海康威视：2018年半年度报告（英文版）

2018 Interim ReportJanuary to June 2018 July21st2018 Section IImportant Notes, Contents and Definitions The Board of Directors, Board of Supervisors, directors, supervisors and senior managementof 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 forthe truthfulness, accuracy and completeness of its contents and free of any false records, misleadingstatements or material omissions, and will undertake individual and joint legal liabilities. Chen ZongNian, the Company'slegal representative;Jin Yan, theperson in charge of theCompany’s accounting work and the head of accounting department(accountant in charge),herebydeclare and warrant thatthe financial statements in thisreport are authentic, accurate and complete. All directors have attended the meeting of the board to review this report. The half year proposal ofprofit distributionand share distribution from capital reservepassedupon deliberation at the meeting of the Board of Directors(not applicable):The Company will notdistribute cash dividend, distribute bonus share, or distribute sharesfrom capital reserve during thecurrent reporting period. Note: This document is a translated version of the Chinese version 2018 Half Year Financial Report(“2018年半年度报告”), and the published announcements in the Chinese version shall prevail. Thecompletepublished Chinese 2018 Half Year Financial Report may be obtained atwww.cninfo.com.cn. Please read the annual report and pay particular attention to the following risk factors: 1)Risk of technology upgrade:With the development of cloud computing, big data, artificialintelligence, andother technologies, the demand and business models of the industry will change accordingly. If the Companycannot follow the changes in the cutting-edge technologies, or fail to realize the business innovation rapidly,the risks of futuredevelopment uncertainties will increase. 2)Risk of cyber-security:Risk of cyber-security: The Company has always attached importance and takenactive measures to enhance security performance of our products and systems, but under the Internetapplication environment, there is still a possibility of deliberate attempts，including computer viruses,malicious software, hacker and similar disruptions，to damage our systems or products, causing the securityissues. 3)Risk of exchange rate fluctuation:At the overseas market, the Company carries out operations in variouscountries and regions with different currencies. The risk of exchange rate mainly comes from foreignexchange exposures arising out of sales, purchase and financingthatnotsettledin RMB (mainly in USD) aswell as the exchange rate fluctuations, which may probably affect the profitability level of the Company. 4)Risk of internal management:The continual expansion of business scale, the continuous increase of newproducts and new businesses, the sustained growth in total number of employees and the significant rise ofinternal management complexity have posed challenges to the Company’s management work and raisedhigher requirements on the Company's management team. The Company’s sustainable development will facecertain risks if the management level fails to match up with the Company’s business expansion. 5)Risk of global market expansion:The Company’s business covers more than 150 countries and regionsworldwide. If various situations suchas trade protectionism, debt problem or political conflict occur in thecountry where our business is carried out, adverse impact may be caused to the Company’s businessdevelopment. 6)Risk of local debt:In the government-related project field, the Companyhas been maintaining a prudentattitude towards PPP (Public-Private Partnership)and other construction modes, and endeavors to reduce risksin the course of management and control for signing the project and implementing project. However, the riskof extension of project schedule and failure of capital recovery might still appear if some government policieschange or the financial payment ability reduces. 7)Risk of intellectual property (IP) rights:The Company continues to maintain the relative large scaleofR&D investment, and produces considerable technical achievements.At the same time,the Companyimplements well-organized intellectual property right (IPR)protection measures,however,the risk ofprovoking IPR disputes and suffering from IPR infringements still exists. The above notices might not be all-inclusive of all other potential risks,please pay attention to the potentialinvestment risks CONTENTS Section I Important Notes, Contents and Definitions ........................................................................................... 1Section II Corporate Profile & Key Financial Data .............................................................................................. 5Section III Corporate Business Summary ............