Hangzhou Hikvision Digital Technology : 1H2023 Financial Report

Hangzhou Hikvision Digital Technology Co., Ltd.

2023 Half Year Report January to June 2023

August 19, 2023

Hikvision 2023 Half Year Report

Section I Important Notes, Contents and Definitions

The Board of Directors, Board of Supervisors, directors, supervisors and senior management of Hangzhou Hikvision Digital Technology Co., Ltd. (hereinafter referred to as the "Company") hereby guarantee that the information presented in this report shall be together be wholly liable for the truthfulness, accuracy and completeness of its contents and free of any false records, misleading statements or material omissions, and will undertake individual and joint legal liabilities.

Chen Zongnian, the Company's legal representative, Jin Yan, the person in charge of the accounting work, and Zhan Junhua, the person in charge of accounting department (accounting supervisor) hereby declare and warrant that the financial statements in this half year report are authentic, accurate and complete.

All directors of the Company have attended the board meeting to review this report.

The half year proposal of profit distribution or share distribution from capital reserve passed upon deliberation at the meeting of the Board of Directors (not applicable): The Company will not distribute cash dividend, distribute bonus shares, or distribute shares from capital reserve during the current reporting period.

Note:

This document is a translated version of the Chinese version 2023 Half Year Report ("2023 年半年 度报告"), and the published announcements in the Chinese version shall prevail. The complete published Chinese 2023 Half Year Report may be obtained at www.cninfo.com.cn.

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Hikvision 2023 Half Year Report

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

1. Geopolitical environment risk: The current global geopolitical uncertainty has greatly increased, and the operating environment in certain regions has deteriorated. The Company will adjust its marketing resources based on business opportunities, but if the geopolitical environment get worse, the Company's operations in certain countries and regions may be adversely affected.
2. Global economic downside risk: The economic growth of some overseas countries slows down, the potential risks such as economic fluctuation and debt default in various regions are difficult to eliminate. At the same time, the domestic economy is switching to a new development mode and its pace of recovery needs to be further observed. The Company disperses the operation risk of a single region with a wide business layout. But the Company's business will also be impacted if there is a global economic recession.
3. Supply chain risk: The global supply system is being undermined by politics. The Company has been making efforts to build a diversified supply chain and optimize inventory adjustment and control. However, if systemic risks arise in the global supply chain, the Company's operating capabilities may be affected
4. Technology upgrading risk: AI, big data, cloud computing, edge computing and other technologies develop rapidly, and the iteration speed of science and technology application is fast. If the update and change of cutting-edge technology cannot be closely tracked and the innovative development of business cannot be realized quickly, the uncertainty of the Company's future development will increase.
5. Legal and compliance risk: The world's multilateral trading system is facing adverse impacts. The laws and regulations of various regions that need to be complied with for business activities are very complicated. The Company constantly strengthens the construction of legal compliance system since China and overseas countries have stricter data supervision and business compliance requirements. If the Company's legal compliance capabilities cannot keep up with the situation, it will bring adverse impacts on the Company's operations.
6. Risk of exchange rate fluctuation: The Company carries out operations in various countries and regions, mainly settled in non-RMB currency. Exchange rate fluctuations could have impact on foreign exchange exposures arising out of sales, procurement and financing, which could likely affect the profitability level of the Company.

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Hikvision 2023 Half Year Report

1. Financial risk caused by the decline of customers' ability to pay: The enterprises' financial liquidity is negatively impacted by the macroeconomic downturn. The Company has accumulated a certain amount of cash reserves due to its stable business operation, and the financing cost is low. If the overall liquidity risk of the market increases, it will adversely affect the Company's account receivables due to the payment collection speed of the Company may slow down.
2. Risk of internal management: The continual expansion of business scale, the continuous increase of new products and new businesses, and the continuous growth in total number of employees lead to a significant rise of internal management complexity, which brings challenges to the Company's management. The Company's sustainable development will face certain risks if the management level fails to proportionally address the Company's business expansion.
3. Risk of cybersecurity: The Company has always attached great importance and taken active measures to enhance cybersecurity performance of our products and systems. But there is still a possibility of deliberate attempts, including computer viruses, malicious software, hacker and others to intentionally attack our systems or products, causing cybersecurity issues.
4. Risk of intellectual property (IP) rights: The Company continues to maintain a relatively large scale of R&D investment, and produces considerable technical milestones. At the same time, the Company implements well-organized intellectual property right (IPR) protection measures. However, the risk of intellectual property disputes and the risk of intellectual property rights violations still exist.

The above notices might not be all-inclusive of all other potential risks. Please pay attention to potential investment risks.

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	Hikvision 2023 Half Year Report
CONTENTS
Section I Important Notes, Contents and Definitions	1
Section II Corporate Profile & Key Financial Data	7
Section III Management Discussion and Analysis	11
Section IV Corporate Governance	29
Section V Environmental and Social Responsibility	31
Section VI Significant Events	32
Section VII Changes in Shares and Information about Shareholders	48
Section VIII Information of Preferred Shares	61
Section IX Bonds	62
Section X Financial Report	63
Section XI Documents Available for Reference	199

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