNext MarketOn March 7, 2023, Hangzhou Hikrobot Co., Ltd. (hereinafter referred to as "HikRobot") received Notice onAccepting the Application Documents for the Initial Public Offering of Shares and Listing on the SZSE ChiNextMarket of Hangzhou Hikrobot Co., Ltd. (SZSE Listing Review [2023] No. 252) issued by Shenzhen Stock Exchange,and SZSE considered that application documents were completed and decided to accept. For details, please refer to

Hikvision 2024 Half Year Report

the Announcement on the Application for the Initial Public Offering of Shares and Listing on the SZSE ChiNextMarket of Hangzhou Hikrobot Co., Ltd., a Subsidiary of the Company, is Accepted by the SZSE (AnnouncementNo.: 2023-008) published by the Company on cninfo website (www.cninfo.com.cn) on March 8,

2023. ShenzhenStock Exchange issed the Inquiry Letter on the Review of Application Documents for the Initial Public ShareOffering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. (Inquiry Letter (2023)No. 010121) on March 30, 2023, and HikRobot has submitted the Reply to the Inquiry Letter on the Review ofApplication Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNext Market ofHangzhou Hikrobot Co., Ltd. on May 17, 2023. Shenzhen Stock Exchange issued the Second Inquiry Letter on theReview of Application Documents for the Initial Public Share Offering of Shares and Listing on the SZSE ChiNextMarket of Hangzhou Hikrobot Co., Ltd. (Inquiry Letter (2023) No. 010218) on June 30, 2023, and HikRobot hassubmitted the Reply to the Second Inquiry Letter on the Review of Application Documents for the Initial PublicShare Offering of Shares and Listing on the SZSE ChiNext Market of Hangzhou Hikrobot Co., Ltd. on July 27, 2023.On January 15, 2024, Shenzhen Stock Exchange issued the Letter on the Implementation of the Opinions of theReview Center on the Application of Hangzhou Hikrobot Co., Ltd. for Initial Public Offering of Shares and Listingon the ChiNext board (Inquiry Letter (2024) No. 010010).

Hikvision 2024 Half Year Report

Section VII Changes in Shares and Information about ShareholdersI. Changes in share capital

1. Table of changes in share capital

Unit: Share

Hikvision 2024 Half Year Report

Reason for the changes in share capital

□Applicable√ Inapplicable

Approval for changes in share capital

□Applicable □√ Inapplicable

Transfer for changes in share capital

□Applicable√ Inapplicable

Information about the implementation of share repurchase

□Applicable √ Inapplicable

The implementation progress of reducing and repurchasing shares by centralized bidding

□Applicable √ Inapplicable

Hikvision 2024 Half Year Report

Effects of changes in share capital on the basic earnings per share ("EPS"), diluted EPS, net assets per share attributable to common shareholders of the Company, andother financial indexes over the last year and last period

□Applicable √ Inapplicable

Other contents that the Company considers necessary or required by the securities regulatory authorities to disclose

□ Applicable √ Inapplicable

2. Changes in restricted shares

√ Applicable □ Inapplicable

Unit: Share

Hikvision 2024 Half Year Report

Note1: Senior management officers who are grantees under incentive restricted shares scheme, his/her holding incentive restricted shares are counted in the totalincentive restricted shares (consolidated statistics).Note 2: The Company’s senior management officers of, Guo Xudong, Xu Ximing, and Huang Fanghong increased their holdings of the Company by 30,000 shares,10,000 shares, and 30,000 shares respectively, which were partially included in the restricted shares for senior executives in accordance with the relevant rules for therestriction of shares for senior executives.Note 3: The Company actually granted 97,402,605 shares under the 2021 Restricted Share Incentive Scheme, and these shares were repurchased and cancelled onAugust 15, 2024.Note 4: The Company has completed the re-election process by August 2, 2024, and Qu Liyang, Wu Weiqi, Xu Lirong, and Jin Duo have all reached the end of theirterms and left their positions.II. Issuance and listing of securities

□Applicable √ Inapplicable

There were no securities issues during the reporting period

Hikvision 2024 Half Year Report

III. Total number of shareholders and their shareholdings

Unit: Share

Hikvision 2024 Half Year Report

Hikvision 2024 Half Year Report

Shareholders holding more than 5% of the shares, the top 10 shareholders and the top 10 shareholders of unrestricted tradable shares participate in the lending of sharesin the refinancing business

√ Applicable □Inapplicable

Unit: share

Hikvision 2024 Half Year Report

Changes of the top 10 shareholders and the top 10 shareholders that are not subject to trading restriction compared with the previous period due to refinancing,lending/repayment issues

□ Applicable √ Inapplicable

Any of the Company's top 10 common shareholders or top 10 non-restricted common shareholders conducted any agreed buy-back in the reporting period?

□ Applicable √ Inapplicable

No such case during the current reporting period.

IV. Shareholding changes of directors, supervisors, senior management personnel

√ Applicable □ Inapplicable

Hikvision 2024 Half Year Report

Hikvision 2024 Half Year Report

Note 1: Number shares held at the beginning of the period, shares increased during the period, shares decreased during the period for directors, supervisors, andsenior management personnel above are all shares directly held by them accordingly, including restricted shares.Note 2: The Company has completed the re-election process on August 2, 2024, with Chen Zongnian, Qu Liyang, Wu Weiqi, Li Shuhua, Guan Qingyou, HongTianfeng, Xu Lirong, and Jin Duo having all reached the end of their terms and left their positions.Note 3: The restricted shares mentioned above have been repurchased and cancelled on August 15, 2024.

V. Changes in controlling shareholders or actual controllers

Change of the controlling shareholder during the reporting period

Hikvision 2024 Half Year Report

□ Applicable √ Inapplicable

The Company's controlling shareholder has not changed during the reporting period.

Change of the actual controller during the reporting period

□ Applicable √ Inapplicable

No such change during the reporting period.

Hikvision 2024 Half Year Report

Section VIII Information of Preferred Shares

□ Applicable √ Inapplicable

There is no preferred share existed for the Company during the current reporting period.

Hikvision 2024 Half Year Report

Section IX Bonds

□ Applicable √ Inapplicable

Hikvision 2024 Half Year Report

Section X Financial Report

I. Audit reportWhether audit has been performed on the half year report

□ Yes √ No

The Company's 2024 Half Year Report has not been audited

Hikvision 2024 Half Year Report

On June 30, 2024

Consolidated Balance Sheet

Unit: RMB

Hikvision 2024 Half Year Report

On June 30, 2024

Consolidated Balance Sheet-continued

Unit: RMB

The accompanying notes form part of the financial statements.The financial statements were signed by the following:

Legal Representative: Hu Yangzhong；Person in Charge of the Accounting Work: Jin Yan;Person in Charge of the Accounting Department: Zhan Junhua

Hikvision 2024 Half Year Report

On June 30, 2024

Balance Sheet of the Parent Company

Unit: RMB

Hikvision 2024 Half Year Report

On June 30, 2024

Balance Sheet of the Parent Company - continued

Unit: RMB

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Consolidated Income Statement

Unit: RMB

Hikvision 2024 Half Year Report

During the current period, a business combination under common control occurred. The net loss realized by the acquiredcompany before the merger was RMB295,677.15, and the net profit realized by the acquired company in the previousperiod was RMB145,487.38.

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Income statement of the parent company

Unit: RMB

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Consolidated Cash Flow Statement

Unit: RMB

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Cash Flow Statements of the Parent Company

Unit: RMB

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Consolidated Statement of Changes in Owners' Equity

Unit: RMB

Hikvision 2024 Half Year Report

Hikvision 2024 Half Year Report

For the reporting period from January 1, 2024 to June 30, 2024

Statement of Changes in Owners' Equity of the Parent Company

Unit: RMB

I. Basic information about the CompanyHangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company" or"Hikvision"), is a Sino-foreign equity joint venture company, formerly known as "Hangzhou Hikvision Digital TechnologyLtd", established on November 30, 2001 in Hangzhou upon the approval letter of Hangzhou High-tech No. 604 [2001]issued by Hangzhou High-tech Industrial Development Zone Management Committee. On June 25, 2008, with approvalof document No. 598 [2008] issued by the MOFCOM (The Ministry of Commerce of the People's Republic of China), theCompany was renamed as "Hangzhou Hikvision Digital Technology Co., Ltd.", headquartered in Hangzhou. On May 28,2010, the Company was listed on the Shenzhen Stock Exchange.

The main business scope of the Company and its subsidiaries (hereinafter referred to as "the Group") includemanufacturing and selling security equipment, network equipment, and smart devices; manufacturing and wholesalingautomotive parts and accessories; selling electronic products; providing construction engineering services; technicalservices, technology development, technical consulting, software development, information system integration services,data processing and storage support services, etc.

The Company's and consolidated financial reports were approved for issuance by the 2

nd meeting of the 6

thsession of theBoard of Directors of the Company on August 16, 2024.

II. Basis of preparation of financial statementsBasis of preparation of financial statementsThe Group has adopted the Accounting Standards for Business Enterprises ("ASBE") and relevant provisions issued bythe Ministry of Finance ("MoF"). In addition, the Group has disclosed relevant financial information in accordance withInformation Disclosure and Presentation Rules for Companies Offering Securities to the Public No. 15－GeneralProvisions on Financial Reporting.

Going concernThe Group has evaluated its going concern for 12 months going forward starting from June 30, 2024, and there is no factorthat may cast significant doubt on the entity's ability to continue as a going concern. Therefore, the financial statementshave been prepared on a going concern basis.

Bookkeeping base and valuation principlesThe Group measures the accounting elements in accordance with the accrual accounting basis. Except certain financialinstruments are measured by fair value, these financial statements are prepared in accordance with the measurements basisof historical costs. If the asset decreases in value, the provision for impairment of assets should be made according torelevant regulations.

According to the historical cost measurement, the assets shall be measured as per the amount of cash or cash equivalentpaid at the time of purchase, or the fair value of consideration paid for the purchase of such assets. The liabilities shall bemeasured in accordance with the amount of funds or assets actually received when undertaking current obligations, or thecontract amount when undertaking the current obligations, or the amount of cash or cash equivalents required for payingback the debts in daily activities.

The fair value is a price received by the market participants from selling asset or transferring liability during orderlytransaction at the measurement date. No matter the fair value is observable or estimated by using valuation technique, themeasured and disclosed fair value in the financial statement shall be determined on this basis.

When measuring non-financial assets at fair value, the assets shall be measured considering the ability of marketparticipants to use the assets for optimal use to generate economic benefits, or to sell the assets to other market participantsto use the assets for optimal use to generate economic benefits.

For the financial assets measured with transaction price at the initial recognition, and the use of valuation techniquesinvolving unobservable inputs in the subsequent fair value measurement, the valuation technique is corrected in thevaluation process in order to make the initial recognition results confirmed by valuation techniques equal to the transactionprice.

Based on the observable extent of the input value of the fair value, and the importance of such input value to the fair valuemeasurement, the fair value measurement is divided into three levels:

? Level 1: The input value is the unadjusted offer of the same assets or liabilities on active market acquired onmeasurement date;? Level 2: The input value is the input value of relevant assets or liabilities observable directly or indirectly in addition

to level 1 input value;? Level 3: The input value is the non-observable input value of relevant assets or liabilities.III. Significant accounting policies and accounting estimatesSpecific Accounting Policies and Accounting Estimates Disclosure:

The Group has established specific accounting policies and estimates based on the actual production and operationalcharacteristics, targeting the determination methods and selection basis for the materiality standard, provision for creditlosses on accounts receivable, inventory write-down, fixed asset depreciation, revenue recognition, and aggregation ofR&D expenses. The important judgments and accounting estimates applied by the Group in recognizing significant

accounting policies, as well as their key assumptions, are detailed in Note Ⅲ (34) of the financial statements.

1. Statement for compliance with Accounting Standards for Business Enterprises (ASBE)The financial statements of the Company have been prepared in accordance with ASBE, and present the Company's andconsolidated financial position as of June 30, 2024, the Company's and consolidated results of operations, the Company'sand consolidated changes in shareholders' equity, and the Company's and consolidated cash flows for the first half of 2024truly and completely.

2. Accounting period

The Group has adopted the calendar year as its accounting year from January 1 to December 31 each year.

3. Business cycle

The business cycle refers to the period from purchase of assets used for processing to realization of cash or cash equivalents.The Group's business cycle is usually 12 months.

4. Functional currency

Renminbi ("RMB") is the currency in the primary economic environments in which the Company and its domesticsubsidiaries are operated. The Company and its domestic subsidiaries take RMB as their functional currency. Overseassubsidiaries of the Company determine their functional currency on the basis of the primary economic environment inwhich it operates. The Group adopts RMB to prepare its financial statements.

5. Methodology for determining materiality criteria and basis for selection

6. Accounting treatment methods for business combinations under common control and non-common control

Business combinations are divided into those under common control and those not under common control.

6.1 Business combinations involving enterprises under common control

A business combination involving enterprises under common control is a business combination in which all of thecombining enterprises are ultimately controlled by the same party or parties both before and after the combination, andthat control is not transitory.

Assets and liabilities obtained shall be measured at their respective account balances as recorded by the combining entitiesat the date of the combination. The difference between the account balance of the net assets obtained and the accountbalance of the consideration paid for the combination is adjusted to the share premium in capital reserve. If the sharepremium is not sufficient to absorb the difference, any excess shall be adjusted against retained earnings.

Costs that are directly attributable to the combination are charged to profit or loss in the period in which they are incurred.

6.2 Business combinations involving enterprises under non-common control and goodwillA business combination not involving enterprises under common control is a business combination in which all of thecombining enterprises are not ultimately controlled by the same party or parties before and after the combination.

The cost of combination is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurredor assumed, and equity securities issued by the acquirer in exchange for control of the acquiree. If a business combinationnot under the common control is realized in stages through multiple transactions, the cost of the combination is the sumof the consideration paid on the purchase date and the fair value of the equity of the purchase already held before thepurchase date on the purchase date. The intermediary expenses incurred by the acquirer in respect of auditing, legalservices, valuation and consultancy services, etc. and other associated administrative expenses attributable to the businesscombination are recognized in profit or loss when they are incurred.

The acquiree's identifiable assets, liabilities and contingent liabilities, acquired by the acquirer in a business combination,that meet the recognition criteria shall be measured at fair value at the acquisition date.

Where the cost of combination exceeds the acquirer's interest in the fair value of the acquiree's identifiable net assets, thedifference is treated as an asset and recognized as goodwill, which is measured at cost on initial recognition. Where thecost of combination is less than the acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirerfirstly reassesses the measurement of the fair values of the acquiree's identifiable assets, liabilities and contingent liabilitiesand measurement of the cost of combination. If after that reassessment, the cost of combination is still less than the

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

acquirer's interest in the fair value of the acquiree's identifiable net assets, the acquirer recognizes the remaining differenceimmediately into profit or loss for the current period.

Goodwill arising on a business combination is measured at cost less accumulated impairment losses, and is presentedseparately in the consolidated financial statements.

7. Criteria for determining control right and methods for preparing consolidated financial statements.

7.1 Criteria for determining control right

Control right means that an investor may control an investee; the investor may participate in relevant activities of theinvestee to obtain variable rewards and also be able to use the control rights for the investee to influence its amount ofreturns. The Group will re-evaluate, if the change of the relevant facts and circumstances leading to the change of therelevant elements involved in the above definition of control.

7.2 Preparation method of consolidated financial statements

The scope of consolidated financial statements shall be confirmed based on the control.

The merger of subsidiary starts from the Group obtaining the control power of the subsidiary, and terminates when theGroup loses the control power of the subsidiary.

As for subsidiaries disposed by the Group, operating results and cash flows prior to the disposal date (the date of losingcontrol right) have been properly included in the consolidated profit statement and consolidated cash flow statement.

For a subsidiary acquired through a business combination not involving enterprises under common control, the operatingresults and cash flows from the acquisition date (the date when control is obtained) are included in the consolidated incomestatement and consolidated statement of cash flows.

No matter when the business combination occurs in the reporting period, subsidiaries acquired through a businesscombination involving enterprises under common control are included in the Group's scope of consolidation as if they hadbeen included in the scope of consolidation from the date when they first came under the common control of the ultimatecontrolling party. Their operating results and cash flows from the beginning of the earliest reporting period are includedin the consolidated income statement and consolidated statement of cash flows, as appropriate.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

The significant accounting policies and accounting periods adopted by the subsidiaries are determined based on theuniform accounting policies and accounting periods set out by the Company.

All significant intra-group balances and transactions are eliminated on consolidation.

The portion of subsidiaries' equity that is not attributable to the Company is treated as minority interests and presented as"minority equity" in the consolidated balance sheet. The portion of net profits or losses of subsidiaries for the periodattributable to minority interests is presented as "minority interests" in the consolidated income statement below the "netprofit" line item.

When the amount of loss for the period attributable to the minority shareholders of a subsidiary exceeds the minorityshareholders' portion of the opening balance of owners' equity of the subsidiary, the excess amount is still allocated againstminority interests.

Acquisition of minority interests or disposal of interest in a subsidiary that does not result in the loss of control over thesubsidiary is accounted for as equity transactions. The account balances of the total owners' equity attributable to ownerof the Company and minority equity are adjusted to reflect the changes in their relative interests in the subsidiary. Thedifference between the amount by which the minority interests are adjusted and the fair value of the consideration paid orreceived is adjusted to capital reserve under owners' equity. If the capital reserve is not sufficient to absorb the difference,the excess is adjusted against retained earnings.

In the case that the equity of the acquiree is obtained through multiple deals in stages to finally form the businesscombination not under the common control, the business combination shall be handled differently based on whether it is"package deal": where it is package deal, the Company accounts each deal as a deal to obtain the control. If the deal is nota "package deal", a deal where the control is obtained on the acquisition date will be subject to accounting. The acquiree'sequity held before the acquisition date will be re-measured based on the fair value of the equity on the acquisition dateand the difference between the fair value and book value will be included in the profit or loss in the current period. If theacquiree's equity held before the acquisition date involves any changes in the other comprehensive income or in any otherowner's equity accounted by the equity method, then it is transferred to income for the period in which it belongs at thedate of purchase..

8. Joint arrangement classification and joint operation accounting

Joint arrangements include joint operation and joint ventures. Such classification is defined based on the rights andobligations of the joint parties in the joint arrangement, taking into account the structure and legal form of sucharrangement and also the contractual provisions.

The Groups investment in any joint venture is accounted by the equity method. See the details in Note (III) "15.3.2 Long-term equity investment accounted under the equity method."

9. Recognition criteria of cash and cash equivalents

Cash comprises cash on hand and deposits that can be readily withdrawn on demand. Cash equivalents are the Group'sshort-term (Generally refers to due within three months from the purchase date), highly liquid investments that are readilyconvertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

10. Conversion of transactions and financial statements denominated in foreign currencies.

10.1 Transactions denominated in foreign currencies

A foreign currency transaction is recorded, on initial recognition, by applying an exchange rate that approximates theactual spot exchange rate on the date of transaction; The exchange rate that approximates the actual spot exchange rate onthe date of transaction is calculated according to the middle price of market exchange rate at the beginning of the monthin which the transaction happened.

At the balance sheet date, foreign currency monetary items are translated into RMB using the spot exchange rates at thebalance sheet date. Exchange differences arising from the differences between the spot exchange rates prevailing at thebalance sheet date and those on initial recognition or at the previous balance sheet date are recognized in profit or loss forthe period, except for exchange differences related to a specific-purpose borrowing denominated in foreign currency thatqualifies for capitalization are capitalized as part of the cost of the qualifying asset during the capitalization period.

When the consolidated financial statements include foreign operation(s), if there is foreign currency monetary itemconstituting a net investment in a foreign operation, exchange difference arising from changes in exchange rates arerecognized as "exchange differences arising on conversion of financial statements denominated in foreign currencies" inother comprehensive income, and in profit and loss for the period upon disposal of the foreign operation.

Foreign currency non-monetary items measured at historical cost are converted to the amounts in functional currency atthe spot exchange rates on the dates of the transactions.

10.2 Conversion of financial statements denominated in foreign currencies

For the purpose of preparing the consolidated financial statements, financial statements of a foreign operation areconverted from the foreign currency into RMB using the following method: assets and liabilities on the balance sheet are

translated at the spot exchange rate prevailing at the balance sheet date; shareholders' equity items are converted at thespot exchange rates at the dates on which such items arose; all items in the income statement as well as items reflectingthe distribution of profits are translated at exchange rates that approximate the actual spot exchange rates on the dates ofthe transactions; The difference between the converted assets and the aggregate of liabilities and shareholders' equity itemsis recognized into other comprehensive income and shareholders' equity.

The foreign currency cash flows and cash flows of overseas subsidiaries adopt the exchange rate similar to the spot rate atthe date of cash flows for conversion. The affected amount of cash and cash equivalents due to the change of exchangerate, as an adjustment item, shall be separately listed as "the impact of cash and cash equivalents due to the change ofexchange rate" in the cash flow statement.

The closing balances of the prior year and the actual amount of the prior year are presented at the converted amounts ofthe prior year's financial statements.

On disposal of the Group's entire interest in a foreign operation, or upon a loss of control over a foreign operation due todisposal of certain interest in it or other reasons, the Group transfers the accumulated exchange differences arising onconversion of financial statements of this foreign operation attributable to the owners' equity of the Company and presentedunder shareholders' equity, to profit or loss in the period in which the disposal occurs.

In case of a disposal or other reason that does not result in the Group losing control over a foreign operation, but only adecrease in proportion of overseas business interests, the proportionate share of accumulated exchange differences arisingon conversion of financial statements are re-attributed to minority interests and are not recognized in profit and loss undercurrent period. For partial disposals of equity interests in foreign operations, which are associates or joint ventures, theproportionate shares of the accumulated exchange differences arising on conversion of financial statements of foreignoperations are reclassified to profit or loss under current period.

11. Financial instruments

The Group recognizes a financial asset or a financial liability when it becomes a party to a contract of financial instrument.

For the purchase or sale of a financial asset in conventional manner, the asset to be received and the liability to be assumedwill be recognized on the trading day, or the asset sold will be derecognized on the trading day.

Financial assets and financial liabilities are measured by fair value upon initial recognition (the method of determining thefair value of financial assets and financial liabilities is described in the related disclosure of the basis of accounting and

valuation principles in note (ii)). For financial assets and financial liabilities at fair value through profit and loss, therelevant trading costs will be directly charged to profit and loss of the current period. For other types of financial assetsand financial liabilities, the relevant trading costs will be booked into the initial recognition amount. Upon initialrecognition of accounts receivable which have no material financing components or have not taken into consideration thefinancing components in contracts with a term not exceeding one year according to Accounting Standards for BusinessEnterprise No. 14 – Revenue ("Revenue Standard"), such initial amount is measured by the transaction price as definedunder the Revenue Standard.

Effective interest rate method refers to the method of calculating the amortized cost of financial asset or financial liabilityand apportioning interest income or interest expenses to each accounting period.

Effective interest rate refers to the interest rate used for discounting the estimated future cash flows of a financial asset ora financial liability for an expected subsisting period into the balance of book value of the financial asset or the amortizedcost of the financial liability. When determining the effective interest rate, the expected cash flows are estimated on thebasis of considering all contractual terms of the financial asset or financial liability (such as early repayment, extendedterm, call option or other similar option) but without considering the expected credit loss.

The amortized cost of a financial asset or a financial liability refers to the initial recognition amount of such financial assetor financial liability, less the repaid amount of principal, plus or minus the accrued amortized amount calculated byamortization of the difference between the initial recognition amount and the amount on maturity by using the effectiveinterest rate method, and then deducts the accrued provision for losses (only applicable to financial assets).

11.1 Classification, confirmation and measurement of financial assets

After initial recognition, the Group will adopt amortized cost, fair value through other comprehensive income, or fair valuethrough profit and loss for subsequent measurement depending on different categories of financial assets.

The Group will classify a financial asset into a financial asset measured at amortized cost if the contractual terms of thefinancial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principalamount outstanding and the financial asset is held within a business model whose objective is to hold financial assets inorder to collect contractual cash flows. Financial assets classified by the Group as financial asset measured by amortizedcost include cash and cash equivalents, notes receivables and accounts receivable, other receivables and long-termreceivables and other non-current assets.

The Group will classify a financial asset into a financial asset measured by fair value through other comprehensive incomeif the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal

and interest on the principal amount outstanding, and the financial asset is held within a business model whose objectiveis achieved by both collecting contractual cash flows and selling the financial assets. This category of financial assetsmainly includes financial assets with a maturity of more than one year from the date of acquisition and which are presentedunder other debt investments, financial assets maturing within one year (inclusive) from the balance sheet date and whichare presented under non-current assets maturing within one year, as well as the notes receivables and certificate ofcreditor’s right of account receivables classified as fair value at the time of acquisition and their changes are included inother comprehensive income are listed in the receivables for financing, and for those have acquisition period within oneyear (including one year) are listed in other current assets.

At the time of initial recognition, the Group may, on the basis of a single financial asset, irrevocably designate aninvestment in an equity instrument held for non-trading purpose recognized or without consideration in a business mergernot under common control as a financial asset at fair value through other comprehensive income. This type of financialassets is presented as investment in other equity instruments.

Financial assets which have satisfied one of the following conditions indicate that such financial assets are held for tradingpurpose by the Group:

? The purpose of acquiring the relevant financial asset is mainly for sale in recent period.? At the time of initial recognition, the relevant financial asset is a part of an identifiable portfolio of financial

instruments under collective management, and there is objective evidence showing a recent and actual existence ofshort-term profitable mode.? The relevant financial assets are derivatives.

Financial assets at fair value through profit and loss include financial assets which are classified as financial assets at fairvalue through profit and loss and financial assets designated at fair value through profit and loss:

? Financial assets which do not satisfy the conditions of being classified as financial assets measured at amortized costor as financial assets at fair value through other comprehensive income, they will be classified as financial assets atfair value through profit and loss.? At the time of initial recognition, in order to eliminate or substantially reduce mismatch in accounting, the Group

may irrevocably designate a financial asset as a financial asset measured at fair value with changes through profitand loss.

Financial assets at fair value through profit and loss will be presented as held-for-trading financial assets. If such financialassets have a maturity of more than one year from the balance sheet date (or without a fixed maturity) and which areexpected to be held for more than one year, they will be presented under other non-current financial assets.

11.1.1 Financial assets measured at amortized cost

Financial assets measured at amortized cost adopt the effective interest rate method for subsequent measurement accordingto amortized cost, the profit or loss when impairment occurs or upon derecognition will be accounted in profit and loss ofthe current period.

The Group recognizes interest income by using effective interest rate method for financial assets measured at amortizedcost. The Group determines interest income by multiplying the balance of book value of financial assets with the effectiveinterest rate except under the following circumstances:

? For acquired or generated financial assets which incurred credit impairment already, their interest income will be

determined by using the amortized cost of such financial asset calculated with the credit adjusted effective interestrate.? For acquired or generated financial assets which have not incurred credit impairment but incur credit impairment inthe subsequent period, the Group will determine their interest income by using the amortized cost of such financialassets multiplied with the effective interest rate in the subsequent period. If such financial asset ceases to have creditimpairment due to improvement in credit risk in the subsequent period, then the Group should change to multiply theeffective interest rate with the balance of book value of such financial asset instead to determine the interest income.

11.1.2 Financial asset at fair value through other comprehensive income

The impairment loss or profit, or interest income calculated by using the effective interest rate method, relating to financialasset at fair value through other comprehensive income should be accounted in the profit and loss of the current period,and other changes in fair value of such financial assets will be accounted in other comprehensive income. The amountcharged by such financial asset to the profit and loss of each period is deemed to be equal to the amount which has beenmeasured by amortized cost and charged to the profit and loss of each period. Upon derecognition of such financial asset,the accumulated profit or loss previously charged to other comprehensive income will be reversed from othercomprehensive income and charged to profit and loss of the current period.

For non-trading equity instrument investment designated at fair value through other comprehensive income, its changesin fair value will be recognized in other comprehensive income. Upon derecognition of such financial asset, theaccumulated profit or loss charged to other comprehensive income will be reversed from other comprehensive income andcharged to retained earnings. During the period when such investment in equity instruments for non-trading purpose areheld by the Group, the right to receive dividends by the Group has been established, and economic benefits related todividends are likely to flow into the Group, and if the amount of dividends may be measured reliably, the dividend incomeis recognized and accounted in the profit and loss of the current period.

11.1.3 Financial asset at fair value through profit and loss

For financial asset at fair value through profit and loss, subsequent measurement will be calculated at fair value, the profitor loss arising from changes in fair value and the dividend and interest income relating to such financial asset will beaccounted in the profit and loss of the current period.

11.2 Impairment of financial assets

For financial assets measured at amortized cost, financial assets that are classified as financial asset at fair value throughother comprehensive income, lease receivables and contract assets, the Group will handle impairment on the basis ofexpected credit loss and recognize loss provision.

The Group's consideration of contract assets, notes receivable and accounts receivable that are generated by transactionsregulated by revenue standards and do not contain significant financing components or that do not consider financingcomponents in contracts that are not more than one year old, as well as those operating lease receivables formed fromtransactions that are defined by the Accounting Standards for Business Enterprises No. 21-Leasing, the loss reserve shallbe measured based on the amount of the expected credit loss during the entire duration.

For other financial instruments, other than acquired or generated financial assets which have incurred credit impairmentalready, the Group will assess on each balance sheet date the changes in credit risk of the relevant financial instrumentssince initial recognition. If the credit risk of such financial asset has significantly increased after initial recognition, theGroup will calculate its loss provision based on the amount equivalent to the expected credit loss for the entire subsistingperiod. If the credit risk of such financial asset since initial recognition has not increased significantly, the Group willcalculate its loss provision according to the expected credit loss amount of such financial asset for the next 12 months.The amount of increase or reversal in the provision for credit loss, apart from financial assets classified as financial assetat fair value through other comprehensive income, is accounted in the profit and loss of the current period. For financialasset classified as measured at fair value through other comprehensive income, the Group will recognize its credit lossprovision in other comprehensive income and charged the impairment loss or gain to the profit and loss of the currentperiod, and will not decrease the book value of such financial asset presented in the balance sheet.

The Group has calculated the loss provision equivalent to the expected credit loss amount for the entire subsisting periodof the financial instrument in the preceding accounting period, but at the balance sheet date of the current period, suchfinancial instrument is no longer under the condition of significant increase in credit risk since initial recognition, theGroup calculates the loss provision for such financial instrument on the balance sheet date of the current period accordingto an amount equivalent to the expected credit loss for the next 12 months, and the resulting loss provision reversal amountwill be counted as impairment gain and booked into the profit and loss of the current period.

11.2.1 Significant increase in credit risk

The Group uses available and reasonable forward-looking information with justification, by comparing the default risk ofthe financial instrument at the balance sheet date with the default risk on the initial recognition date, to confirm whetherthe credit risk of the financial instrument has significantly increased after initial recognition.

The Group considers the following factors when assessing whether the credit risk has significantly increased:

(1) Whether a significant change has been caused to the internal price indicator due to changes in credit risk.

(2) Whether the external credit rating of financial instrument has actual or expected significant changes.

(3) Whether the actual or expected internal credit rating of the debtor has been downgraded.

(4) Whether adverse changes have occurred in the business, finance or economic conditions which are expected to causesignificant changes in the capability of the debtor to perform debt repayment obligations.

(5) Whether actual or expected significant changes have occurred in the operating results of the debtor.

(6) Whether significant adverse changes have occurred in the supervision, economic or technical environment in which

the debtor operates.

(7) Whether significant changes have occurred in the value of security pledged for the debt or the quality of guaranteeor credit enhancement provided by third parties. Such changes are expected to reduce the debtor's economicmotivation of repayment according to contractual term or influence the probability of default.

(8) Whether significant changes have occurred in the economic motivation which will lower the expectation ofrepayment by the borrower according to the contractual term.

(9) Whether significant changes have occurred in the expected performance and repayment behavior of the debtor.

Whether or not the credit risks increase significantly after the foregoing assessments, if any contractual payment for anyfinancial instrument that overdue for over (including) 30 days, it indicates the credit risks of that financial instrument haveincreased significantly.

On the balance sheet date, if the Group determines that the financial instrument only carries low credit risks, then it assumesthat the credit risks of the financial instrument have not increased significantly since the initial recognition. If the risk ofdefault on financial instruments is low, the borrower is highly able to perform its contractual cash flow obligations in theshort term, and even if the economic situation and operating environment are adversely changed over a long period of timebut not necessarily reducing the borrower's performance of its contractual cash obligations, the financial instrument isconsidered as having a lower credit risk.

11.2.2 Financial assets which have incurred credit impairment already

When one or more events which will have adverse effect on the expected future cash flows from the financial asset of theGroup have occurred, such financial asset will become a financial asset which have incurred credit impairment already.The evidence of credit impairment occurred in a financial asset includes the following observable information:

(1) Material financial difficulties have occurred in the issuer or debtor;

(2) Breach of contract by the debtor, such as default or overdue for the payment of interest or repayment of principal;

(3) Due to economic or contractual considerations relating to financial difficulties of the debtor, the creditor has grantedconcession to the debtor under no other circumstances;

(4) The debtor is likely to go bankrupt or carry out other financial restructuring;

(5) The financial difficulties of the issuer or debtor have caused the disappearance of the active market for the financial

asset;

(6) The purchase or generation of a financial asset at a large discount, such discount reflects the fact of occurrence ofcredit loss.

11.2.3 Confirmation of expected credit loss

The Group confirms the expected credit loss of the relevant financial instrument according to the following method:

? In respect of financial assets and lease receivables, the credit loss is the present value of the difference between thecontractual cash flow that the group should receive and the cash flow that it expects to receive.? In respect of financial assets with credit impairment on the balance sheet date but they are not acquired or generated

financial assets with credit impairment, the credit loss represents the difference between the balance of the book valueof such financial asset and the present value of the estimated future cash flows discounted by the original effectiveinterest rate.

The factors reflected by the method used for calculating expected credit loss of financial instruments by the Group include:

an unbiased weighted average amount determined by assessing a series of probable outcomes; time value of currency;reasonable and justifiable information relating to past events, prevailing conditions and forecast of future economicconditions obtained on the balance sheet date without incurring unnecessary additional cost or effort.

11.2.4 Write-off on financial asset

When the Group ceases to have reasonable expectation on the possible collection of all or part of the contractual cashflows from the financial asset, the balance of book value of such financial asset will be written off directly. Such a write-off constitutes a derecognition of the relevant financial asset.

11.3 Transfer of financial asset

A financial asset that fulfills one of the following conditions will be de-recognized: (1) termination of contractual rightsto receive cash flows from the financial asset; (2) upon transfer of such financial asset and transfer of substantially all therisks and rewards in respect of the ownership of such financial asset to the transferee; (3) upon transfer of such financialasset, though the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownershipof such financial asset, yet it has not retained the control over such financial asset.

If the Group has not transferred nor retained substantially all the risks and rewards in respect of the ownership of suchfinancial asset, and has retained the control over such financial asset, then such transferred financial asset will continue tobe recognized, and the relevant liabilities will continue to be recognized, according to the level of the Group's continuousinvolvement in such transferred financial asset. The relevant liabilities will be measured by the Group according to thefollowing method:

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

? If the transferred financial asset is measured by amortized cost, the book value of the relevant liabilities is equivalentto the book value of the transferred asset of continuous involvement less the amortized cost of the rights retained bythe Group (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the amortizedcost of the obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transferof the financial asset), and the relevant liabilities are not designated as financial liabilities at fair value through profitand loss of the current period.

? If the transferred financial asset is measured by fair value, the book value of the relevant liabilities is equivalent tothe book value of the transferred asset of continuous involvement less the fair value of the rights retained by theGroup (if the Group has retained the relevant rights due to transfer of the financial asset) and plus the fair value ofthe obligations undertaken by the Group (if the Group has undertaken the relevant obligations due to transfer of thefinancial asset), and the fair value of the rights and obligations shall be measured at the fair value on a separate basis.

For full transfer, which satisfies the conditions of derecognition, of the financial assets, the difference between the sum ofthe book value of the transferred financial assets as at the date of derecognition and the consideration received from suchtransfer and the accumulated amount of change in fair value originally included in other comprehensive income, whichcorresponds to the amount in respect of derecognition, shall be recognized in the profit and loss for the current period. Ifthe transfer of the financial assets by the Group is designated as investment in equity instrument held for non-tradingpurpose measured at fair value through other comprehensive income, the accumulated gains or losses previously includedin other comprehensive income shall be transferred out from other comprehensive income and be included in retainedearnings.

For transfer in part, which satisfies the conditions of derecognition, of the financial assets, the book value of the entirefinancial assets before the transfer shall be shared between the derecognized portion and the continuous recognition portionat their respective relative fair value on the date of transfer, and the difference between the sum of the considerationreceived from derecognition and the accumulated amount of change in fair value originally included in othercomprehensive income, which corresponds to the amount in respect of derecognition, and the book value of thederecognized portion as at the date of derecognition shall be included in the profit and loss of the current period. If thetransfer of the financial assets by the Group is designated as investment in equity instrument for non-trading purposemeasured at fair value through other comprehensive income, the accumulated gains or losses previously included in othercomprehensive income shall be transferred out from other comprehensive income and be included in retained earnings.

For full transfer, which does not satisfy the conditions of derecognition, of the financial assets, the Group will continue torecognize the entire financial assets transferred and the consideration received as a result of the asset transfer is recognizedas a liability when received.

11.4 Classification, confirmation and measurement of financial liabilities and equity instrumentsPursuant to the contractual terms of the issued financial instruments and the substantive economic condition as reflected,but not in legal terms only, combined with the definitions of financial liabilities and equity instruments, the Group hasclassified such financial instruments or the components thereof as financial liabilities or equity instruments upon initialrecognition.

11.4.1 Classification, confirmation and measurement of financial liabilities

Financial liabilities are classified into financial liabilities at fair value through profit and loss of the current period andother financial liabilities upon initial recognition.

11.4.1.1 Financial liabilities at fair value through profit and loss of the current periodFinancial liabilities at fair value through profit and loss of the current period comprise of financial liabilities held fortrading purpose (including derivatives of financial liabilities) and financial liabilities designated as measured at fair valuethrough profit and loss of the current period. Except for derivatives of financial liabilities, which are presented separately,financial liabilities at fair value through profit and loss of the current period are presented as financial liabilities held fortrading.

Financial liabilities that fulfill one of the following conditions suggest that the Group assumes such financial liabilities fortrading purpose:

? Assumption of the relevant financial liabilities is mainly for the purpose of the recent repurchases.? The relevant financial liabilities, upon initial recognition, are part of a portfolio of identifiable financial instruments

under centralized management, and available objective evidence shows the recent and actual existence of a short-term profit-making model.? The relevant financial liabilities are derivatives.

Financial liabilities can be designated, upon initial recognition, by the Group as financial liabilities at fair value throughprofit and loss of the current period, provided that they have satisfied one of the following conditions: (1) such designationcan eliminate or substantially reduce accounting mismatches; (2) managing and evaluating the performance of portfoliosof financial liabilities, or portfolios of financial assets and financial liabilities, on fair value basis and reporting internallyto key personnel of the Group on this basis in accordance with the risk management or investment strategies specified informal written documents of the Group; (3) hybrid contracts, with embedded derivatives, have satisfied the conditions.

Financial liabilities held for trading purpose use fair value for subsequent measurement, gains or losses arise from changesin fair value and the dividends or interest expenses relating to such financial liabilities are accounted in the profit and lossof the current period.

11.4.1.2 Other financial liabilities

Excluding transfer of financial assets not complying with derecognition conditions, or financial liabilities as a result ofcontinuous involvement in transferred financial assets, as well as the financial guarantee contracts, the other financialliabilities will be classified as financial liabilities measured at amortized cost, subsequent measurement will be based onamortized cost, gains or losses on derecognition or amortization will be accounted in the profit and loss of the currentperiod.

If the Group and the counterparty have revised or renegotiated the contract, this has not resulted in the derecognition offinancial liabilities measured at amortized cost for subsequent measurement, but has caused changes in the contractualcash flows, then the Group should recalculate the book value of such financial liabilities, and the relevant gains or lossesshall be accounted in the profit and loss of the current period. The recalculated book value of such financial liabilities willbe determined by the Group by discounting the cash flows from the renegotiated or revised contract with the original effectinterest rate of the financial liabilities. All costs or expenses incurred in the revision or renegotiation of the contract willbe reflected in the adjusted book value of financial liabilities after such revision, and will be amortized during theremaining period of the revised financial liabilities.

11.4.2 Derecognition of financial liabilities

When the existing obligations of a financial liability have been wholly or partially discharged, such financial liability orsuch part of it will be derecognized. When the Group (as borrower) and the lender enter into an agreement to undertakenew financial liabilities for replacing the original financial liabilities, if substantive difference exists in the contractualterms between the new financial liabilities and the original financial liabilities, the Group should derecognize the originalfinancial liabilities while at the same time recognizes the new financial liabilities.

When a financial liability is wholly or partially derecognized, the difference between the book value of the derecognizedportion and the consideration paid (including non-cash asset transferred out or new financial liabilities undertaken) willbe accounted in the profit and loss of the current period.

11.4.3 Equity instrument

Equity instrument refers to a contract which can prove the ownership of remainder interest in assets after deducting allliabilities of the Group. The Group issues (including refinances), repurchases, sells or cancels equity instruments fortreatment of changes in equity. The Group will not recognize changes in the fair value of equity instruments. Tradingexpenses relating to equity transactions will be deducted from equity.

The Group's distribution to holder of equity instrument is treated as profit distribution, the share dividends paid out willnot affect the total equity of shareholders.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

11.5 Derivatives

Derivatives include foreign exchange forward contract, foreign exchange option contract and interest rate swap contract,etc. Derivatives are measured at fair value initially on the date of signing the relevant contract and will be measured at fairvalue for subsequent measurement.

11.6 Offsetting between financial assets and financial liabilities

When the Group has legal right to offset the recognized financial assets and financial liabilities, and such legal right isenforceable currently, while at the same time the Group plans to perform netting settlement, or to liquidate the financialasset and repay the financial liability at the same time, the amount after offsetting between the financial asset and financialliability will be presented in the balance sheet. Save as said above, the financial asset and financial liability are presentedseparately in the balance sheet without offsetting each other.

11.7 Reclassification of financial instruments

When the Group changes its business model for managing financial assets, all affected underlying financial assets will bereclassified. All financial liabilities are not reclassified.

The Group reclassifies financial assets and applies the prospective application method for relevant accounting treatmentfrom the date of reclassification (i.e., the first day of the first reporting period after the change in the business model thatled to the reclassification of financial assets).

If the Group reclassifies a financial asset measured at amortized cost to a financial asset at fair value through othercomprehensive income, it is measured at the fair value of the financial asset at the date of reclassification. The differencebetween the original account balance and the fair value is recognized in other comprehensive income.

12. Notes receivables

12.1 Method of determining expected credit losses on notes receivable and its accounting treatment

The Group separately assesses the credit risk of the notes receivable with a single significant amount and the debtor withsevere financial difficulties, and makes provision for credit losses on a portfolio basis for the remaining notes receivablebased on the credit risk characteristics.The increase or reversal of the provision for expected credit losses of notesreceivable is recognized in profit or loss as credit impairment gains or losses.

12.2 Combination category and determination basis of bad debt provision according to credit risk characteristics

The Group classifies notes receivable into different portfolios based on the nature of the acceptor.

13. Accounts receivable, financial lease receivables and installment receivables in long-term receivables

13.1 Method of determining expected credit losses on accounts receivable/long-term receivables and their accountingtreatment

The Group assesses the credit risk of accounts receivable with significant individual amounts and significant financialdifficulties of debtors and financial lease receivables and installment receivables in long-term receivables individually,and determines the credit loss allowance on a portfolio basis using impairment matrix for the remaining parts. The increaseor reversal of the provision for expected credit losses of accounts receivable is recognized in profit or loss as creditimpairment gains or losses.

13.2 Combination category and determination basis of bad debt provision according to credit risk characteristics

For accounts receivables, the Group categorizes accounts receivable into Portfolio A, Portfolio B and Portfolio C basedon shared risk characteristics. Common credit risk characteristics adopted by the Group include the geographical locationand business object.

For long-term receivables, the common credit risk profile adopted by the Group includes business objects.

13.3 Calculation of ageing based on age-based recognition of a portfolio of credit risk characteristics

The Group uses the ageing as a credit risk characteristics, and use impairment matrix to determine the credit losses of itsaccounts receivable and long-term receivables related to the financial lease and installment collection business. The ageingis calculated from the end of the credit period. The ageing is calculated on a continuous basis when the terms and conditionsof accounts receivables and long-term receivables are modified but do not result in derecognition of them.

14. Receivables for financing

14.1 Method of determining expected credit losses on receivables financing and its accounting treatment

The Group measures bad debt provisions based on expected credit losses over the entire duration, recognizes credit lossprovisions for receivables financing in other comprehensive income, and recognizes credit impairment losses or gains inprofit or loss for the period, without reducing the account balance of receivables financing presented in the balance sheet.

14.2 Combination category and determination basis of bad debt provision according to credit risk characteristics

The Group considers that there is no significant credit risk for the bank acceptance bills held by the Group, which are allbank acceptance bills and the possibility of significant losses due to bank default is low.

15. Other receivables

15.1 Method of determining expected credit losses on other receivables and its accounting treatment

The Group determines credit losses for other receivables on a portfolio basis. The increase or reversal of the provision forexpected credit losses of other receivables is recognized in profit or loss as credit impairment losses or gains.

15.2 Combination category and determination basis of bad debt provision according to credit risk characteristics

The Group categorizes other receivables into different groups according to the nature of the amounts.

16. Inventories

16.1 Categories of inventories, valuation method, count system, amortization method for low cost and short-livedconsumable items and packaging materials

16.1.1 Categories of inventories

The Group's inventory mainly includes finished products, products in process, raw materials and contract performancecosts. Inventories are initially measured at cost. Cost of inventories comprises all costs of purchase, costs of conversionand other expenditures incurred in bringing the inventories to their present location and condition.

16.1.2 Valuation method of inventories upon delivery

The actual cost of inventories upon delivery is calculated using the moving weighted average method.

16.1.3 Inventory count system

The perpetual inventory system is maintained for stock system.

16.1.4 Amortization method for low cost and short-lived consumable items and packaging materialsPackaging materials and low cost and short-lived consumable items are amortized using the immediate write-off method.

16.2 The recognition standard and accounting method of inventory falling price reserves

At the balance sheet date, inventory is measured at the lower of cost or net realizable value. When the net realizablevalue is lower than the cost, the inventory falling price reserves is withdrawn.

Net realizable value is the amount of the estimated selling price of inventory in day-to-day activities less the estimatedcosts to be incurred at completion, estimated selling expenses and related taxes. The determination of net realizable valueof inventories is based on firm evidence obtained, taking into account the purpose for which the inventories are held andthe effect of events after the balance sheet date.

After the provision for inventory depreciation, if the factors affecting the previous reduction of inventory value havedisappeared, resulting in the net realizable value of the inventory being higher than its carrying value, the amount of theoriginal provision for inventory depreciation shall be reversed, and the amount of the reversal shall be included in thecurrent profit or loss.

16.3 The combination category and the basis for determining the inventory falling price reserves, and the basis fordetermining the net realizable value of different categories of inventories

The Group makes provision for inventory falling price reserves by inventory category for inventories with a large quantityand low unit price. For inventories manufactured and sold in the same region, having the same or similar use or purpose,and difficult to measure separately from other items, provision for inventory depreciation shall be made on a consolidatedbasis. The Group makes provision for inventory falling price reserves according to the nature and status of inventories.

17. Contract assets

17.1 Method and standard for determination of contract assets

Contract assets refer to the Group's right to consideration in exchange for goods or services that the Group has transferredto a customer when that right is conditioned on something other than the passage of time. The Group's unconditional (i.e.,depending on the passage of time only) right to receive consideration from the customer is separately presented asreceivables.

17.2 Determination and accounting treatment methods of expected credit loss of contract assetsConsistent with accounts receivable, except for contract assets with significant individual amounts and significant financialdifficulties of debtors, the Group determines the credit loss for contract assets on a portfolio basis for other contract assets.The increase or reversal of expected credit loss provision for contract assets of this year is recognized as impairment lossor gain in current profit or loss.

17.3 Combination category and determination basis of bad debt provision according to credit risk characteristicsConsistent with accounts receivable, the Group provides for credit losses on a portfolio basis based on common riskcharacteristics. Common credit risk characteristics adopted by the Group include the geographical location and businessobject.

18. Long-term equity investment

18.1 Basis for determining joint control and significant influence over investee

Control is the power to govern an entity through participating in relevant activities of the investee; the investor is able toobtain variable benefits from its activities, and at same time, to use the control rights on the investee to influence theamount of returns. Joint control means that joint control for certain arrangement in accordance with relevant agreements;activities relevant to the arrangement cannot be decided until obtaining the unanimous consent of parties sharing controlright. Significant influence is the power to participate in the financial and operating policy decisions of the investee but isnot control or joint control over those policies. When determining whether an investing enterprise is able to exercisecontrol or significant influence over an investee, the effect of potential voting rights of the investee, such as currentconvertible debts, current executable warrants, etc., held by the investing enterprises or other parties shall be considered.

18.2 Determination of initial investment cost

For a long-term equity, investment acquired through a business combination involving enterprises under common control,the shares of merged party's book value of owners' equity in the final controlling party consolidated financial statementsobtained on the merger date shall be considered as the initial investment cost of long-term equity investment. Thedifferences between the initial investment cost of long-term equity investment and the paid cash, the transferred non-cash

assets and the book value of the assumed debts are adjusted against the capital surplus; if the capital surplus is not sufficientto be offset, the remaining balance is adjusted against retained earnings. In the case of issued equity securities treated asconsolidation consideration, share of book value of owner's equity of merged party in the final controlling partyconsolidated financial statements is regarded as initial investment cost of long-term equity investments on the date ofconsolidation; capital reserve shall be adjusted in accordance with taking total nominal value of issued share as capitalshare, the difference between the initial investment cost of long-term equity investments and total book value of issuedshares; In case the capital reserve is not enough for writing down, the retained earnings shall be adjusted.

For a long-term equity investment acquired through business combination not involving enterprises under common control,and the merging cost confirmed on the purchased date are regarded as the initial investment cost. In the case that the equityof the acquiree is obtained through multiple deals in stages to finally form the business combination not under the commoncontrol, the business combination shall be handled differently based on whether it is "package deal": where it is packagedeal, the Company accounts each deal as a deal to obtain the control. If the deal is not a "package deal", the sum of theaccount balance of the equity investment of the acquiree plus the cost of the new investment shall be used as the initialinvestment cost of the long-term equity investment calculated according to the cost method. The equity originally held isaccounted for by the equity method, and the relevant other comprehensive income will not be accounted for the time being.

The intermediate expenses made by the combining party or purchaser for audit, legal service, assessment and othermanagement related expenses during the business merger should be included into the current profit and loss as it happens.

Long-term equity investment obtained by other means other than long-term equity investment formed by businesscombination shall be initially measured at cost.

18.3 Subsequent measurement and recognition of profit or loss

18.3.1 Long-term equity investment accounted for using the cost method

Long-term equity investments in subsidiaries are accounted for using the cost method in the Company's financialstatements. A subsidiary is an investee that is controlled by the Group.

The long-term equity investment accounted by the cost method shall be measured at its initial investment cost. If there areadditional investments or disinvestments, the long-term equity investment cost shall be adjusted. Income from theinvestment in the current period shall be recognized in accordance with the cash dividends or profits declared and issuedby the investee.

18.3.2 Long-term equity investment accounted for using the equity method

Except for investments in associates and joint ventures that are wholly or partly classified as holding assets for sale, theGroup accounts for investment in associates and joint ventures using the equity method. An associate is an entity overwhich the Group has significant influence and a joint venture is an entity over which the Group can only exercise jointcontrol along with other investors on the investee's net assets.

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's share ofthe fair value of the investee's identifiable net assets at the time of acquisition, no adjustment is made to the initialinvestment cost. Where the initial investment cost is less than the Group's share of the fair value of the investee'sidentifiable net assets at the time of acquisition, the difference is recognized in profit or loss for the period, and the cost ofthe long-term equity investment is adjusted accordingly.

Under the equity method, the Group recognizes its share of the net profit or loss and other comprehensive income of theinvestee for the period as investment income or loss and comprehensive income for the period, meanwhile, the book valueof the long-term equity investment shall be adjusted; The Group shall accordingly reduce the book value of the long-termequity investment in terms of the part that shall be enjoyed according to the profit or cash dividends declared by theinvested unit to be distributed; For other changes in the owners' equity of the invested unit other than net profits and losses,other comprehensive incomes and the profit distribution, the book value of long-term equity investment shall be adjustedand be included into the capital reserves. The Group shall, on the ground of the fair value of all identifiable assets of theinvested entity when it obtains the investment, recognize the attributable share of the net profits and losses of the investedentity after it adjusts the net profits of the invested entity. If the accounting policies and accounting periods adopted by theinvested unit are different from those adopted by the Group, the adjustment shall be made for the financial statements ofthe invested unit in accordance with the accounting policies and accounting periods of the Group to recognize theinvestment income and other comprehensive incomes. For the transaction incurred between the group and associatedenterprises and joint ventures, invested or sold assets don't constitute a business, the part that doesn't achieve internaltransaction profit or loss or belongs to the Group calculated according to the enjoyed ratio will be offset, and the profit orloss on investment will be confirmed on this basis. But for the unrealized loss arising from the internal transaction betweenthe Group and the invested unit, if such transaction loss is defined as the impairment loss of the transferred asset, theycannot be offset.

When the Group determines the net loss of the invested unit that shall be shared, it is necessary to write-down the bookvalue of the long-term equity investment and other long-term equities substantially constituting the net investment of theinvested unit to zero as a limit. Besides, if the Group is obliged to bear extra loss for the invested unit, it shall be necessaryto determine provisions and record them to current investment loss in compliance with obligations expected to be assumed.If the invested unit realizes any net profits later, the Group shall, after the amount of its attributable share of profits offsetsits attributable share of the un-confirmed losses, resume recognizing its attributable share of profits.

18.4 Disposal of long-term equity investments

On disposal of a long-term equity investment, the difference between the proceeds actually received and the accountbalance is recognized in profit or loss for the period.

19. Fixed assets

19.1 Recognition criteria for fixed assets

Fixed assets are tangible assets that are held for use in the production or supply of goods or services, for rental to others,or for administrative purposes, and have useful lives of more than one accounting year. A fixed asset is recognized onlywhen it is probable that economic benefits associated with the asset will flow to the Group and the cost of the asset can bemeasured reliably. Fixed assets are initially measured at cost.

Subsequent expenditures incurred for the fixed asset are included in the cost of the fixed asset and if it is probable thateconomic benefits associated with the asset will flow to the Group and the subsequent expenditures can be measuredreliably. Meanwhile the account balance of the replaced part is derecognized. Other subsequent expenditures arerecognized in profit or loss in the period in which they are incurred.

19.2 Depreciation of each category of fixed assets

A fixed asset is depreciated over its useful life using the straight-line method since the month subsequent to the one inwhich it is ready for intended use. The depreciation method, depreciation period, estimated residual value rate and annualdepreciation rate of each category of fixed assets are as follows:

Estimated net residual value of a fixed asset is the estimated amount that the Group would currently obtain from disposalof the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the conditionexpected at the end of its useful life.

19.3 Other explanations

If a fixed asset is upon disposal or no future economic benefits are expected to be generated from its use or disposal, thefixed asset is derecognized. When a fixed asset is sold, transferred, retired or damaged, the amount of any proceeds on

disposal of the asset net of the account balance and related taxes is recognized in profit or loss for the period.

The Group reviews the useful life and estimated net residual value of a fixed asset and the depreciation method applied atleast once at each financial year-end, and account for any change as a change in an accounting estimate.

20. Construction in process

Construction in progress is measured at its actual costs. The actual costs include various construction expenditures duringthe construction period, borrowing costs capitalized before it is ready for intended use and other relevant costs.Construction in progress is not depreciated.

Construction in progress is transferred to a fixed asset when it is ready for intended use. The standards and time points forcarrying forward various types of projects under construction to fixed assets are as follows:

21. Borrowing costs

Where funds are borrowed under a specific-purpose borrowing, the amount of interest to be capitalized is the actual interestexpense incurred on that borrowing for the period less any bank interest earned from depositing the borrowed funds beforebeing used on the asset or any investment income on the temporary investment of those funds. Where funds are borrowedunder general-purpose borrowings, the Group determines the amount of interest to be capitalized on such borrowings byapplying a capitalization rate to the weighted average of the excess of cumulative expenditures on the asset over theamounts of specific-purpose borrowings. The capitalization rate is the weighted average of the interest rates applicable tothe general-purpose borrowings. During the capitalization period, exchange differences related to a specific-purposeborrowing denominated in foreign currency are all capitalized. Exchange differences in connection with general-purposeborrowings are recognized in profit or loss in the period in which they are incurred.

22. Intangible assets

22.1 Service life and its basis for determination, estimate, amortization method or review procedureIntangible assets include land use right, intellectual property (IP), application software, and franchise, etc.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

An intangible asset is measured initially at cost. When an intangible asset with a finite useful life is available for use, itsoriginal cost is amortized over its estimated useful life using the straight-line method. The amortization method, servicelife and net residual value of various intangible assets are shown as follows:

The fees charged by the Group to those who acquire public products and services during the project operation period donot constitute an unconditional right to receive cash. When the PPP project assets are ready for their intended use, thedifference between the consideration amount of the relevant PPP project assets or the amount of confirmed constructionincome and the amount of cash (or other financial assets) that is entitled to receive a determinable amount will berecognized as intangible assets.

For an intangible asset with a finite useful life, the Group reviews the useful life and amortization method at the end of theperiod, and makes adjustments when necessary.

22.2 The accounting treatment methods and the collection scope of research and development expenditureExpenditure during the research phase is recognized as an expense in the period in which it is incurred.

Expenditure during the development phase that meets all of the following conditions at the same time is recognized asintangible asset. Expenditure during development phase that does not meet the following conditions is recognized in profitor loss for the period:

(1) It is technically feasible to complete the intangible asset so that it will be available for use or sale;

(2) The Group has the intention to complete the intangible asset and use or sell it;

(3) The Group can demonstrate the ways in which the intangible asset will generate economic benefits, including theevidence of the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is tobe used internally, the usefulness of the intangible asset;

(4) The availability of adequate technical, financial and other resources to complete the development and the ability touse or sell the intangible asset; and

(5) The expenditure attributable to the intangible asset during its development phase can be reliably measured.

If the expenditures cannot be distinguished between the research phase and development phase, the Group recognizes allof them in profit or loss for the period. The costs of the intangible assets generated by internal development activities onlyinclude the total expenditure incurred from the time point when the capitalization conditions are available to the pointwhen the intangible assets are used for their intended purposes; for the expenditure that already becomes an expenditurein the profit and loss statement before the capitalization conditions are available during development of the same intangibleasset, no adjustment will be made.

The aggregate scope of the Group's R & D expenses includes employee compensation for personnel directly engaged inR & D activities, materials and service fees directly consumed by R & D activities, depreciation expenses and amortizationexpenses of intangible assets for equipment and equipment used in R & D activities, rental expenses for R & D sites,intermediate testing expenses for R & D activities, new product design expenses, and travel, transportation andcommunication expenses required for research and test development. The Group uses the passing of feasibility studies andthe completion of R&D project projects after evaluation as the specific criteria for classifying R&D projects into researchand development phases.

23. Long-term assets impairment

The Group assesses at each balance sheet date whether there is any indication that the long-term equity investment, fixedassets, construction in process, and intangible assets with a finite useful life may be impaired. If there is any indicationthat such assets may be impaired, recoverable amounts are estimated for such assets. Intangible assets with indefiniteuseful life and intangible assets not yet available for use are tested for impairment annually, irrespective of whether thereis any indication that the assets may be impaired.

Recoverable amount is estimated on individual basis. If it is not practical to estimate the recoverable amount of anindividual asset, the recoverable amount of the asset group to which the asset belongs will be estimated. The recoverableamount is determined by the higher of 1) net amount of fair value of the asset or asset group deducted by the disposalexpenses; or 2) the present value of the expected future cash flows of the asset or asset group.

If the recoverable amount of an asset or an asset group is less than its account balance, the deficit is accounted as animpairment provision and is recognized in profit or loss for the period.

Goodwill impairment test shall be conducted at the end of each year at least. Goodwill impairment test shall be conductedin accordance with the concerned asset group or asset portfolio. That is to allocate the book value of goodwill to the assetgroup or asset portfolio that is expected to benefit from the synergies of the combination in a reasonable way from the dateof purchasing. When recoverable amount of apportion-included asset group or asset portfolio of goodwill is less than book

value of goodwill, impairment loss shall be recognized. Firstly, amount of impairment loss shall be apportioned to thebook value of goodwill of the said asset group or asset portfolio, and then book value of other assets, except for goodwill,in asset group or asset portfolio shall be abated in proportion.

Once the impairment loss of such assets is recognized, it cannot be reversed in any subsequent period.

24. Long-term deferred expenses

Long-term deferred expenses are the expenses that are already incurred but will be shared in the current reporting periodand later periods with amortization term of more than one year, mainly for the expenses on betterment of leased fixedassets and employee housing loan deferred interest. Long-term deferred expenses are evenly amortized in installments inthree to five years during the expected benefit period.

25. Contract liabilities

Contract liabilities refer to the obligation of the Group to transfer goods or services to customers for consideration receivedor receivable from customers. Contract assets and contract liabilities under the same contract are presented in net terms.

26. Employee compensation

26.1 Accountant arrangement method of short-term remuneration

During accounting period when the Group's employees provide services, actual short-term remuneration shall berecognized as the liabilities and current profit and loss or relevant asset cost. The Group's employee benefits and welfareare included into current profit and loss or relevant asset cost according to actual amount occurred during the period. Ifthe employee benefits and welfare is non-monetary, it shall be measured according to its fair value.

During the accounting period that the employees service the Group, the Group pays social insurance premiums such asmedical insurance premium, industrial injury insurance premium, maternity insurance premium and housing accumulationfund for its employees, as well as labor union expenditure and employee education expenses calculated and withdrawnaccording to the regulations, corresponding employee remuneration amount shall be calculated and determined inaccordance with specified calculation and withdrawal basis and proportion to recognize corresponding liabilities andincluded into the current profit and loss or relevant asset cost.

26.2 Accountant arrangement method of post-employment benefits

All post-employment benefits shall be considered as the defined contribution plan.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

In the accounting period when the employee serves for the Group, the deposited amount calculated based on definedcontribution plan shall be recognized as liabilities and included in the current profit and loss or relevant asset cost.

26.3 Accountant arrangement method of the termination benefits

Where the Group provides termination benefits, the employee remuneration liabilities caused by such termination benefitswill be determined as the following date, whichever is earlier, and will be included in the current profit and loss: 1) Whenthe Group cannot unilaterally withdraw the termination benefits provided due to labor relation cancellation plan oremployee lay-off suggestion; or 2）when the Group determines costs or expenses in relation with the restructuring of thepaid termination benefits.

27. Provisions

Provisions are recognized when the Group has a present obligation related to a contingency such as products qualityassurance, etc. And it is probable that an outflow of economic benefits will be required to settle the obligation, and theamount of the obligation can be measured reliably.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation atthe balance sheet date, taking into account factors pertaining to a contingency such as the risks, uncertainties and timevalue of money. Where the effect of the time value of money is material, the amount of the provision is determined bydiscounting the related future cash outflows.

The Group estimates product quality guarantee deposits based on expected claim rates, maintenance and replacement costs,etc.

28. Share-based payment

Share-based payment refers to a transaction in which the Group grants the equity instruments or undertakes the equity-instrument-based liabilities in return for services from employees. The Group's share-based payment is an equity-settledshare-based payment.

28.1 Equity-settled share-based payments

Equity-settled share-based payments in exchange for services rendered by employees are measured at the fair value of theequity instruments granted to employees at the grant date. Such amount is recognized as related costs or expenses on astraight-line basis over the vesting period, with a corresponding increase in capital reserve.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

At each balance sheet date during the vesting period, the Group makes the best estimate according to the subsequent latestinformation of change in the number of employees who are granted with options that may vest, etc. and revises the numberof equity instruments expected to vest. The effect of the above estimate is recognized as related costs or expenses, with acorresponding adjustment to capital reserve.

28.2 Accounting treatment related to implementation, modification and termination of share-based payment arrangementIn case the Group modifies a share-based payment arrangement, if the modification increases the fair value of the equityinstruments granted, the Group will include the incremental fair value of the equity instruments granted in the measurementof the amount recognized for services received. If the modification increases the number of the equity instruments granted,the Group will include the fair value of additional equity instruments granted in the measurement of the amount recognizedfor services received. The increase in the fair value of the equity instruments granted is the difference between fair valueof the equity instruments before and after the modification on the date of the modification. If the Group modifies the termsor conditions of the share-based payment arrangement in a manner that reduces the total fair value of the share-basedpayment arrangement, or is not otherwise beneficial to the employee, the Group will continue to account for the servicesreceived as if that modification had not occurred, other than a cancellation of some or all the equity instruments granted.

If cancellation of the equity instruments granted occurs during the vesting period, the Group will account for thecancellation of the equity instruments granted as an acceleration of vesting, and recognize immediately the amount thatotherwise would have been recognized over the remainder of the vesting period in profit or loss for the period, with acorresponding recognition in capital reserve. When the employee or counterparty can choose whether to meet the non-vesting condition but the condition is not met during the vesting period, the Group treats it as a cancellation of the equityinstruments granted.

29. Revenue

The Group's revenue consists of product sales revenue, engineering construction revenue and cloud services and otherservice revenue.

When (or as) a performance obligation in a contract was satisfied, i.e., when (or as) the customer obtains control of relevantgoods or services, the Group recognizes as revenue the amount of the transaction price that is allocated to that performanceobligation. A performance obligation is the Group's commitment to transfer to a customer a good or service (or a bundleof goods or services) that is distinct, in a contract with the customer.

The Group evaluates the contract on the commencement date of the contract, identifies the individual performanceobligations contained in the contract and determines whether each individual performance obligation is to be performedover a certain period of time or at a certain point in time. Revenue is recognized over time by reference to the progresstowards complete satisfaction of the relevant performance obligation if one of the following criteria is met: (1) the customer

simultaneously receives and consumes the benefits provided by the Group's performance as the Group performs; (2) theGroup's performance creates or enhances an asset that the customer controls as the Group performs; or (3) the Group'sperformance does not create an asset with an alternative use to the Group and the Group has an enforceable right topayment for performance completed to date. Otherwise, revenue is recognized at a point in time when the customer obtainscontrol of the distinct good or service.

If the contract contains two or more performance obligations, the Group allocates the transaction price to each singleperformance obligation on the contract start date in accordance with the relative proportion of the individual selling priceof the goods or services promised by each single performance obligation. However, if there is strong evidence that thecontract discount or variable consideration is only related to one or more (but not all) performance obligations in thecontract, the Group allocates the contract discount or variable consideration to the relevant one or more performancesobligation. Individual selling price refers to the price at which the Group sells goods or services to customers separately.Where the individual selling price cannot be directly observed, the Group comprehensively considers all relevantinformation that can be reasonably obtained, and uses the observable input value to the maximum to estimate the individualselling price.

The Group judges whether the Group’s identity is the principal or agent when engaging in transactions based on whetherit has control over the goods or services before transferring the goods or services to customers. If the Group is able tocontrol the goods or services before transferring them to customers, the Group is the principal responsible person, andrevenue is recognized based on the total amount of consideration received or receivable. Otherwise, the Group acts as anagent and recognizes revenue based on the amount of commission or handling fee to which it is expected to be entitled,which is determined based on the net amount of the total consideration received or receivable less the consideration payableto other related parties, or based on a predetermined commission amount or proportion, etc.

29.1 Revenue from sale of products

Product sales revenue is the revenue from sales of video surveillance products, smart home products, robotics productsand other products of the Group.

According to the contract, the Group recognizes revenue when the control of the product is transferred, that is, when theproduct is handed over to the agreed carrier or delivered to the place designated by the other party for receipt. As thedelivery of the products to the customer represents the right to receive the contract consideration unconditionally, and thematurity of the payment is only subject to the passage of time, the Group recognises a receivable when the product isdelivered to the customer. When a customer prepays for a purchase, the Group recognises the transaction amount receivedas a contractual liability until revenue is recognized when the product is delivered to the customer.

There is variable consideration in the product sales contracts between the Group and its distributors. The Group determinesthe best estimate of the variable consideration based on the expected delivery time, quantity and price of the products. Thetransaction price, including variable consideration, does not exceed the amount by which the accrued recognized revenue

is unlikely to be materially reversed at the time the relevant uncertainty is eliminated. At each balance sheet date, theGroup re-estimates the amount of variable consideration that should be included in the transaction price.

When the Group sells products to distributors, it provides an additional purchase option under sales incentives, i.e., theGroup's distributors can accumulate sales rebates when purchasing specific products from the Group and use them to offsetthe price of goods in future purchases. These sales rebates provide resellers with discounts on their future purchases thatare not available to similar customers. As a result, the commitment to provide the dealer with a credit for future purchasesis a separate performance obligation that is recognized as a contractual liability at the time of the sale transaction at thetransaction price apportioned to the fair value of the rebate, and revenue is recognized when the reseller uses the salesrebate offset.

The Group provides quality assurance for the products sold, and the quality assurance related to the products sold by theGroup cannot be purchased separately, but is to assure customers that the products sold meet the established standards, sothe Group carries out accounting treatment in accordance with the provisions of Accounting Standard for BusinessEnterprises No. 13 - Contingencies.

For product sales of the Group with sales return terms attached, as the customer obtains ownership of related products, theGroup recognizes revenue in accordance with the consideration (excluding expected refund amounts due to sales returns)that the Group is expected to receive due to the transfer of products or services to the customer, and recognizes expectedliabilities in accordance with expected refund amounts due to sales returns. The remaining amount, subsequent todeduction of expected costs from collecting the products (including the decrease in value of the returned products), isrecognized as an asset in accordance with the account balance during the expected transfer of returned products afterdeducting the costs of the above net assets carried forward.

Some of the Group's product sales contracts have instalment payment clauses, and there is a significant financingcomponent in the contract, the Group determines the transaction price based on the amount payable in cash when thecustomer assumes control of the products. The difference between the transaction price and the contract consideration isamortized using the effective interest rate method during the contract period. On the contract commencement date, theGroup does not consider the significant financing components in the contract if the interval between the customer obtainingcontrol of the products and the price being paid by the customer is not more than one year.

29.2 Project construction revenue

Project construction revenue is the revenue from constructions related to intelligent security solution projects and PPPProjects provided by the Group.

For project construction, the customer is able to control the assets under construction in the course of the Group'sperformance, and the Group regards them as a performance obligation to be performed within a certain period of time, andthe revenue is recognized according to the performance progress, unless the performance progress cannot be reasonablydetermined.

The Group uses the output method to determine the progress of performance, which is to determine the progress ofperformance based on the value of engineering construction services transferred to customers. If the progress ofperformance cannot be reasonably determined and the costs incurred by the Group are expected to be compensated,revenue is recognized according to the amount of costs incurred until the progress of performance can be reasonablydetermined.

The Group's customers make milestone payments with the Group in respect of projects in accordance with the terms ofthe contract. The Group first recognizes the completed performance obligations as contract assets and reclassifies them asaccounts receivable when the payment milestone is reached; if the contract price received or receivable by the Groupexceeds the accumulated performance obligations completed, the excess part is recognized as a contract liability. TheGroup's contract assets and contractual liabilities under the same contract are presented on a net basis.

Some of the Group's construction contracts have long-term payment clauses, and there are significant financing elementsin the contracts. The Group determines the transaction price on the basis of the amount payable in cash on the assumptionthat the customer will take control of the asset-building. The difference between the transaction price and the contractconsideration is amortized over the life of the contract using the effective interest method. At the commencement date ofthe contract, the Group expects that the interval between the customer obtaining control of the service and the customerpaying the price will not exceed one year, regardless of the significant financing component existing in the contract.

The Group, as a private capital, entered into a PPP project contract with the government and provided construction,operation, maintenance and other services. The Group identifies construction services, operation services and maintenanceservices as individual performance obligations in the contract, and allocates the transaction price to each performanceobligation based on the relative proportion of the stand-alone selling price of each performance obligation. When providingconstruction services or outsourcing projects to other parties, The identity of the Group is the principal responsible person,and then accounting for construction revenue to confirm the contract assets is made. After the PPP project is ready for use,the Group recognizes revenue related to operation and maintenance services.

29.3 Cloud service and other service revenue

Revenue from cloud services and other services refers to cloud services such as storage services, video services, andtelephone services provided by the Group, maintenance services related to security projects, and other services, etc.

For cloud services and other services, the economic benefits brought by the customer are obtained and consumed at thetime of the Group's performance, and the Group regards them as a performance obligation to be performed within a certainperiod, and the revenue is recognized according to the performance progress during the period of providing services. TheGroup adopts the output approach to determine the performance progress, i.e. the performance progress is determinedbased on the value of the services transferred to the customer to the customer. The customer paid for the cloud services inadvance at the time of purchase, so the Group recognized the cloud service payment received at the time of the transaction

as a contractual liability, and recognized the revenue according to the performance progress during the period of theprovision of the services. The Group presents contract assets and contract liabilities under the same contract on a net basis.

For the provision of operation and maintenance services to customers, the economic benefits obtained and consumed bythe customers at the same time as the performance of the contract by the Group shall be regarded as the performanceobligation to be performed within a certain period of time, and the revenue shall be recognized according to theperformance progress. The Group's customers make milestone payments with the Group for O&M services in accordancewith the terms of the contract. The Group first recognizes completed performance obligations as contract assets andreclassifies them as accounts receivable when payment milestones are reached, and if the contract price received orreceivable by the Group exceeds the accumulated performance obligations completed, the excess part is recognized as acontract liability. The Group's contract assets and contractual liabilities under the same contract are presented on a netbasis.

For the provision of operation and maintenance services to customers, the economic benefits obtained and consumed bythe customers at the same time as the performance of the contract by the Group shall be regarded as the performanceobligation to be performed within a certain period of time, and the revenue shall be recognized according to theperformance progress. The Group's customers make milestone payments with the Group for O&M services in accordancewith the terms of the contract. The part of the Group that has obtained the unconditional right to receive payment isrecognized as accounts receivable, and the remainder is recognized as contract assets, and if the contract price received orreceivable by the Group exceeds the accumulated performance obligations completed, the excess part is recognized as acontract liability. The Group's contract assets and contractual liabilities under the same contract are presented on a netbasis.

30. Cost of contract

30.1 Cost of obtaining a contract

Incremental costs incurred by the Group to obtain a contract (that is, costs that would not have occurred without a contract)and expected to be recovered are recognized as an asset, and amortized using the same basis as revenue recognition forthe goods or services to which the asset relates, and included in current profit or loss. If the amortization period of theasset does not exceed one year, it is included in current profit or loss when it occurs. Other expenses incurred by the Groupin order to obtain the contract shall be included in current profit or loss when incurred, unless it is clearly borne by thecustomer.

30.2 Cost of contract fulfillment

The cost of the Group's performance of a contract that does not fall within the scope of accounting standards other thanthe revenue standard and meets the following conditions is recognized as an asset: (1) The cost is directly related to acurrent or anticipated contract; (2) The cost increases the Group's resources for fulfilling performance obligations in the

future; (3) The cost is expected to be recovered. The aforesaid assets are amortized on the same basis as the recognitionof income from goods or services related to the assets, and are included in the current profit or loss. The Group's asset inrelation to contract costs are mainly contract performance costs, and they are included in inventories based on their currentnature.

30.3 Impairment losses on assets related to contract costs

In determining impairment losses on assets related to contract costs, impairment losses are first determined for other assetsrecognized in accordance with other relevant ASBEs and related to the contract. Then, for assets related to contract costswhose carrying value is higher than the difference between the following two items, the Group makes provision forimpairment for the excess to be recognized as asset impairment losses: (1) the remaining amount of consideration expectedto be obtained by the Group for the transfer of goods or services related to the asset; (2) the estimated costs to be incurredin connection with the transfer of such relevant goods or services.

After provision for impairment is made for the asset related to contract costs, if the difference between the above two itemsis higher than the carrying value of the asset due to changes in the factors of impairment in previous periods, the originalprovision for impairment of the asset is reversed and included in the current profit or loss, but the carrying value of theasset after the reversal shall not exceed the carrying value of the asset on the reversal date assuming no provision forimpairment is made.

31. Governmental Subsidies

Government subsidies refer to the monetary and non-monetary assets obtained by the Group from the government for free.Government subsidies are recognized when they can meet the conditions attached to the government subsidies and can bereceived.

If a government subsidy is a monetary asset, it shall be measured at the amount received or receivable.

31.1 Judgment basis and accountant treatment of government subsidy related to assetThe government subsidies for some special subsidies and etc. are used for constructions and forms long-term assets, andtherefore are categorized as government subsidy related to assets.

A government grant related to an asset is recognized as deferred income, and it should be evenly amortized to profit orloss over the useful life of the related asset.

31.2 Judgment basis and accountant treatment of government subsidy related to incomeThe Group receives government subsidies including subsidies for special projects and Value-Added-Tax refund, etc.,which are used to compensate the group-related costs or losses, and therefore are categorized as government subsidyrelated to income.

For a government grant related to income, if the subsidy is a compensation for related expenses or losses to be incurred insubsequent periods, it is recognized as deferred income, and recognized in profit or loss over the periods in which therelated costs or losses are recognized; If the subsidy, such as VAT refund, is a compensation for related expenses or lossesalready incurred, it is recognized immediately in profit or loss for the period.

For government subsidies related to the Group's daily operations shall be booked into other income; for those not relatedto the Group's daily operations, shall be booked into non-operating income/expense.

32. Lease

Lease refers to a contract that conveys the right to use an asset for a period of time in exchange for consideration.

The Group assesses whether a contract is, or contains, a lease at the inception date. The Group does not re-assess whethera contract contains a lease unless the terms and conditions of the contract are changed.

32.1 The Group as the lessee

32.1.1 Separating components of lease

In case the contract contains one or more lease and non-lease components, the Group separates each lease component andnon-lease component, and allocates the consideration to the lease and non-lease components based on the proportion ofrelative stand-alone prices of the components.

32.1.2 Right-of-use assets

The Group recognizes the right-of-use assets for leases on the commencement date of the lease term, except for short-termlease and lease of low-value assets. The commencement date of the lease term refers to the date from which the lessormakes the leased assets available for use by the Group. Right-of-use assets are initially measured at cost. The cost includes:

? Initial measurement amount of lease liabilities;? Amount of lease payment made at or before the commencement date of the lease, less any lease incentives received;? Initial direct costs incurred by the Group;? An estimate of any costs to be incurred by the Group in dismantling and removing the underlying asset, or restoringthe site on which it is located, or restoring the leased assets to the conditions as agreed under the terms of the lease,excluding costs incurred to produce inventories.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

The Group calculates depreciation of the right-of-use assets in accordance with the relevant depreciation provisions ofAccounting Standards for Business Enterprises No. 4 - Fixed Assets. The right-of-use asset is depreciated over the shorterof the lease term and the useful life of the right-of-use asset, unless there is a transfer of ownership or purchase optionwhich is reasonably certain to be exercised at the end of the lease term.

The Group determines whether the right-of-use assets are impaired and accounts for the identified impairment loss inaccordance with the provisions of Accounting Standards for Business Enterprises No. 8 - Impairment of Assets.

32.1.3 Lease liabilities

The Group initially measures the lease liability on the commencement date at an amount equal to the present value of thelease payments during the lease term that are not paid at that date, except short-term lease and lease of low-value assets.In calculating the present value of the lease payments, the Group adopts the interest rate implicit in the lease as the discountrate. The Group uses its incremental borrowing rate if the interest rate implicit in the lease cannot be readily determined.

Lease payments refer to the payments made by the Group to the lessor in connection with the right to use the leased assetduring the lease term, including:

? Fixed payments, including in-substance fixed payments, less any lease incentives receivable;? The exercise price of a purchase option, if the Group is reasonably certain to exercise that option;? Payments for terminating the lease, if the lease term reflects the lessee exercising the option to terminate the lease;? Amounts expected to be payable by the Group under residual value guarantees.

After the commencement date of the lease term, the Group calculates interest expense of lease liabilities in each period oflease term at fixed periodic rate and recognizes in the current loss and profit or relevant asset costs.

After the commencement date of the lease term, the Group re-measures the lease liability and adjusts the correspondingright-of-use assets under the following circumstances. If the carrying value of the right-of-use assets has been reduced tozero while the lease liability needs to be further reduced, the Group will recognize the difference into the current loss andprofit:

? In case of any change of the lease term or any change in the valuation of the purchase option, the Group re-measures

the lease liability at the present value calculated based on the modified lease payments and the revised discount rate;? In the event of any change in the amount expected to be payable based on the residual value guarantees, the Group

re-measures the lease liability at the present value calculated based on the changed lease payments and the original

discount rate.

32.1.4 Short-term lease and lease of low-value assets

The Group has elected not to recognize the right-of-use assets and lease liabilities for short-term leases and leases of low-

value assets. Short-term lease refers to lease with a term no more than 12 months from the commencement date of leaseterm and without purchase option. Lease of low-value assets refers to lease for single lease asset with low value when itis new. The Group recognizes lease payments under short-term leases and leases of low-value assets as the current lossand profit or the relevant asset costs on a straight-line basis over each period during the lease term.

32.1.5 Lease modification

In case of lease modification, the Group makes accounting treatment of such lease change as a separate lease if all of thefollowing conditions are met:

? Such lease modification increases the scope of the lease by adding the right to use one or more lease assets;? The increased consideration is commensurate with the stand-alone price for the increase in scope and any appropriateadjustments to reflect the circumstances of the particular contract.

Where accounting treatment is not made for lease modification as a separate lease, at the effective date of leasemodification, the Group reallocates the contract consideration after the modification, redetermines the lease term, and re-measures the lease liability based on the present value calculated according to the modified lease payments and the reviseddiscount rate.

In the event that the lease scope is decreased or the lease term is shortened as a result of the lease modification, the Groupreduces the account balance of the right-of-use assets, and recognizes the relevant gains or losses relating to the partial orfull termination of the lease in the income statement; for the lease liabilities re-measured due to other lease modifications,the Group adjusts the account balance of the right-of-use assets accordingly.

32.2 The Group as the lessor

32.2.1 Separating components of lease

In case the contract contains both lease and non-lease components, the Group allocates the contract consideration inaccordance with the provisions of Accounting Standards for Business Enterprises No. 14 - Revenue on portion oftransaction prices, based on the respective stand-alone prices of the lease component and the non-lease component.

32.2.2 Classification criteria and accounting treatment for leases as lessors

Finance lease is a lease that substantially transfers all the risks and rewards of incidental to ownership of an underlyingasset. Operating lease refers to the leases other than finance lease.

32.2.2.1 The Group records the operating lease business as the lessor

The Group recognizes the lease payments from operating leases as rental income on a straight-line basis for all periodsover the lease term. The Group's initial direct costs incurred in connection with operating leases is capitalized as incurred,recognized in the income statement over the lease term on the same basis as the lease income.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

32.2.2.2 The Group records the finance lease business as the lessor

On the commencement date of the lease term, the Group uses the net lease investment as the carrying value of the financelease receivables and derecognizes the finance lease assets. Net lease investment is the sum of present value ofunguaranteed residual value and lease payments receivable discounted at the interest rate implicit in lease on thecommencement date of the lease term.

Lease payments receivable, which refer to amounts receivable by the Group from the lessee for conveying the right to usethe leased assets during the lease term, include:

? Fixed payment including in-substance fixed payments by the lessee, less any lease incentives payable;? The exercise price of a purchase option, if the lessee is reasonably certain to exercise that option;? Payments for terminating the lease (if the lease term reflects the lessee exercising the option to terminate the lease;? Residual value guarantees provided to the Group by the lessee, a party related to the lessee, or a third party unrelated

to the lessor that is capable of discharging the obligations under the guarantee.

The Group calculates and recognizes the interest income in each period of the lease term according to the fixed periodicinterest rate.

In financial leases in which the Group acts as a manufacturer or distributor as the lessor, on the commencement date ofthe lease term, the Group recognizes revenue based on the lower of the fair value of the leased assets and the present valueof the lease receipts discounted at the market rate, and carries forward the cost of sales based on the balance of the accountbalance of the leased assets after deducting the present value of the unsecured residual value.

The costs incurred by the Group acting as a manufacturer or distributor as a lessor to obtain a financial lease are recognizedin profit or loss for the current period on the commencement date of the lease term.

32.2.3 Lease modification

In case of a medication of the operating lease, the Group accounts for it as a new lease as of the effective date of themodification, any prepaid or accrued lease payments relating to the original lease are considered as payments for the newlease .

In case of modification of finance lease, the Group accounts for the modification of a finance lease as a separate lease ifall of the following conditions are met:

? The modification increases the scope of the lease by adding the right to use one or more lease assets;? The consideration for the lease increases by an amount that is commensurate with the stand-alone price for theincrease in scope, and any appropriate adjustments to that price to reflect the circumstances of the particular contract.

If a modification of finance lease is not accounted for as a separate lease, the Group accounts for the changed lease underthe following circumstances:

? If the modification becomes effective on the commencement date of the lease and the lease is classified as anoperating lease, the Group accounts for it as a new lease from the effective date of the lease modification and measuresas the net lease investment prior to the effective date of the lease modification as the carrying value of the leasedasset.? If the modification becomes effective on the commencement date of the lease and the lease is classified as a financelease, the Group accounts for it in accordance with the provisions of Accounting Standards for Business EnterprisesNo. 22 - Recognition and Measurement of Financial Instruments regarding the modification or renegotiation ofcontracts.

33. Deferred tax assets / deferred tax liabilities

The income tax expenses include current income tax and deferred income tax.

33.1 Current income tax

At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are measured at theamount expected to be paid (or recovered) according to the requirements of tax laws.

33.2 Deferred tax assets and deferred tax liabilities

For temporary differences between the account balances of certain assets or liabilities and their tax base, or between thenil account balance of those items that are not recognized as assets or liabilities and their tax base that can be determinedaccording to tax laws, deferred tax assets and liabilities are recognized through the balance sheet liability method.

In general, all temporary differences are recognized as the relevant deferred income tax. However, for deductibletemporary differences, the Group recognizes the relevant deferred tax assets to the extent that it is likely to obtain thetaxable income to offset the deductible temporary differences. In addition, deferred tax assets or liabilities relating to theinitial recognition of goodwill, as well as those arising from transactions that are neither a business combination nor affectaccounting profits and taxable income (or deductible losses) and do not result in equal taxable and deductible temporarydifferences, are not recognized.

For deductible losses and tax credits that can be carried forward, deferred tax assets are recognized to the extent that it isprobable that future taxable profits will be available against which the deductible losses and tax credits can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries, exceptwhere the Group is able to control the timing of the reversal of the temporary difference and it is probable that the

temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporarydifferences associated with such investments are only recognized to the extent that it is probable that there will be taxableprofits against which to utilize the benefits of the temporary differences and they are expected to reverse in the foreseeablefuture.

On the balance sheet date, the deferred income tax assets and deferred income tax liabilities are measured at the applicabletax rates in the period in which the related assets are recovered or the related liabilities are recovered in accordance withthe tax laws.

Current and deferred tax expenses or income are recognized in profit or loss for the period, except when they arise fromtransactions or events that are directly recognized in other comprehensive income or in shareholders' equity, in which casethey are recognized in other comprehensive income or in shareholders' equity; and when they arise from businesscombinations, in which case they adjust the account balance of goodwill.

At the balance sheet date, the account balance of deferred tax assets is reviewed and reduced if it is no longer probablethat sufficient taxable profits will be available in the future to allow the benefit of deferred tax assets to be utilized. Suchreduction in amount is reversed when it becomes probable that sufficient taxable profits will be available.

33.3 Offset of income tax

When the Group has a legal right to settle on a net basis and intends either to settle on a net basis or to realize the assetsand settle the liabilities simultaneously, current tax assets and current tax liabilities are offset and presented on a net basis.

When the Group has a legal right to settle current tax assets and liabilities on a net basis, and deferred tax assets anddeferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity ordifferent taxable entities which intend either to settle current tax assets and liabilities on a net basis or to realize the assetsand liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities areexpected to be reversed, deferred tax assets and deferred tax liabilities are offset and presented on a net basis.

34. Important judgments while applying accounting policy, and key assumptions and uncertainty factors appliedfor accounting estimateDuring the process of using accounting policy described in note (III), due to the uncertainty in operation activities, thegroup should judge, estimate and assume the book value of the report items which may not be metered reliably. Thesejudgments, estimates and assumptions are based on the historical experience of the Group's management and other relatedfactors. Differences may exist between the actual results and the Group's estimate.

The Group regularly reviews the above judgments, assumptions and estimations on the basis of continuous operation. Ifthe changes of accounting estimate only influence current period, the influence amount will be affirmed during thechanging period; if it influences the current period and subsequent periods, the influence amount will be recognized in thecurrent period and future period.

- Key assumptions and uncertainties used in accounting estimateOn balance sheet date, key assumptions and uncertainties for performing accounting estimates on book value of assets andliabilities in subsequent future periods are:

Impairment provision for inventoriesExcept for contract performance costs, inventories are measured at the lower of cost or net realizable value. For rawmaterials, the latest or future actual purchase price is used as the basis for determining the net realizable value; For productsin progress, the net realizable value is determined by the actual selling price of the most recent or post-period finishedproduct, less the estimated costs of the current similar type at the time of completion of the product, the estimated salesexpenses and related taxes; For finished products, the actual selling price of the latest or future finished product minus theestimated selling expenses and related taxes will be incurred, is used as the basis for determining the net realizable value.The Group will regularly conduct a comprehensive stocktaking to review the impairment circumstances on defective,obsoleted or slow-moving inventory if any; in addition, the Group's management will regularly review the impairmentcircumstance of inventory with long storage time according to the inventory aging. Based on the above procedure, theGroup's management deems that the full provision amounts have been withdrawn for inventory. For details, please referto Note (V) 9.

Impairment of accounts receivableExcept for accounts receivable whose credit losses are determined on the basis of individual basis, the Group adopts animpairment matrix on a portfolio basis to determine its expected credit loss of the relevant accounts receivable. The Groupdivides the risk characteristics according to the region and object of its business, and divides the relevant accountsreceivable into different portfolios. Based on the historical loss rate and consider reasonable and well-founded forward-looking information in the industry, the Group determines the proportion of corresponding loss reserves for differentportfolios of various types of accounts receivable. As of June 30, 2024, based on the historically loss rate and considerreasonable and well-founded forward-looking information in the industry, the Group determines the correspondingproportion of loss provision for accounts receivable. The amount of the provision for expected credit losses will changeas the estimation of the Group. The details on the provision for expected credit losses of the accounts receivable of theGroup are given in Note (V) 4.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

Useful life and predicted net residual value of fixed assetThe Group's estimation of fixed assets useful life is based on the historical experience of actual usable term of fixed assetswith similar properties and functions, the estimation of predicted net residual value is the amount obtained currently bythe Group from the assets after deducting the anticipated disposal expense based on the anticipated status assuming theconditions that fixed assets' predicted useful life expires and fixed assets are at the end of useful life. The Group shallconduct the review on the predicted service life and predicted net residual value of fixed assets at least annually. For thecurrent reporting period, the Group's management did not see signs either indicating a shortened or extended useful life ofthe Group's fixed asset or indicating a change in predicted net residual value.

Accrued liabilities of product quality warrantyAccrued liabilities of product quality assurance are costs and expenses incurred to meet the established standards ofproduct quality assurance obligations to customers in accordance with the product contract; the Group made such anestimation according to the predicted claim rate, repair and replacement cost of relevant products. The management deemsthat the current estimation on accrued liabilities of product quality warranty is reasonable, however, the Group willcontinue to review the conditions of product repairs, and will conduct adjustment if any sign indicating the need to makeadjustments on accounting estimates.

Deferred tax assets and deferred tax liabilitiesDeferred income tax assets and deferred income tax liabilities are measured at the applicable income tax rate during theperiod when the relevant asset is expected to be recovered or the relevant debt is expected to be paid off. The expectedapplicable income tax rate is determined according to the relevant current tax regulations and the actual situation of theGroup. If the estimated income tax rate is different from the original estimate, the management of the Group will adjust it.

The realization of deferred income tax assets mainly depends on the actual future taxable income, taxable temporarydifferences, and the effective tax rate of temporary difference in the future applicable years. If the actual taxable incomeand taxable temporary differences in the future is less than the estimation, or actual tax rate is lower than the estimation,then the confirmed deferred income tax assets will be reversed and confirmed in the income statement during thecorresponding period. If the actual taxable income and taxable temporary differences in the future is more than theestimation, or actual tax rate is higher than the estimation, then the deferred tax assets that are partially unrecognizeddeductible losses and deductible temporary differences will be recognized and confirmed in the income statement duringthe corresponding period.

Goodwill impairmentWhen testing goodwill for impairment, a pre-tax interest discount rate that appropriately reflects the current market timevalue of money and asset-specific risk is determined and the present value of the projected future cash flows of the relevant

asset group or combination of asset groups containing goodwill is calculated. When the future actual result is differentfrom the original estimation, the result of the goodwill impairment test will alter.

IV. Taxes

1. Major categories of taxes and tax rates

Note 1: Except that the Company and subsidiaries in China are applicable to the following tax preference, the Company'sother subsidiaries in China are applicable to 25% of enterprise income tax rate, the overseas subsidiaries are applicable tocorresponding local tax rate.

(1) In accordance with the list of High-tech Enterprises Identified and Reported by the Zhejiang Provincial AccreditationAgency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management onDecember 28, 2023, the Company was identified as the high-tech enterprise with a valid term of 3 years and thepreferential tax period is from 2023 to 2025. Therefore, the enterprise income tax is calculated and paid on the basisof a reduced tax rate of 15% in the current reporting period (2023: 15%).

According to the Announcement on the Enterprise Income Tax Policies for Promoting the High-quality Developmentof Integrated Circuit Industry and Software Industry (Ministry of Finance, State Administration of Taxation, NationalDevelopment and Reform Commission, Ministry of Industry and Information Technology Announcement [2020] No.

45) (hereinafter referred to as " Preferential Tax Policies for Integrated Circuit and Software Industries"), the Companywas approved by the tax authorities in May 4, 2024 to pay the 2023 annual corporate income tax at the rate of 10%.

(2) According to the Announcement on Continuation of the Corporate Income Tax Policy for the Western Development

(Ministry of Finance, State Administration of Taxation, National Development and Reform CommissionAnnouncement [2020] No.23), the subsidiaries of the Company, Chongqing Hikvision Technology Co., Ltd.(hereinafter referred to as "Chongqing Technology"), Chongqing Hikvision System Technology Co., Ltd. (hereinafterreferred to as "Chongqing System"), and Chongqing EZVIZ Electronics Ltd. have enjoyed preferential tax policiesfor the development of the western region. Therefore, the current enterprise income tax is calculated and paid on the

basis of a reduced tax rate of 15% in the current reporting period (2023: 15%).

(3) According to the Recording List of the First Batch of identified High-tech Enterprises of Zhejiang Province in 2021issued by the Leading Group Office of National High-tech Enterprise Identification Management Work on January 24,2022, Hangzhou Fuyang Haikang Baotai Surveillance Technology Service Ltd. (hereinafter referred to as "FuyangBaotai") and Hangzhou Hikstorage Technology Ltd. ("Hikstorage Technology") , subsidiaries of the Company, areidentified as high-tech enterprises, and the validity period of the identification is 3 years and the preferential tax periodis from 2021 to 2023. As of the approval date of this report, Fuyang Baotai and Hikstorage Technology are still in theapplication stage for the re-examination of the high-tech enterprise qualification for the year 2024. According to theAnnouncement of the State Administration of Taxation on Issues Concerning the Implementation of Preferential TaxPolicies for High-tech Enterprises, during the year when the high-tech enterprise qualification expires, before passingthe re-determination, its corporate income tax may be prepaid temporarily at a tax rate of 15%. Therefore, theenterprise income tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period(2023: 15%).

(4) In accordance with the List of High-tech Enterprises Recognized by Zhejiang Provincial Identification Institution in2022 issued by the leading group office of Zhejiang high-tech enterprise identification management work onDecember 24, 2022, the Company's subsidiaries, Hangzhou Hikvision System Technology Ltd. (hereinafter referredto as "Hangzhou System") and Hangzhou Kuangxin Technology Co., Ltd. (hereinafter referred to as "HangzhouKuangxin"), Hangzhou Rayin Technology Co., Ltd. (hereinafter referred to as "Hangzhou Rayin Technology"), andHangzhou Hikfire Technology Ltd. (hereinafter referred to as "HikFire Technology") were recognized as a high-techenterprise and was valid for 3 years and the preferential tax period is from 2022 to 2024. Therefore, the enterpriseincome tax is calculated and paid on the basis of a reduced tax rate of 15% in the current reporting period (2023: 15%).

(5) In accordance with the List of Second Batch of High-tech Enterprises Identified and Reported by Shanghai

Accreditation Agency in 2023 issued by Shanghai High-tech Enterprise Identification Office on January 4, 2024, theCompany’s subsidiary, Shanghai Goldway Intelligent Transportation System Ltd. (hereinafter referred to as "GoldwayTransportation") was identified as the high-tech enterprise, and valid term is 3 years, and the preferential tax period isfrom 2023 to 2025. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of15% in the current reporting period (2023: 15%).

(6) In accordance with the list of High-tech Enterprises Identified and Reported by the Zhejiang Provincial AccreditationAgency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management onDecember 28, 2023, the Company’s subsidiaries, Hangzhou Hikauto Software Ltd. (hereinafter referred to as"HikAuto Software") and Hangzhou Hikimaging Technology Ltd. (hereinafter referred to as "HikImagingTechnology") were identified as the high-tech enterprise, and valid term is 3 years, and the preferential tax period isfrom 2023 to 2025. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced tax rate of

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

15% in the current reporting period (2023: 15%).

(7) In accordance with the list of High-tech Enterprises Identified and Reported by the Zhejiang Provincial Accreditation

Agency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management onDecember 28, 2023, the Company’s subsidiary, Hangzhou Hikrobot Technology Co., Ltd. (formerly known asHangzhou Hikrobot Technology Ltd. and hereinafter referred to as "HikRobot") was identified as the high-techenterprises, and valid term is 3 years, and the preferential tax period is from 2023 to 2025..

According to the preferential tax policies for the integrated circuit industry and the software industry and theAnnouncement No. 10 of 2021 of the Ministry of Industry and Information Technology of the People's Republic ofChina, the National Development and Reform Commission, the Ministry of Finance and the State Administration ofTaxation, Hikrobot is a qualified software enterprise., and is exempted from enterprise income tax in the first andsecond years after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third tofifth years. The year of 2024 is the second year of HikRobot making profits and is exempted from enterprise incometax (2023: tax-exempted)

(8) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang ProvincialIdentification Institution in 2022 issued by the Leading Group Office of National High-tech Enterprise IdentificationManagement on January 17, 2023, the Company’s subsidiary, Hangzhou Hikmicro Sensing Technology Co., Ltd.(hereinafter referred to as "Hikmicro Sensing") was identified as the high-tech enterprise with a valid term of 3 yearsand the preferential tax period is from 2022 to 2024.

In accordance with the Preferential Tax Policies for Integrated Circuit and Software Industries, Hikmicro Sensing is aqualified intergrated circuit company, and is exempted from enterprise income tax in the first and second years afterstart of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third to fifth years. Theyear of 2024 is the fourth year of Hikmicro Sensing making profits and enjoyed enterprise income tax at half of the25% statutory tax rate (2023: half of the 25% statutory tax rate).

(9) In accordance with the Announcement on the Filing of High-tech Enterprises Recognized by Zhejiang ProvincialIdentification Institution in 2022 issued by the Leading Group Office of National High-tech Enterprise IdentificationManagement on January 17, 2023, the Company’s subsidiary, Hangzhou Hikmicro Sensing Technology Co., Ltd.(hereinafter referred to as "Hikmicro Sensing") was identified as the high-tech enterprise with a valid term of 3 yearsand the preferential tax period is from 2022 to 2024.

According to the preferential tax policies for the integrated circuit industry and the software industry and theAnnouncement No. 10 of 2021 of the Ministry of Industry and Information Technology of the People's Republic ofChina, the National Development and Reform Commission, the Ministry of Finance and the State Administration ofTaxation, Hikmicro Sensing is a qualified software enterprise, and is exempted from enterprise income tax in the firstand second years after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the third

to fifth years. The year of 2024 is fifth year of Hikmicro Sensing making profits and enjoyed the preferential enterpriseincome tax at half of the 25% statutory tax rate.

According to the preferential tax policies for the integrated circuit industry and the software industry, HikmicroSensing was approved by the tax authority in May 2024 for exemption from corporate income tax for the year 2023.

(10) In accordance with the Recording List of the Second Batch of identified High-tech Enterprises of Hebei Province in2022 issued by the Leading Group Office of Hebei Province's High-tech Enterprise Identification Management onDecember 26, 2022, the Company’s subsidiary, Sensortech Hebei Technology Ltd. (hereinafter referred to as "Sensortech Hebei") was identified as the high-tech enterprises with a valid term of 3 years and the preferential taxperiod is from 2022 to 2024. Therefore, the enterprise income tax is calculated and paid on the basis of a reduced taxrate of 15% in the current reporting period (2023: 15%).

(11) In accordance with the list of High-tech Enterprises Identified and Reported by the Zhejiang Provincial AccreditationAgency in 2023 issued by the Leading Group Office of National High-tech Enterprise Identification Management onDecember 28, 2023, the Company's subsidiary, Hangzhou EZVIZ Software Ltd. (hereinafter referred to as "EZVIZSoftware") was identified as the high-tech enterprise, and valid term is 3 years, and the preferential tax period is from2023 to 2025.

According to the preferential tax policies for the integrated circuit industry and the software industry and theAnnouncement No. 10 of 2021 of the Ministry of Industry and Information Technology of the People's Republic ofChina, the National Development and Reform Commission, the Ministry of Finance and the State Administration ofTaxation, EZVIZ Software is a qualified software enterprise, and is exempted from enterprise income tax in the firstand second years after start of profiting and pays enterprise income tax at half of the 25% statutory tax rate in the thirdto fifth years. The year of 2024 is fifth year of EZVIZ Software making profits and enjoyed the preferential enterpriseincome tax at half of the 25% statutory tax rate (20223 half of the 25% statutory tax rate).

Note 2: In accordance with the requirements of the Notice on Software Product Value-added Tax Policy (Cai Shui [2011]No. 100) promulgated by the Ministry of Finance and the State Administration of Taxation, as for self-developed softwareproducts sales of the Company, Hangzhou System, HikRobot, HikAuto Software, Hangzhou EZVIZ Software, HikstorageTechnology, Hikimaging Technology, HikFire Technology, Hangzhou Rayin Technology, Hangzhou Microimage Software,Henan Haikang Hua’An BaoQuan Electronics Co., Ltd. (hereinafter referred to as "Hua’An BaoQuan Electronics") ,Hangzhou Kuangxin, Fuyang Baotai, Zhejiang Hailai Yunzhi Technology Co., Ltd., and Sensortech Hebei, the VAT shallbe calculated and paid with tax rate of 13% at first, then the portion with actual tax bearing excess 3% shall be refundedafter State Administration of Taxation reviews.

Note 3: In accordance with the Announcement on clarifying policies such as VAT reduction and exemption for small-scaletaxpayers (Ministry of Finance, State Administration of Taxation Announcement [2023] No. 1), In 2023, the current

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

deductible input tax for production and living services taxpayers will continue to be deducted by 5% and 10% of the taxpayable respectively. This policy was valid until December 31, 2023.

The Company’s subsidiaries, a part of Hangzhou Hikvision Technology Ltd.’s branches , Chongqing System, HangzhouHikvision Security Equipment Leasing Service Co., Ltd., Anhui Hikvision Urban Operation Service Co., Ltd., a part ofHangzhou EZVIZ Network Co., Ltd.(hereinafter referred to as "EZVIZ Network")'s branches, Zhejiang Haikang CityService Co., Ltd. Luliang Branch, Henan Hua’An Bao Quan Intelligent Development Co., Ltd. Luoyang Branch, HenanHua’an Security Services Co., Ltd., ( hereinafter referred to as "Hua'an Security Services"), Urumqi HaiShi Xin'AnElectronic Technology Ltd., Chengdu Hikvision Digital Technology Ltd., Hangzhou EZVIZ Software, Hangzhou branchof Zhejiang Hikfire Technology Ltd., Wuhan Hikvision Technology Ltd., and some branches of Hangzhou HaikangIntelligent Technology Ltd. met the provisions of the VAT Additional Deduction Policy and were entitled to additionaldeduction preferential tax policy of input tax since 2023, and ceased to offer benefits in 2024.

Note 4: In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on the AdditionalVAT Deduction Policy for Integrated Circuit Enterprises (Finance and Taxation [2023] No. 17), from January 1, 2023 toDecember 31, 2027, enterprises in integrated circuit design, production, packaging and testing, equipment and materialsare allowed to deduct an additional 15% of the current deductible input tax to deduct the tax payable. The Company'ssubsidiary, Hikmicro Sensing complies with the provisions of the policy and additional deducts an additional 15% of thecurrent deductible input tax to deduct the tax payable.

V. Notes to items in the consolidated financial statements

1. Cash and bank balances

Unit: RMB

Details of other currency funds:

Unit: RMB

2. Held-for-trading financial assets

Unit: RMB

3. Notes receivable

3.1 Categories of notes receivable

Unit：RMB

3.2 As of June 30, 2024, the pledged notes receivable by the Group is nil.

3.3 At the end of the current reporting period, notes receivable endorsed or discounted by the Group but not yet due at thebalance sheet day

Unit：RMB

As of June 30, 2024, the Group gave RMB1,017,010,975.47 (2023: RMB1,075,118,808.52 ) undue bank acceptance bill tosuppliers for endorsement, RMB43,283,218.53 (2023: RM47,808,575.05) undue acceptance bill of the finance companyto suppliers for endorsement. There was no (2023: RMB500,000.00) undue commercial acceptance bill to suppliers forendorsement. The Group discounted the bankacceptance bill of RMB 48,240,325.63 (2023: RMB34,566,243.97) that hasnot yet matured to the bank, and discounted commercial acceptance bill of RMB4,387,180.75 (2023: nil) that has not yetmatured to the bank. Since the Group has not transferred almost all the risks and rewards of ownership of financial assets,the Group has not terminated its confirmation. For details, please refer to Note (V) 24 and Note (V) 31.3.

3.4 Classified disclosure by method of provision for bad debts

Unit：RMB

Provision for bad debts of notes receivables by portfolios

Bank acceptance bill portfolio:

The Group believes that there is no significant credit risk to the acceptors of bank acceptance bills held by the Group, sono loss provision is made.

Non-bank acceptance bill portfolio:

Unit：RMB

3.5 Situation of provision.

Unit：RMB

4. Accounts receivable

4.1 Disclosure by aging

Unit: RMB

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

4.2 Classified disclosure of credit loss provision by methods

Unit: RMB

Provision for credit loss by portfolios

Unit: RMB

Description of credit loss provision by portfolios for accounts receivable:

As part of the Group's credit risk management, the Group uses an impairment matrix to determine expected credit lossesbased on the ageing of accounts receivable beyond the credit period, and divides the risk characteristics account receivablesinto portfolio A, portfolio B and portfolio C according to the risk characteristics of business areas and objects. And theCompany uses an impairment matrix to determine expected credit losses of each portfolio based on the ageing of accountsreceivable beyond the credit period. These three portfolios involve a large number of customers with the same riskcharacteristics. Aging information is able to reflect the solvency of these three types of customers when the accountsreceivable are due.

As of June 30, 2024 and January 1, 2024, the credit risk and expected credit losses during the duration of accounts receivable from portfolio A are as follows:

Unit: RMB

As of June 30, 2024 and January 1, 2024, the credit risk and expected credit losses during the duration of accounts receivable from portfolio B are as follows:

Unit: RMB

As of June 30, 2024 and January 1, 2024, the credit risk and expected credit losses during the duration of accounts receivable from portfolio C are as follows:

Unit: RMB

4.3 Bad debt provision

Unit: RMB

4.4 Top five debtors based on corresponding closing balance of accounts receivable and contract assets (including the part included in other non-current assets)At the end of the current period, the aggregate amount of the Group's accounts receivable and contract assets (including the part included in other non-current assets) of top five companiesamounted to RMB2,486,643,979.13, accounting for 5.73% of the total closing balance of accounts receivable and contract assets (including the part included in other non-current assets),and the amount of provision for bad debts was RMB194,559,113.08.

5. Contract assets

5.1 Details of contract assets

Unit: RMB

5.2 The classification and disclosure of the method of provision for impairment of contract assets

Unit: RMB

5.3 Provision for bad debts of contract assets (including the part included in other non-current assets) in the current period

Unit: RMB

6. Receivables for financing

6.1 Receivables for financing by categories

Unit: RMB

6.2 At the end of the current reporting period, the Group had no pledged receivables for financing.

6.3 At the end of the reporting period, receivables for financing endorsed or discounted by the Group that have not yet expired on the balance sheet date.

Unit: RMB

6.4 The Group believes that the acceptor credit rating of the receivables for financing held is high, and there is no significant credit risk, so no loss provision is made.

7. Prepayments

7.1 Prepayments by aging analysis

Unit: RMB

7.2 Details of closing balances of top five prepayments parties

As of June 30, 2024, the Group's top five balances of prepayments amounted to RMB69,025,993.66, accounting for 11.37% of total closing balance of prepayments.

8. Other receivables

8.1 Other receivables by aging

Unit: RMB

8.2 Details of other receivables by nature of the payment

Unit: RMB

8.3 Accrual for bad debts of other receivables

Unit: RMB

8.4 Provision for bad debts of other receivables

Unit: RMB

8.5 Top five debtors based on corresponding closing balance of other receivables

At the end of current period, the aggregate amount of other receivables of the top five debtors of the Group was RMB137,069,028.79, accounting for 3.97% of the total balance of otherreceivables at the end of the reporting period, and the provision for bad debts amounted to RMB364,479.40.

9. Inventories

9.1 Categories of inventories

Unit: RMB

9.2 Provision for decline in value of inventories

Unit: RMB

The write-offs of provision for inventories in the current reporting period are due to use or sale of inventories.

10. Non-current assets due within one year

Unit: RMB

11. Other current assets

Unit: RMB

12. Long-term receivables

12.1 Details of long-term receivables

Unit: RMB

12.2 Disclosure by method of provision for bad debts

Unit: RMB

Portfolio of employee

The Group believes that the employees corresponding to the employee housing loans held by the Group all have labor relations with the Group and the Group assesses that the relevantdebtors have good credit records, and the Group believes that there is no significant credit risk and therefore no loss of provision is made.

Portfolio of financial leasing and installment collection customers

As of June 30, 2024, the credit risk and expected credit losses of long-term receivables relating to financial leasing and installment collection customers are as follows:

Unit: RMB

12.3 Bad debt provision

13. Long-term equity investment

Unit: RMB

Note 1: The changes in other equity in the period were caused by the changes in equity of the investee due to additional investments from other shareholders or share-based paymentsgranted by the investee.

Hikvision 2024 Half Year Report

Notes to Financial StatementsFor the reporting period from January 1, 2024 to June 30, 2024

14. Other non-current financial assets

Unit: RMB

Note: It refers to the Group's equity investments of private companies. The Group has no control, joint control or significantinfluence over the invested company.

15. Fixed Assets

15.1 Details of fixed assets

Unit: RMB

15.2 As of June 30, 2024, the carrying amount of special-purpose equipment leased by the Group through operating leasesis RMB63,958,980.34

15.3 Fixed assets of which certificates of title have not been granted as of June 30, 2024 are as follows:

Unit: RMB

16. Construction in progress

16.1 Details of construction in progress

Unit: RMB

16.2 Changes in significant construction in progress during the current reporting period

Unit: RMB

17. Right-of-use assets

Unit: RMB

18. Intangible assets