ZKTeco 2024 Annual Report
ZKTECO CO. LTD.2024 Annual Report
Announcement No.: 2025-037
April 2025
1ZKTeco 2024 Annual Report
Agilely embracing changes building customer lifetime value with AI and cloud services
A Letter to Shareholders
In 2024 ZKTeco continued to invest in and develop along the main trajectory of high-quality development which focuses on
"establishing a service system based on the self-innovated Minerva IoT while emphasizing the lifetime value of customers through
BioCV AI productivity." Over the past year ZKTeco has made significant strides by advancing product concepts optimizing service
details and continuously innovating. The Company has consistently introduced new application scenarios. Guided by a commitment
to continuous innovation and zero-based thinking ZKTeco staff have steadily progressed various business initiatives with a focus on
stable innovation and ongoing excellence. This effort culminates in a straightforward yet impactful report card presented to our
shareholders. In 2024 the Company achieved operating revenue of RMB 1991.2004 million a YoY increase of 1.07% and realized a
net profit attributable to the parent company of RMB 183.046 million a YoY increase of 3.26%. While the data may not be extraordinary
this accomplishment is a testament to the hard work and dedication of ZKTeco staff. Here on behalf of the Board of Directors I would
like to extend my heartfelt gratitude to all our colleagues users partners and investors who have supported ZKTeco. Your collaboration
has been invaluable as we navigated challenges together and seized opportunities over the past year. Thank you for your unwavering
commitment to advancing alongside ZKTeco.In 2024 the Company remained committed to its development objectives of precision expansiveness and excellence. We
concentrated on refining our core business with meticulous attention to detail cultivating a robust ecosystem through broad engagement
and driving innovation with elevated aspirations. We have integrated products ecosystems and services into a cohesive solution
achieving innovative applications in the BioCV unmanned management scenarios at the industry's general entry and exit points.Additionally we have endeavored to transform ZKTeco's offline platform of high-quality screens into cloud services within the smart
retail sector. Through ongoing technological innovation in core computer vision technologies and edge-side multimodal AI human-
computer interaction we have facilitated the enhancement of our products and solutions. This has led to significant opportunities and
breakthroughs for multimodal AI technology within the "end-edge-cloud-service" framework related to entry and exit operations. In
2024 we established ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co. Ltd. to conduct research and integrate multimodal
data including biometric iris and retina information EEG data clinical records and genetic data. Utilizing advanced deep learning
and data mining technologies for comprehensive analysis we explored the correlations and potential patterns among various data
modalities. This innovative approach enabled us to develop new technologies and products aimed at enhancing technical research and
exploring treatment methodologies in the fields of education healthcare and elderly care.In 2025 as the wave of artificial intelligence and large models sweeps across the globe propelling human society into a new era
of AIoT at an unprecedented pace ZKTeco will undertake a comprehensive integration of customer value within the realm of AI
cognitive space computing technology. This integration will occur in a three-dimensional manner—transitioning from digitalization to
2ZKTeco 2024 Annual Report
intelligence and ultimately to cognition. The Company will prioritize R&D as well as optimization of BioCV TinyML (micro
multimodal learning) edge models. The Company is dedicated to integrating autonomous decision-making and evolutionary capabilities
into edge devices thereby enhancing ZKTeco's spatial cognition in the perception of scenarios involving "people vehicles objects
and environments."
In 2025 ZKTeco will continue to deeply integrate AI cognitive technology with multimodal biometrics and computer vision
technologies. This integration assists enterprises in optimizing their time space and resources while enhancing the intelligence of
products and user experiences. Furthermore it will improve operational efficiency by bridging the physical world with the digital realm.ZKTeco's achievements in innovation are not only evident in the continuous expansion and optimization of product functionalities but
also in the redefinition and establishment of industry standards. This ensures the Company's technological leadership while providing
users with enhanced experiences that are more comfortable intelligent safe and conducive to sustainable development. Furthermore
these advancements promote industrial innovation and usher in a new era of coexistence between humanity and space.As a global leader in intelligent space evolution services ZKTeco is poised to transform the industry landscape through innovative
strategies. We will adeptly navigate changes and enhance customer lifetime value by leveraging AI and cloud services thereby setting
the course for future development trends. We are committed to meeting the expectations of all our investors!
Chairman Che Quanhong
3ZKTeco 2024 Annual Report
2024 Annual Report
Section I Important Notes Contents and Definitions
The Board of Directors the Board of Supervisors directors supervisors and
senior managers guarantee that the information presented in this report is true
accurate and complete without any false records misleading statements or
material omissions and will undertake individual and joint legal liabilities.The Company's legal representative Jin Hairong the person in charge of the
accounting work Wang Youwu and the person in charge of accounting institution
(accounting supervisor) Xu Ping hereby declare that the financial information in
this report is true accurate and complete.All directors have attended the board meeting to review this report.The forward-looking statements regarding future plans in this annual report
do not constitute substantial commitments of the Company to investors. Investors
are advised to pay attention to investment risks.Investors are advised to refer to the full text of this annual report and pay
special attention to the content of "Section III Management Discussion and
Analysis XI. Prospects for the Future Development of the Company (III) Possible
Risks and Countermeasures" in this annual report.The profit distribution proposal passed upon deliberation at the meeting of
the Board of Directors is set out as follows: Based on the total share capital on the
registration date of future equity distribution after deducting the repurchased
shares in the Company's repurchase account the Company proposed to distribute
cash dividend of RMB 5 (tax inclusive) per 10 shares to all shareholders. There
4ZKTeco 2024 Annual Report
will be no bonus shares. Capital reserve will be converted into 2 shares of share
capital per 10 shares to all shareholders.
5ZKTeco 2024 Annual Report
Table of Contents
Section I Important Notes Contents and Definitions... 4
Section II Company Profile and Key Financial Indic.. 11
Section III Management Discussion and Analysis ..... 16
Section IV Corporate Governance ................... 103
Section V Environmental and Social Responsibility.. 127
Section VI Significant Events ..................... 128
Section VII Changes in Shares and Information abou. 152
Section VIII Information of Preferred Shares ...... 165
Section IX Bonds................................... 166
Section X Financial Report ........................ 167
6ZKTeco 2024 Annual Report
Documents Available for Inspection
I. Financial statements affixed with official stamps and the signatures of the Company’s legal representative the person in
charge of accounting and the charge of accounting institution (accounting supervisor) of the Company.II. Original of the audit report affixed with the stamp of the accounting firm as well as stamps and signatures of the certified
public accountants.III. All original copies of the Company's documents and the original drafts of the Company's announcements as disclosed on
websites designated by the CSRC during the reporting period.IV. Other relevant documents.Place for document inspection: Office of the Company's Board of Directors
7ZKTeco 2024 Annual Report
Definitions
Terms Refers to Definitions
Company the
Refers to ZKTECO CO. LTD.Company ZKTeco
ZKTeco Times Refers to Shenzhen ZKTeco Times Investment Co. Ltd. a controlling shareholder of the Company
JYHY Refers to Shenzhen JYHY Investment Enterprise (Limited Partnership) a shareholder of the Company
JYSJ Refers to Shenzhen JYSJ Investment Enterprise (Limited Partnership) a shareholder of the Company
Dongguan LX Investment Partnership Enterprise (Limited Partnership) a shareholder of the
LX Investment Refers to
Company
JYLX Refers to Shenzhen JYLX Consulting Enterprise (Limited Partnership) a shareholder of the Company
Shenzhen JYQL Investment Consulting Enterprise (Limited Partnership) a shareholder of the
JYQL Refers to
Company
Guangdong Zkteco Refers to ZKTECO (GUANGDONG) CO. LTD a wholly-owned subsidiary of the Company
Shenzhen ZKTeco Biometric Identification Technology Co. Ltd. a wholly-owned subsidiary
Shenzhen ZKTeco Refers to
of the Company
XIAMEN
Refers to XIAMEN ZKTECO CO. LTD. a wholly-owned subsidiary of the Company
ZKTECO
Zokon Industry Refers to Shenzhen Zokon Industry Development Co. Ltd.Ministry of Public
Refers to Ministry of Public Security of the PRC
Security
Company Law Refers to Company Law of the People's Republic of China
Securities Law Refers to Securities Law of the People's Republic of China
Articles of
Refers to Articles of Association of ZKTECO CO. LTD.Association
A shares Refers to RMB denominated ordinary shares
RMB RMB '0000 Refers to RMB RMB '0000
Reporting Period Refers to 2024
End of Reporting
Refers to December 31 2024
Period
CV Refers to Computer Vision
BioCV Refers to Biometrics & Computer Vision
A computer technology that utilizes the analysis of human biological characteristics to
distinguish biological organisms. It is used for personal identification by a close combination
of computer technology with high-tech methods such as optics acoustics biosensors and
Biometrics Refers to
biostatistics and utilizing the inherent physiological characteristics of the human body
(fingerprints facial features palm veins iris etc.) or behavioral characteristics (sound gait
etc.)
Used to simulate biological vision using cameras computers and related equipment; simulate
human visual abilities capture and process three-dimensional information of the scene by
Computer Vision Refers to
using optical systems and image processing tools understand and command specific devices
to execute decisions
Radio Frequency Identification (RFID) a wireless communication technology that can
identify specific targets and read and write relevant data through radio signals without
RF RFID Refers to
establishing mechanical or optical contact between the identification system and specific
targets
Used to connect any object to the network by using information sensing devices and
Internet of following agreed protocols. The object exchanges and communicates information through
Refers to
Things/IoT information dissemination media to achieve intelligent recognition positioning tracking
supervision and other functions
Single Minute Exchange of Die a process improvement method that minimizes the product
SMED Refers to die exchange time production startup time or adjustment time of the die. It can significantly
shorten the time required for machine installation and die exchange setting
Software as a Service a software application model that provides software services through
SaaS Refers to
the Internet
Platform as a Service (PaaS) a cloud computing-based service that provides a complete
platform including operating systems database management systems middleware
PaaS Refers to
development tools and runtime environments allowing developers to develop test deploy
and manage applications on this platform without having to worry about the setup and
8ZKTeco 2024 Annual Report
maintenance of underlying infrastructure such as servers storage devices and network
devices.Cyber Trusted Identity an authoritative network identity certificate issued to individuals by
CTID Refers to
the "Internet+" trusted identity authentication platform (CTID Platform)
Material Requirement Planning the process in which a production enterprise gradually
derives the production and procurement plans for the components raw materials and other
MRP Refers to
materials required for the production of the main product based on the production plan the
structure of the main product and the inventory situation
Secure Access Module a module used for encrypting and decrypting identity card
SAM Refers to
information
Surface Mount Technology a circuit assembly technology used to install surface mounted
components without pins or with short leads on the surface of printed circuit boards (PCBs)
SMT Refers to
or other substrates and then solder and assemble them through methods such as reflow
soldering or immersion soldering
Printed Circuit Board Assembly the process of soldering components onto a PCB substrate to
PCBA Refers to
form a printed circuit board (PCB)
A professional industry media company under the Messe Frankfurt Exhibition GmbH aiming
to provide market analysis technical information solution evaluation industry forecasting
asmag Refers to
etc. for practitioners in smart security smart life smart transportation smart buildings IT
communication and networking
AI Refers to Artificial Intelligence
AIoT Refers to The Artificial Intelligence of Things
IoT Refers to Internet of Things
The rebate the Company provides to dealers based on the rebate policy and the completion of
Rebate Refers to
dealer performance
SDK Refers to Software Development Kit
BioCode Refers to Biometric feature code converted from encrypted biometric features
QR code Refers to Two-dimensional barcode format: Quick Response Code which can quickly read data
Transformer Refers to Deep learning model based on attention mechanism
Manufacturing Execution System a production information management system for the shop
MES Refers to
floor of manufacturing enterprises.Quality Management System the management system that directs and controls an
QMS Refers to organization in terms of quality. It is a systematic quality management model established
within an organization to achieve quality objectives.Advanced Planning and Scheduling system an information management system used to
APS system Refers to
optimize production planning and scheduling.GDPR Refers to General Data Protection Regulation issued by the European Union.Artificial Intelligence Generated Content the process of generating content using AI
AIGC Refers to
technologies including text images audio and video etc.Artificial Intelligence Generated Service a type of service based on generative artificial
AIGS Refers to intelligence technology aiming to automatically generate content such as text images audio
and video through AI models.Representational State Transfer API a type of web application programming interface (API)
RESTful API Refers to designed based on the REST architectural style used for communication between clients and
servers.Hyper Text Transfer Protocol Secure a protocol for secure communication on the World
HTTPS Refers to
Wide Web and is the secure version of HTTP (Hypertext Transfer Protocol).Closed-Circuit Television the technology of video surveillance through a closed signal
CCTV Refers to
transmission system (not public broadcasting).Natural Language Processing an important branch of AI that focuses on enabling effective
NLP Refers to
interaction between human natural language and computers.Generative Pre-trained Transformer a language model based on artificial intelligence
GPT Refers to
technology and widely used in the field of natural language processing.ChatGPT Refers to The large language model developed by the American company OpenAI.Bidirectional Encoder Representations from Transformers a pre-trained language model
BERT Refers to
developed and released by Google in 2018.Session Initiation Protocol an application-layer control protocol for multimedia
SIP Refers to
communication over IP networks.Open Network Video Interface Forum an international organization dedicated to formulating
ONVIF Refers to
global open interface standards for network video devices.
9ZKTeco 2024 Annual Report
SMB Refers to Small and Medium-sized Businesses.Near Field Communication a short-range high-frequency wireless communication
NFC Refers to
technology that enables data exchange between electronic devices.Over-The-Air Technology a technology that enables remote updates and upgrades of system
OTA Refers to software applications configuration parameters etc. of mobile terminal devices or other
intelligent devices through mobile communication networks.Stock Keeping Unit a unique code used to identify and track each distinct product variant
SKU Refers to (such as different colors sizes and features) in inventory and serving as the foundation for
refined inventory management.Note: If there is a discrepancy between the total count and the sum of the sub item values in any table of this annual report it is due
to rounding reasons.
10ZKTeco 2024 Annual Report
Section II Company Profile and Key Financial Indicators
I. Company Information
Stock Abbreviation ZKTECO Stock code 301330
Chinese name of the熵基科技股份有限公司
Company
Chinese abbreviation of the熵基科技
Company
English name of the Company
ZKTECO CO. LTD.(if any)
English abbreviation of the
ZKTeco
Company (if any)
Legal representative of the
Jin Hairong
Company
Registered address No.32 Pingshan Industrial Road Tangxia Town Dongguan Guangdong China
Postal code of registered
523710
address
Historical changes in the
registered address of the The registered address of the Company has not changed since its listing
Company
Office address No.32 Pingshan Industrial Road Tangxia Town Dongguan Guangdong China
Postal code of office address 523710
Website www.zkteco.com
Email ir@zkteco.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Guo Yanbo Wang Jia
No.32 Pingshan Industrial Road No.32 Pingshan Industrial Road
Contact address Tangxia Town Dongguan Guangdong Tangxia Town Dongguan Guangdong
China China
Tel. 0769-82618868 0769-82618868
Fax 0769-82618848 0769-82618848
Email ir@zkteco.com ir@zkteco.com
III. Information Disclosure and Place of the Report
Website of the stock exchange where the Company discloses its
Shenzhen Stock Exchange http://www.szse.cn
Annual Report
Securities Times China Securities Journal Shanghai Securities
Media and website for the disclosure of the Annual Report News Securities Daily and CNINFO
(http://www.cninfo.com.cn)
Location for inspection of the Annual Report Office of the Board of Directors No.32 Pingshan Industrial
11ZKTeco 2024 Annual Report
Road Tangxia Town Dongguan Guangdong China
IV. Other Relevant Information
Accounting firm engaged by the Company
Zhonghui Certified Public Accountants (Special General
Name of the accounting firm
Partnership)
Room 601 Building A Hualian UDC Times Building No. 8
Office address of the accounting firm
Xinye Road Jianggan District Hangzhou City
Name of signing accountants Li Li Yuan Zongzhi
Sponsor engaged by the Company to continuously perform its supervisory function during the reporting period
□Applicable □ Not applicable
Name of sponsor Period of continuous
Name of sponsor Office address of sponsor
representative supervision
12th floor (F1201-F1210
F1211B-F1215A F1231-
F1232) and 15th floor
(F1519-F1521 F1523-F1531) August 17 2022-December
UBS Securities Co. Ltd. Gong Qian Cai Zhiwei
Winland International Finance 31 2025
Center No. 7 Finance Street
Xicheng District Beijing
China
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting period
□ Applicable □Not applicable
V. Main Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment or restatement of the previous accounting data
□ Yes □ No
2024 2023 YoY change 2022
Operating revenue
1991200391.751970183682.341.07%1918559191.76
(RMB)
Net profit attributable
to shareholders of
183045997.93177263675.153.26%192502163.93
listed companies
(RMB)
Net profit attributable
to shareholders of
listed companies after
165283299.30178122838.64-7.21%189604873.38
deducting non-
recurring profits and
losses (RMB)
Net cash flows from
operating activities 228336583.05 236000890.21 -3.25% 124520033.18
(RMB)
Basic EPS
0.94960.91763.49%1.1307
(RMB/share)
Diluted EPS
0.94960.91333.97%1.1275
(RMB/share)
12ZKTeco 2024 Annual Report
Weighted average
5.60%5.63%-0.03%9.40%
return on net assets
Increase or decrease at
the end of this year
At the end of 2024 At the end of 2023 At the end of 2022
compared to the end of
the previous year
Total assets (RMB) 4014623523.49 3923900732.70 2.31% 3664679907.15
Net assets attributable
to shareholders of
3350349704.083265413589.202.60%3057662843.22
listed companies
(RMB)
The lower of the Company's net profit before and after deducting non-recurring profits and losses in the past three fiscal years is
negative and the audit report in the last year shows that there is uncertainty in the Company's ability to continue as a going concern
□ Yes □No
The lower of the net profit before and after deducting non-recurring profits and losses is negative
□ Yes □No
VI. Main Financial Indicators by Quarter
Unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating revenue 399677922.33 503425236.44 507796993.98 580300239.00
Net profit attributable
to shareholders of 26334496.73 52303230.60 42040658.61 62367611.99
listed companies
Net profit attributable
to shareholders of
listed companies after
21211610.6945960594.3738795453.6359315640.61
deducting non-
recurring profits and
losses
Net cash flows from
61516123.255116198.6069506278.1992197983.01
operating activities
Whether there is a significant difference between the above financial indicators or their total amount and the financial indicators
related to the disclosed quarterly and semi-annual reports of the Company
□ Yes □No
VII. Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
During the reporting period there were no differences in net profit and net assets between the financial reports disclosed in accordance
with international accounting standards and Chinese accounting standards.
13ZKTeco 2024 Annual Report
2. Differences in net profit and net assets in financial reports disclosed in accordance with foreign
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
During the reporting period there were no differences in net profit and net assets between the financial reports disclosed in
accordance with foreign accounting standards and Chinese accounting standards.VIII. Items and Amounts of Non-recurring Gains and Losses
□Applicable □ Not applicable
Unit: RMB
Item Amount in 2024 Amount in 2023 Amount in 2022 Remarks
Losses and gains from
disposal of non-current assets
(including the offsetting -1122946.12 -626426.46 -353911.28
portion of the provision for
asset impairment)
Government subsidies
included in current profits and
losses (except those closely
related to the normal business
of the Company which are in
line with national policies and 6728971.26 6119808.45 12705234.71
regulations enjoyed
according to determined
standards and have a
continuous impact on the
Company's profits and losses)
Profits and losses from fair
value changes arising from
the holding of financial assets
and financial liabilities by
Mainly due to
non-financial enterprises as
investment income and
well as the gains and losses
16131575.37 -2644568.64 -5791116.41 fair value changes
arising from the disposal of
generated by financial
financial assets and financial
products
liabilities except for effective
hedging business related to
the normal operation of the
Company
Capital occupancy fees
charged to non-financial
42684.2850222.6550026.13
enterprises included in current
profits and losses
Reversal of the provision on
receivables with impairment
409755.94239389.68
test conducted on an
individual basis
Mainly due to the
Other non-operating income
changes in non-payable
and expenses other than the -715235.85 -4210700.05 -2833347.63
amounts and material
above items
losses.
14ZKTeco 2024 Annual Report
Less: income tax impact 2042311.18 -281003.45 722071.62
Minority interest impact
1669795.0767892.57157523.35
(after tax)
Total 17762698.63 -859163.49 2897290.55 --
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable □Not applicable
The Company has no specific situation of other profit and loss items that meet the definition of non-recurring profits and losses.Explanations on defining the non-recurring profit and loss items listed in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" as recurring profit and loss items
□ Applicable □Not applicable
The Company has no situation where the non-recurring profit and loss items listed in the "Explanatory Announcement for Information
Disclosure by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" are defined as recurring profit
and loss items.
15ZKTeco 2024 Annual Report
Section III Management Discussion and Analysis
I. Industry situation of the Company during the reporting period
(I) Basic situation of the industry of the Company
As an internationally recognized innovative enterprise the Company has consistently committed itself to the domains of smart
space smart office digital identity authentication and smart business. We provide advanced smart terminals industry-specific
application software and platforms equipped with object detection as well as identity recognition and verification capabilities tailored
for relevant sectors. We apply multimodal BioCV (computer vision and biometrics) and AI cognitive space computing technologies to
build a comprehensive perception system promoting the transformation of space from static management to autonomous decision-
making and evolution and bringing comfortable intelligent safe and sustainable scene experiences to global customers.In light of the rapid advancements characterizing the intelligent era the Company has officially unveiled its new mission and
vision with its robust AI cognitive technology serving as the core driving force. Based on this the Company comprehensively upgraded
its business system and built four strategic sectors: smart space smart office digital identity authentication and smart business. This
significant initiative marks the official commencement of the Company's new journey to redefine its value system. It will continuously
explore the realm of intelligence striving to create enhanced value for customers and set new trends within the industry.The downstream end users of the Company involve numerous industries diverse customer types and a wide range of application
scenarios. Therefore there is no obvious periodicity.(II) Industry development status of the main application areas of the products
1. Global biometric industry situation in 2024
(1) Global market overview
The global biometric market size was USD 45.09 billion in 2024 and is projected to grow to USD 173.08 billion by 2033 with a
compound annual growth rate (CAGR) of 14.4% (source: IMARC Group).The main growth drivers of the global market include:
* The continuous advancement of edge computing and AI chips has markedly improved the precision of facial recognition and
gait behavior analysis as well as expanded their range of application scenarios.* The combination of multimodal biometric technologies with multiple biological features (such as fingerprint + face + iris) has
further enhanced security and reliability. For instance multimodal systems in airport security inspections combine facial recognition
with iris scanning to reduce error rates and improve clearance efficiency.* The integration of non-contact biometric technologies with the financial industry such as the binding of biometric features for
payment verification in digital currency and cashless societies Amazon's "Payment by Stretching out Your Hand" palm recognition in
unmanned stores and WeChat's palm payment terminals in major chain convenience stores.* Policy support and industry standardization. Governments promote technology application through policy support and standard
setting. For example China's "Development Planning for a New Generation of Artificial Intelligence" explicitly supports biometric
technology R&D. The EU's GDPR strengthens the protection of biometric data privacy forcing enterprises to optimize security
technologies such as encrypted storage and dynamic biometric feature updates.* The diversified application scenarios are expanded from traditional security and finance to emerging fields such as smart cities
healthcare and education. For instance in healthcare iris recognition is used for patient identity verification to prevent medical record
confusion; in education facial recognition is used for classroom attendance and examination invigilation (such as in smart classrooms
in some Chinese universities).
(2) Global development of biometric technology
Global biometric technology is undergoing continuous evolution and emergence particularly evident in the following aspects:
16ZKTeco 2024 Annual Report
* Multimodal biometric technology improves recognition accuracy and security by combining multiple biological features (such
as fingerprint face iris and voiceprint). The core of this technology lies in information fusion which can be conducted at different
levels including sensor level feature level matching score level rank level and decision level. Multimodal biometric technology can
cover more application scenarios and populations achieving significant improvements in accuracy efficiency and user experience
thereby meeting the demands of high security and convenience.* Non-contact biometric technology uses machine sensors for identity verification without manual contact. The demand for this
technology is increasing in areas such as smart cities smart homes e-commerce financial services and mobile payments. The market
for non-contact biometric technology is growing rapidly. Especially in recent years with the occurrence of public health events the
demand for this technology has further increased. As the technology continues to advance and costs decrease the application scope of
non-contact biometric technology will further expand.* The integration of biometric technology with AI is leading a new trend. This fusion technology improves the accuracy and
efficiency of biometric systems by introducing AI technologies such as deep learning and computer vision. For example AI can
optimize data processing reduce false rates and improve the accuracy and precision of facial detection systems in complex
environments. AI can also mine potential patterns from large amounts of historical data to achieve more accurate population profiling
which can assist enterprises in making marketing decisions in the retail sector.* With the popularization of edge computing and edge intelligence biometric technology is shifting from cloud-based to edge
and end side computing architectures. This transformation moves most of the computing and storage processes to local edge and end
side devices significantly reducing network transmission latency compared to remote cloud services. This localized processing model
can better meet the demands of real-time control and other latency-sensitive edge intelligence applications. Since only the calculation
results need to be sent back to the cloud this model has a relatively low requirement for network bandwidth. Moreover when the
network is unstable or interrupted the edge devices can still operate independently all or part of their functions effectively reducing
the impact of network fluctuations on applications and demonstrating stronger network adaptability. This architecture not only achieves
low latency through local processing but also avoids potential privacy risks by reducing data transmission across the network providing
more efficient and reliable technical support for edge intelligence applications.The development of global biometric technology shows trends such as multimodal non-contact AI integration and edge side
migration. These technological advancements not only enhance the accuracy and security of identity verification but also expand its
application scope driving continuous market growth.
(3) The application situation of the global biometric industry
From a regional distribution perspective the application of global biometric technology shows significant regional differences.Each region has its own characteristics due to different policy orientations technological foundations and market demands. The Asia-
Pacific region has emerged as one of the largest global markets for biometric technology applications driven primarily by demand
from government governance financial services and public security sectors. For instance India has promoted digital governance
through the "Aadhaar" biometric identity system while Japan and South Korea have widely applied fingerprint and facial recognition
technologies in financial payments and intelligent security. Meanwhile emerging economies like Indonesia have accelerated inclusive
financial development through mobile identity authentication. At the same time developed countries in Europe and the United States
are also active in the application of biometric technology covering areas such as government management public security financial
payments and enterprise office. Especially under the framework of the EU's GDPR (General Data Protection Regulation) data privacy
protection has become a key direction promoting the implementation of data desensitization local storage and compliance solutions
thereby further enhancing the standardization and security of technology applications.From the perspective of application scenarios biometric technology has broken through the limitations of traditional identity
verification and gradually permeated into broader fields showing a trend of full-scenario coverage and full-chain closed-loop
development. From basic identity authentication to intelligence applications based on behavior analysis and scene perception and then
to the deep integration of active security protection biometric technology is constantly evolving. The combination of non-contact
biometric technologies (such as facial recognition palm recognition and iris recognition) and multimodal fusion technologies
17ZKTeco 2024 Annual Report
(combining multiple biometric features such as fingerprints and voiceprints) is leading the application in areas such as security entrance
and exit management consumer electronics (such as smartphone unlocking) and industrial scenarios (such as identity verification on
production lines) while playing a key role in epidemic prevention and control and security expansion. This technological integration
not only enhances the convenience and accuracy of authentication but also provides more flexible solutions for diverse scenarios.In addition some emerging markets are rapidly rising as new hotspots for biometric technology applications through top-level
design at the national strategic level. For example the NEOM New Future City Project in Saudi Arabia and the smart customs clearance
system at Dubai Airport in the Middle East have deeply integrated multimodal biometric technology with smart city construction. In
Latin America Brazil has promoted the leapfrog development of inclusive finance by binding the Central Bank Digital Currency
(CBDC) PIX with biometric technology. These emerging markets often adopt an innovative model of "government-led scenario-
closed-loop and ecosystem-bundled" directly deploying multimodal fusion solutions which not only accelerates technology
implementation but also significantly enhances the space and influence of biometric technology in local applications. This model also
provides a new development paradigm for the global biometric industry demonstrating the adaptability and potential of the technology
in different economies.
2. China's biometric industry situation in 2024
(1) Overview of China's biometric market
According to a report released by CICC Qixin International Consulting it is estimated that the market size of China's biometric
industry will grow to RMB 60 billion in 2024 with a compound annual growth rate (CAGR) of 22.6% over the next five years. In
2024 benefiting from policy support and technological progress the Chinese biometric market is expected to maintain a high growth
rate.In recent years China has issued multiple policies and regulations to promote the development of the industry. For instance the
implementation rules of the "Personal Information Protection Law of the People's Republic of China" further clarify the norms for the
collection and use of biometric data requiring enterprises to strike a balance between privacy protection and technological applications.Additionally the "14th Five-Year Plan for Digital Economy Development" proposes to accelerate the construction of a digital identity
authentication system providing policy support for the application of biometric technology in government affairs finance and other
fields. The "Measures for the Security Management of the Application of Facial Recognition Technology" regulates the processing of
facial information by facial recognition technology thereby better protecting personal information rights and interests. These
regulations not only standardize the market order but also inject impetus into industry innovation.
(2) China's development of biometric technology
In 2024 multimodal biometric technology became the core trend in the industry. Compared with single-modal systems
multimodal technology integrates multiple recognition methods such as fingerprint finger vein face palmprint palm vein iris and
voiceprint significantly improving accuracy reliability and anti-forgery capabilities. The application of technology presents three
major characteristics:
* Mainstreaming of multimodal products: Non-contact palmprint and palm vein fusion recognition and iris recognition
technologies are gradually commercialized and widely applied in high-security scenarios;
* Deep integration of scenarios: Biometric technology is deeply integrated with the IoT cloud computing and AI giving rise
to solutions such as intelligent access control and digital identity verification covering communities parks education healthcare
transportation and other fields;
* Technological iteration direction: With the advancement of sensor and optical technologies biometric devices are evolving
towards miniaturization mobility and high throughput to meet diverse and personalized demands.According to IDC's forecast the market for biometric smart access control integrated machines in China is expected to grow
rapidly at a CAGR of 11.6% from 2023 to 2027 reaching nearly USD 900 million by 2027. The trends include non-contact multimodal
recognition integration integration with other business systems and product export demonstrating strong international potential.
(3) The application situation of the Chinese biometric industry
In 2024 the application of biometric technology in consumer electronics and identity authentication will be further deepened:
18ZKTeco 2024 Annual Report
* Consumer electronics: Smartphones smart door locks and wearable devices enhance security and convenience through
biometric technology promoting the popularization of the technology. According to statistics over 60% of smart door locks in the
Chinese market in 2024 were integrated with biometric functions.* Identity authentication: Expanding from public security to transportation finance social security education and healthcare
biometric technology has become a reliable authentication method. In July 2024 the Ministry of Public Security and the Cyberspace
Administration of China solicited public opinions on the "Administrative Measures for National Network Identity Authentication
Public Services (Draft for Comment)". The implementation of electronic identity cards is anticipated to accelerate in sectors such as
finance taxation and healthcare thereby enhancing service efficiency.The "14th Five-Year Plan for National Informatization" emphasizes the construction of new types of infrastructure and the
integrated development of the digital economy. Multimodal biometric technology is increasingly applied in entrance and exit
management and digital identity verification. Multiple provinces and cities across the country have piloted electronic identity cards. In
June 2024 the Shandong Big Data Bureau and the Provincial Public Security Department jointly issued a notice to promote the
application of electronic identity cards throughout the province facilitating their use in various fields and scenarios such as government
services law enforcement and social life. In the future the deep integration of biometric technology with AI IoT and cloud computing
will become the standard practice within the industry.
3. Development of the smart retail industry in 2024
In recent years computer technologies such as LLMs AIGC and AIGS have developed rapidly and continuously giving rise to
a large number of industry applications and product innovations. In 2024 the retail industry also faces significant opportunities. Based
on technologies such as big data cloud computing and AI it can accurately understand consumer needs provide personalized services
and products and meet diverse consumer demands thereby enhancing the shopping experience. Retail enterprises are also actively
transforming strengthening the integration of online and offline applications and implementing intelligent management and
optimization to improve retail efficiency and reduce operating costs.The overall solution for the retail industry is moving towards "deep integration of technologies full data connectivity and
seamless experience". Enterprises need to strike a balance between technological investment organizational change and ecological
cooperation to address the dual challenges of upgraded consumer demands and market competition. In the future the acceleration of
digital and physical integration and the iteration of emerging technologies will continue to drive innovation and restructuring in the
retail sector.(III) Overview and development trends of major technologies in the industry in 2025
There are various types of biometric technologies including fingerprint recognition facial recognition palmprint recognition
palm vein recognition finger vein recognition iris recognition voiceprint recognition etc. Due to the development of AI technology
big data and cloud computing biometrics is closely combined with computer vision and it has developed from simple identification
to the empathetic experience ecology of scene interaction such as "Who are you What kind of service should I provide for you" as
well as the empathetic experience ecology of scene interaction.
1. Overview and trends of global biometric technology development
The global development of biometric technology has experienced significant advancements driven by the development of AI
chips algorithms and various other components. Technically the rapid evolution from single biometric recognition (such as
fingerprints and facial recognition) to multimodal technology integration provides multi-layered authentication and enhances security.The transition from contact-based biometric recognition to non-contact biometric recognition—such as iris recognition voiceprint
recognition and palmprint recognition—has been underway for some time particularly in recent years. The promotion of good hygiene
practices and the non-invasive characteristics of non-contact biometric systems have contributed to their growing popularity. The
integration of multimodal biometrics with artificial intelligence—encompassing dynamic liveness detection environment-adaptive
technology and behavior recognition techniques—has significantly enhanced the accuracy and efficiency of biometric systems. This
advancement has rendered the authentication process more reliable and expedited. Furthermore the processing of biometric data on
19ZKTeco 2024 Annual Report
edge devices is on the rise which reduces data transmission to centralized servers. This development not only reduces latency but also
enhances privacy and security.The global application of biometric technology is expanding to various industries and scenarios mainly driven by the need for
enhanced security and authentication. In governments and law enforcement agencies biometric technology is used for border control
national ID programs and public safety improving the overall security and efficiency of government operations. For instance
biometric systems are used for border security and national identity management enhancing the overall security and efficiency of
government operations. In the banking and financial sector biometric authentication is used for customer verification and transaction
security reducing the risk of identity theft and fraud. Banks use biometric authentication for mobile banking and ATM transactions
improving the overall security and efficiency of financial services. In the healthcare industry biometric technology is used for patient
identification and access control reducing medical errors and ensuring secure access to health records. For example hospitals use
biometric systems to verify patient identities and control access to sensitive areas enhancing the overall efficiency and security of
healthcare services. Moreover the integration of biometric technology with self-service systems is increasing providing convenient
and secure authentication for various services.The future development of biometric technology is transitioning from a "simple tool attribute" to a "social foundation" thereby
redefining the ultimate boundaries of human identity authentication. This evolution occurs within the context of technological
innovation while adhering to principles of privacy and security.
2. Overview and trends of China's biometric technology development
(1) Technological application trends
In 2024 the following key trends will emerge in China's biometric technology:
Mainstreaming of multimodal technology: The integration of multimodal recognition technologies such as fingerprint face
palmprint palm vein iris and voiceprint will become mainstream due to their advantages in security reliability and flexibility. The
demand for non-contact identity authentication will continue to rise and multimodal technology will be flexibly adapted to scenarios
such as government finance and hotels promoting the popularization of self-service terminals.Empowerment through AI and computer vision: The field of biometrics is transitioning from conventional algorithms to
approaches driven by deep learning thereby achieving a profound integration with computer vision technology. The improvement in
algorithm efficiency and accuracy significantly enhances recognition speed and robustness supporting precise detection of both
biometric and object features. Generative AI technology optimizes algorithms through simulated data further enhancing performance
while ensuring compliance with privacy regulations.Scenario-based innovation: The transformation from traditional physical security to digital and intelligent security is underway
with biometric technology combining with AI and IoT to create "people-oriented" OMO (online-to-offline integration) micro-scenario
experiences. There is significant application potential in fields such as healthcare retail transportation education and government
such as intelligent access control and digital identity verification solutions.
(2) Industry demand and policy drivers
Demand: The geometric growth in the demand for identity authentication and security in the digital age is driving the expansion
of biometric technology from public safety to all industries. In 2024 the demand for non-contact recognition will surge and emerging
technologies such as behavior recognition (such as network usage habits and payment habits) will be used in conjunction with
traditional biometrics covering both the real and virtual worlds.Policy: The "14th Five-Year Plan for Digital Economy Development" of the state and the new infrastructure strategy accelerate
digital transformation providing a broad stage for biometrics. The "Personal Information Protection Law of the People's Republic of
China" further regulates the use of biometric data while the promotion policy of electronic identity cards is implemented in fields such
as finance healthcare and social security releasing huge market space. The "Measures for the Security Management of the Application
of Facial Recognition Technology" regulates the processing of facial information by facial recognition technology thereby better
protecting personal information rights and interests.
(3) Frontier applications and future prospects
20ZKTeco 2024 Annual Report
With the innovation of AI technology and the expansion of application scenarios biometric technology will continue to make
breakthroughs in accuracy speed and adaptability. At the same time as an important support for AI biometric technology is
accelerating its integration into fields such as intelligent robots. The integration of facial recognition and voiceprint recognition
enhances personalized services and security promoting the development of intelligent automation.Although China's biometric market still accounts for a relatively low proportion globally as one of the world's fastest-growing
economies its market potential is huge and is expected to further increase in the future. The synergy of policy support technological
innovation and scene demand will drive China's biometric industry towards a market worth hundreds of billions providing a solid
support for the construction of the digital economy and intelligent society.II. Main Businesses Engaged by the Company During the Reporting Period
(I) Basic situation of the Company's main businesses and products
1. Business overview
(1) Business overview
As an internationally recognized innovative enterprise the Company has consistently committed itself to the domains of smart
space smart office digital identity authentication and smart business. We provide advanced smart terminals industry-specific
application software and platforms equipped with object detection as well as identity recognition and verification capabilities tailored
for relevant sectors. In light of the rapid advancements characterizing the intelligent era the Company has officially unveiled its new
mission and vision with its robust AI cognitive technology serving as the core driving force. Based on this the Company
comprehensively upgraded its business system and built four strategic sectors: smart space smart office digital identity authentication
and smart business. This significant initiative marks the official commencement of the Company's new journey to redefine its value
system. The Company will continuously explore the realm of intelligence striving to create enhanced value for customers and set new
trends within the industry.Over the past few years the external environment has undergone numerous profound changes which has also prompted us to
have a clearer understanding of ourselves and to define what kind of company we aspire to be. With the continuous leap in our
technological capabilities and the continuous expansion of our business boundaries the new mission embodies ZKTeco's dual pursuit
of technological and humanistic values. AI cognition is not merely a tool; it is the key to endowing spaces with the ability to "think"
and "evolve". In the context of the global digital wave our objective is to inspire innovative efficiency ensure security and trust and
promote a sustainable future through intelligent spatial experiences. We strive to enable technology to genuinely serve humanity and
illuminate the world.In addition in response to the growing market demands for smart homes and elderly care the Company is actively expanding into
these sectors by leveraging its technological expertise and marketing service capabilities. This strategic initiative aims to transition its
business towards greater intelligence scenario-based solutions and global outreach.The main business income obtained from the four major scenarios of the Company during the reporting period is as follows:
Unit: RMB '0000
20242023
Item
Amount Proportion Amount Proportion
I. Smart space
149969.0575.62%143706.6673.27%
products
II. Smart office
30372.7715.31%33157.7016.90%
products
III. Digital identity
authentication 11413.47 5.75% 15582.86 7.94%
products
21ZKTeco 2024 Annual Report
IV. Smart
business 6578.09 3.32% 3703.62 1.89%
products
Total 198333.38 100.00% 196150.83 100.00%
(2) Core businesses
* Smart space products: Intelligent upgrade spanning physical and digital worlds
The smart space business segment leverages AI cognitive space computing technology and multi-dimensional perception
capabilities to transcend the limitations of traditional entrance and exit management. This innovation enables comprehensive awareness
and intelligent enhancement of people vehicles objects and the environment. For applications in enterprise parks office buildings
educational institutions healthcare facilities and communities we provide solutions for traffic optimization energy management data
analytics and autonomous spatial decision-making.* Smart office products: Enhancing efficiency and enjoying a pleasurable office experience
In the smart office segment the Company is dedicated to enhancing work efficiency and enjoyment. This business segment which
focuses on multimodal BioCV technology and IoT perception encompasses various scenarios including attendance tracking visitor
management meetings and consumption monitoring. It offers intelligent solutions for time management security oversight and
operational optimization tailored for enterprise and institutional clients. This segment integrates AI-driven intelligent agents with cloud
technology to develop advanced time management solutions and establish a comprehensive smart office ecosystem.* Digital identity authentication products: Secure and convenient with trust as the cornerstone
The Company's digital identity authentication business seamlessly integrates multimodal BioCV advanced large models and
blockchain technology to establish a precise secure and user-friendly identity authentication system laying a robust foundation of
trust for the digital world. By harnessing the distinctiveness of biometric features the advanced deep learning capabilities of large
models and the decentralized and immutable nature of blockchain technology the Company's digital identity authentication services
can ensure both precise identity verification and robust data security.* Smart business products: AI-driven leading business transformation
The Company's smart business segment propelled by multimodal models emphasizes the integration of "AI + digital signage"
within the general retail and catering sectors. This segment supports traditional businesses in their transition towards intelligent
ecosystems. It offers IoT infrastructure digital solutions and operational services thereby establishing a new type of borderless retail
platform that is comprehensive scenario-inclusive and fully integrated across the supply chain. The products and solutions of this
business segment cover digital marketing screens electronic price tags AI shelves smart shopping carts as well as creative content
intelligent customer service digital marketing and digital stores.
(3) Innovative businesses
In response to the growing market demands for smart homes and elderly care the Company is actively expanding into these
sectors by leveraging its technological expertise and marketing service capabilities.The representative innovative businesses of the Company are as follows:
* Smart elderly care
Population aging is one of the most significant "gray rhinos" of the 21st century. According to the United Nations the global
population began to age at a rate of 7% since 2005. After 2015 the aging process of the world's population accelerated with the
proportion of the elderly population increasing by 0.2 percentage points annually up from less than 0.1 percentage points previously.By 2022 the global population aged 65 and above had reached 780 million accounting for approximately 9.8%. Among them the
proportions of the elderly population in high-income upper-middle-income lower-middle-income and low-income regions were
19.2% 11.6% 8.1% and 3.2% respectively. According to the "Medium-fertility Scenario" outlined in the "World Population Prospects
22ZKTeco 2024 Annual Report
2022" it is projected that by 2038 the global elderly population will surpass 14% marking the onset of a significant aging period.
In China the silver economy is a key industrial direction guided by government policies. As the most important part of the silver
economy smart elderly care has a huge market potential. According to the "China Smart Health and Elderly Care Industry Development
Report (2023)" the scale of China's smart health and elderly care industry was approximately RMB 6 trillion in 2023. According to
China Report Hall it is expected that the market size of China's smart elderly care industry will reach RMB 14 trillion in 2024 and
exceed RMB 20 trillion by 2027. From the current market perspective this sector exhibits significant potential for growth and
development. Therefore guided by the principle of "Tech for Social Good" the Company commenced its research into the elderly care
industry in 2024. Through collaborative ecological efforts it has successfully incubated products such as urination and defecation care
robots as well as portable bathing assistance robots. In the future the Company will conduct comprehensive studies on the living
scenarios of the elderly examining various aspects such as "clothing food housing and transportation" as well as their mental health
and experiences of loneliness. Based on these insights we will develop inclusive solutions tailored to elder-friendly environments and
integrate our existing technologies—such as machine vision multimodal recognition and spatial agents—with elderly care product
solutions. This approach aims to achieve a synergy between AI and smart elderly care enhancing the dignity of seniors in their later
years while ensuring their ongoing happiness and well-being.* E-bike
E-Bike as an important component of green travel and intelligent transportation is at a turning point from a niche market to a
mainstream one and is expected to be deeply integrated into urban transportation systems in the next decade. With technological
advancements policy support and increased consumer awareness its market size is likely to surpass that of traditional bicycles and it
will become a core carrier of sustainable travel ecosystems. In recent years it has experienced explosive growth worldwide. According
to the "2024 Global E-Bike Market Insight Report" by Big Data Cross-border the global E-bike market size is expected to reach USD
35 billion in 2024 and climb to USD 62.25 billion by 2030 with a compound annual growth rate (CAGR) of nearly 10%.
We have launched various products with different appearances and functions for different countries and travel scenarios such as
urban commuting leisure outdoor activities mountain biking and cargo transportation. Meanwhile ZKTeco has applied AI technology
to E-bike bringing more convenience and safety. For instance through a mobile app users can remotely control and monitor the status
of E-bike and by integrating multimodal recognition technology with E-bike vehicle anti-theft applications can be realized. With the
development of battery technology motor technology and intelligent technology the performance of E-bike will continue to improve.We will also move towards intelligence and lightweighting launching more advanced E-bike products.* Swimming pool cleaning robots
According to the Pool & Hot Tub Alliance (PHTA) in the United States there are approximately 30 million private swimming
pools worldwide and the number is increasing at a rate of about 5% annually. In the United States alone over 10 million households
own residential swimming pools. Data from the American company Lawnstarter shows that swimming pool owners spend an average
of USD 1432 per year on pool maintenance with an average cleaning cost of over USD 100 each time. This is an additional expense
for families. Compared with manual cleaning swimming pool cleaning robots have advantages in cost and efficiency leading to a
rapid expansion of the market. According to research the swimming pool cleaning robot business was valued at approximately USD
1.946 billion in 2022 and is expected to reach USD 3.533 billion in 2026 with a compound annual growth rate (CAGR) of over 16%.
Currently the penetration rate of swimming pool cleaning robots globally is only about 21% indicating huge market potential.In 2024 the Company released a swimming pool cleaning robot equipped with ultrasonic sensors and four brushless motors. It
features powerful and thorough scrubbing and an excellent filtration system. Through brushes and the filtration system it can clean the
bottom sides and waterline of the pool adsorbing obvious impurities in the water and floor drains thereby achieving higher cleanliness
and energy efficiency. Additionally the Company's swimming pool cleaning robots adopt a new cordless design and come with path
planning offering strong intelligence and agility. It also features wireless induction charging and magnetic suction systems.Furthermore in the area of innovative business the Company will further expand innovative products based on its own business
development and market demand.
2. Core technology system of the Company
23ZKTeco 2024 Annual Report
The Company has built a solid and advanced core technology system through forward-looking technological innovation. With
multimodal BioCV (computer vision and biometrics) as the core technology foundation the Company has long empowered diverse
business scenarios and maintained a leading position in the industry. In the context of the accelerated evolution of the AI era the
Company diligently monitors technological trends and actively explores cutting-edge domains such as AI cognitive technology
proprietary model development and cloud computing continuously strengthening its technological moat and providing strong support
for business expansion.
(1) Core biometric technology
ZKTeco has mastered multiple core biometric technologies covering fingerprint face palm iris and finger vein modalities. The
Company's independently developed biometric algorithms feature high precision high speed and high security especially excelling in
recognition performance under complex conditions. To overcome the limitations of single modality ZKTeco has innovatively
introduced multimodal fusion recognition technology which combines multiple biometric features to further enhance recognition
accuracy and security. Meanwhile the Company has made significant breakthroughs in liveness detection technology effectively
preventing attacks from photos videos masks etc. thereby ensuring the security and reliability of identity recognition. These
technologies have been widely applied in smart security smart office smart healthcare and other fields providing customers with
efficient convenient and secure solutions.Palm and facial recognition technologies are the key directions of ZKTeco. Relying on the uniqueness and high security of
biometrics they achieve convenient identity verification. To adapt to the diversity of mobile devices and computing platforms ZKTeco
innovatively launched palm and facial recognition technologies that can be used across different operating systems and devices
supporting mobile platforms such as HarmonyOS Android and iOS as well as X86 Windows and X86 Linux at the device end.Characteristic templates are extracted and encrypted uniformly enabling secure transmission across different platforms. Users do not
need to register repeatedly to use these templates across devices. In HarmonyOS with the help of distributed capabilities palm and
facial recognition can achieve multi-device collaboration; in Android and iOS efficient compatibility is ensured through system
framework integration; on desktop and server ends unified data management is supported. By adopting standardized formats and cross-
platform protocols combined with multi-factor authentication dynamic encryption and decentralized storage only characteristic
templates are transmitted instead of raw data effectively protecting privacy and security meeting global information security standards
and providing users with seamless and efficient recognition experiences.ZKTeco integrates deep learning and traditional pattern recognition algorithms to optimize multimodal recognition performance.Deep learning through multi-layer neural networks extracts high-level features and excels in handling complex scenarios and high-
dimensional data; pattern recognition with mathematical models provides stability and efficient computation. The combination of the
two enables the system to strike a balance between accuracy and speed maintaining high accuracy under challenges such as lighting
changes and occlusions and running efficiently on resource-constrained devices. This integration enhances the system's generalization
ability and reliability providing strong support for intelligent processing of multimodal data.
(2) IoT
ZKTeco's self-developed AIoT solution Minerva IoT adopts a micro-service architecture and containerized deployment
supporting concurrent access to hundreds of millions of devices. Through low-code API development and integration with third-party
ecosystems it flexibly adapts to diverse scenarios. It provides full-chain capabilities including device connection audio and video
processing payment gateways data analysis and content management achieving cloud edge and device collaboration. For the
Company's business scenarios Minerva IoT deeply integrates AI big data and IoT technologies to build an AIoT ecosystem providing
enterprises with efficient and intelligent digital operation support. Through technological innovation and scenario-based services it
helps customers achieve digital transformation and business upgrading.
(3) Core technologies of computer vision edge AI and large model
ZKTeco has evolved from a pioneer in single biometric technology to a leader in multimodal BioCV and AI cognitive technology.The Company is no longer limited to "I'll tell you who you are" in identity recognition but through the integration of computer vision
and biometrics it creates multimodal AI attributes answering "Who are you What kind of service should I provide for you" and
24ZKTeco 2024 Annual Report
building an empathetic experience ecosystem of scene interaction. Relying on core technologies and its self-developed IoT platform
digital infrastructure the Company has promoted the upgrade of audio and video in smart terminals and simultaneously launched
machine vision analysis big data analysis AIGC and advertising production and distribution platforms. Among them the
ZKDIGIMAX Level3 digital marketing solution has been applied to the retail scenarios of traditional small and medium-sized retailers
deeply exploring the value of smart retail scenarios. The Company always integrates the interaction value and empowerment value
between people and scenarios into its innovation practices and continuously deepens its exploration.In the field of edge computing AI ZKTeco has advanced the "lightweight intelligence" strategy and independently developed the
BioCV TinyML architecture. Through model compression dynamic quantization and heterogeneous deployment technologies it has
broken through the traditional edge computing power bottleneck and created low-power high-response edge intelligent solutions. This
technology is widely applied in smart terminals and IoT devices providing efficient lightweight perception capabilities for the era of
AIoT.The Company has proposed the "cognitive space computing" theory in advance and built the Mars Wisdom AI platform with a
multimodal AI cognitive computing framework achieving a full-chain intelligent evolution from perception understanding prediction
to decision-making. Relying on its self-developed space computing engine the system can analyze in real time the behavior
characteristics relationship networks and spatiotemporal trajectories of people vehicles and objects within the physical space and
form a scenario-based cognitive decision-making system by combining commercial intelligence algorithms. Different from the
traditional focus on physical control in entrance and exit management ZKTeco has surpassed the physical management of Baiaruida
and the digital upgrade of general entrance and exit of ZKBio. Through AI cognitive space computing technology it has broken the
boundaries between physical and digital spaces and moved towards a higher-dimensional intelligent cognitive era. For example in
large commercial complexes the system not only accurately identifies customers and vehicles but also analyzes trajectories and dwell
times to understand consumption preferences and potential demands providing precise decision support for operations and achieving
intelligent marketing and resource optimization.Based on the technical architecture of "AIoT multi-dimensional perception + large model empowerment middleground + industry
scenario application" the Company has built a three-level technical system covering smart terminals edge computing and cloud
services. Through its self-developed Agent development platform it deeply integrates the capabilities of DeepSeek DouBao ChatGPT
and other large models to achieve cross-modal knowledge transfer and scenario-based intelligent generation promoting the digital
transformation of traditional industries into a new stage of cognitive intelligence.
3. Main products and services
ZKTeco with its new-generation AI cognitive space computing technology and self-developed multimodal models as the driving
force has comprehensively upgraded its four business segments and deeply laid out in the four strategic fields of smart space smart
office digital identity authentication and smart business providing AI-empowered end-edge-cloud integrated full-stack solutions to
help customers achieve efficiency leaps and value reshaping in the digital era. It provides global customers with comfortable intelligent
safe and sustainable scenario experiences.
(1) Smart space business
ZKTeco with the core driving force of the cutting-edge AI cognitive space computing technology deeply integrates the ZKBio
software platform and the Mars Wisdom AI platform to build a comprehensive perception network of people vehicles objects and the
environment providing comprehensive and intelligent management solutions for smart parks and buildings. We are committed to
transforming traditional "physical" spaces into "understanding partners" that can understand and serve users redefining the relationship
between people and space to enhance operational efficiency optimize user experience and achieve sustainable development.The Company's smart space business layout is as follows:
25ZKTeco 2024 Annual Report
* Smart space business products and solutions - ZKBio Management Software Platform
The ZKBio Intelligent Integrated Management Platform (ZKBio CVSecurity) takes "creating a smart space for all scenarios" as
its core goal. By deeply integrating multimodal BioCVTiny ML technology with the IoT perception system it has built a space
intelligent management platform covering "people vehicles objects and environmental energy". With the machine vision intelligent
analysis provided by the Mars Wisdom platform as the technical foundation it integrates personnel biometrics behavioral characteristic
recognition vehicle recognition and intelligent scene algorithms achieving a full-link and full-scenario deep integration of 18 business
subsystems such as access control visitors passages parking video perception and space environment perception forming a closed-
loop smart ecosystem from space access to energy consumption management.The panoramic view of the ZKBio Intelligent Integrated Management Platform is as follows:
26ZKTeco 2024 Annual Report
The architecture diagram of the ZKBio Intelligent Integrated Management Platform is as follows:
The main characteristics of the ZKBio Intelligent Integrated Management Platform are as follows:
a. All-scenario integration:
Based on a micro-service distributed architecture the platform supports the flexible combination of modules such as video
27ZKTeco 2024 Annual Report
perception parking management and elevator control systems. Through a GIS map visualization interface it builds a three-dimensional
security prevention system of "circle-line-surface-point". At the same time it enhances the hybrid cloud deployment capability
supporting dynamic modeling of smart spaces and real-time analysis of energy consumption data making carbon footprint management
in office parks communities and other scenarios possible.b. Intelligent decision-making hub:
Relying on multimodal BioCVTiny ML technology IoT perception and Mars Wisdom platform it has constructed "four
intelligent defense lines":
? The first line: Physical space access control is achieved through seamless passage (face gate/plate recognition).? The second line: Process supervision is strengthened through electronic fences and AI video perception (loitering
detection/intrusion detection).? The third line: By integrating the access control and elevator control linkage mechanism after identity tverification
through access control the smart elevator dispatching system is activated to improve elevator operation efficiency
reduce stop time and lower motor wear.? The fourth line: It provides post-event verification tools such as personnel trajectory tracking and vehicle feature
search.c. Ecological expansion capability:
Adopting a RESTful API open architecture it can interface with third-party systems and support rapid algorithm model iteration.Through the ZKBio app and mini-program users can complete visitor reservations remote elevator control and video intercom
operations. Meanwhile the platform ensures full-chain information security through HTTPS encryption transmission and data
desensitization technologies. This "end-edge-cloud" collaborative smart space solution is driving traditional management towards
digitalization and low-carbon transformation.* Access control products
Access control products are smart terminals that verify and logically judge the access rights of single-door entrance and exit based
on various biometric technologies. Depending on the biometric verification methods employed these can be categorized into single
biometric devices and multimodal recognition products that integrate multiple biometric technologies. The Company offers a range of
technologies including fingerprint facial recognition palm vein scanning palmprint identification and iris recognition. Additionally
it provides conventional verification methods such as RFID cards and passwords. These products are designed with features such as
water resistance anti-glare properties and impact resistance ensuring they meet the diverse needs of various scenarios.During the reporting period the Company launched the new generation of multimodal biometric product series zFace which
supports facial and fingerprint hybrid recognition and is integrated with wireless doorbells and video intercom functions achieving a
three-in-one product application form of access control video intercom and doorbell optimizing the installation of door equipment
for users. Additionally it released the terminal recognition device Xpalm602 supporting payment-level palm technology capable of
meeting various recognition demands.The Company's main access control terminal products are as follows:
28ZKTeco 2024 Annual Report
Multimodal biometrics products
Face + Fingerprint
Palm + Face
Fingerprint recognition
products
In response to complex multi-access control interlocking scenarios the Company has launched access controller products which
are paired with various biometric data collectors a wide range of fire water electricity and gas sensors as well as alarm systems to
form a comprehensive system solution integrating personnel identification and spatial security. This solution is mainly applied to
medium and large-scale project sites with a large number of access control points and high security requirements. Accessible collection
methods include facial features fingerprints RFID cards QR codes and passwords. The device has professional access control function
and supports unified management on the software platform.During the reporting period the Company launched facial recognition controllers and rack mounted controllers which were paired
with access control magic boxes. Compared with traditional controllers they are easier to install and manage centrally simplify the
installation process and are equipped with dedicated fire alarm interfaces. This effectively reduces the workload of construction and
wiring on the project site lowers project costs and facilitates users' continuous use and maintenance.The Company's main access controller products are as follows:
RFID Control Panel Biometric Control Panel Rack-mounted Control Elevator Control Panel
Panel
C3 series ZTHCAM series INBIO640 series InBioP3000 series
Expansion board InBio series Controller magic box
* Channel products
As an intelligent device for controlling the entry and exit of people the pedestrian gate is increasingly widely used in various
fields with the rapid development of digital technology. Currently in places such as schools high-end residential areas scenic spots
stations customs airports terminals office buildings and sports venues where there is a need for crowd management identity
verification and self-service charging management automated channel gates have gradually replaced the traditional manual ticket
checking or access verification mode.The pedestrian gate products meticulously developed by the Company integrate multimodal biometrics and radio frequency
identification and also feature multiple infrared passage detection functions for human bodies and objects enabling efficient intelligent
control and management of the channel. The Company has continuously delved into and expanded in core technologies such as video
29ZKTeco 2024 Annual Report
detection image recognition behavior analysis and feature comparison. With its leading multimodal BioCV technology and the
outstanding ZKTeco cloud IoT platform Minerva IoT it provides strong and continuous empowerment for pedestrian channel products.Based on a precise understanding of the demand characteristics of different pedestrian channel scenarios the Company has
successfully developed a series of self-service settlement and passage products and solutions that can meet the usage needs of various
scenarios such as libraries sports venues scenic spots conferences unmanned supermarkets communities schools airports border
inspection subways and high-speed railway stations fully promoting the upgrade of convenient travel experiences in these passage
scenarios. The Company's independently developed video passage detection algorithm and device can accurately detect promptly
alarm and effectively dissuade abnormal behaviors such as tailgating intruding walking side by side and hugging leveraging
advanced AI technology. This innovative achievement not only significantly reduces the workload of staff but also significantly
enhances the security of control and the accuracy of passage data.During the reporting period the Company in response to the demands of high-end commercial scenarios actively promoted the
in-depth integration and application of cutting-edge technologies such as multimodal recognition holographic projection and smart
commercial displays with pedestrian gates continuously exploring innovative applications and striving to provide customers with
more high-quality and intelligent solutions.The Company's main channel products are as follows:
Tripod Turnstile Flap Barrier Swing Barrier Full Height Turnstile Periphery products
* Smart parking
To build a smart space operation ecosystem the Company relies on a "cloud + edge + AI" technology architecture to create an all-
scenario smart parking and charging integrated solution. This solution takes digital twin technology as its core and through the digital
transformation of all elements achieves the deep integration of the physical and digital spaces of parking lots and builds a smart
management system that coordinates people vehicles charging piles and parking spaces. This solution can easily realize self-service
charging self-service payment and real-time cloud management helping parking lots and operation entities comprehensively improve
their smart parking and charging management levels.Based on the smart space central system the Company integrates AI technologies such as 5-megapixel license plate recognition
parking space status perception and charging load prediction as well as a smart terminal matrix including intelligent license plate
recognition all-in-one machines automatic barriers charging piles parking space management cameras and parking space locks to
create an all-scenario smart parking and charging integrated solution.
30ZKTeco 2024 Annual Report
During the reporting period the Company successively released unmanned self-service terminals upgraded 5-megapixel license
plate recognition all-in-one machines card-type intelligent barriers and drop-down barriers and other smart parking products as well
as 7kW AC charging piles and 30kW and 240kW DC charging piles making the smart terminal product matrix more complete and
better meeting the parking and charging integrated management needs of various application scenarios such as administrative agencies
enterprises and institutions industrial parks industrial zones shopping centers scenic spots communities and public charging stations.This helps operation entities achieve digital operation management improve the utilization rate of charging and parking reduce the
operating costs of parking lots increase efficiency and reduce staff and also provides car owners with a comfortable parking and
charging experience.As of the end of the reporting period the Company's smart parking solutions have covered over 120 key cities across the country.These solutions are serving more than 3800 smart space projects and managing over 800000 parking spaces. Furthermore a
remarkable connection rate of 98% has been achieved for charging facilities. This has culminated in the establishment of a leading
operational ecosystem for smart parking lot spaces within the industry.The product topology diagram of the Company's integrated management of charging and parking is as follows:
Mobile kiosk Remote opening of the Manual checkout Manual entry and exit Fixed vehicle
gate management
Income details Lane management Manual entry and exit Report management
Application Mini program Parking fee payment Monthly card renewal Lane monitoring Emergency call
layer
Cloud platform
Cloud kiosk Charging and parking with discount Order management Data dashboard
Management
Smart charging Charging equipment management Parking space Statistical analysis
system management
Service provider Operation group Parking lot Charging pile Parking space Profit sharing
Capability management management management management management management
layer Cloud device Cloud call Merchant Rate Electronic Bill management
management management management management invoice
Network
layer
License plate recognition
Intelligent barrier
all-in-one machine Charging pile
Equipment
layer
* Smart security inspection
The Company has developed a comprehensive smart security inspection product matrix for people vehicles and objects covering
all scenarios. It includes core equipment such as intelligent X-ray scanners walk through metal detectors handheld metal detectors
vehicle underbody scanning systems and liquid detectors. The Company possesses independent technical capabilities from hardware
R&D to AI algorithms. Relying on its intelligent recognition system driven by deep learning algorithms the Company launched a new
series of X-ray scanners integrated with intelligent analysis algorithms during the reporting period assisting security inspectors in
quickly identifying prohibited items. The people and bag association system accurately links the images of people and bags efficiently
tracing and restoring the security inspection process. The smart walk through metal detector combined with AI algorithms precisely
identifies prohibited items such as mobile phones and knives.The Company has formed professional solutions for the security needs of various scenarios such as rail transit large-scale events
judicial institutions major venues and hospitals. In recent years it has further extended to industries such as logistics sorting education
and factories developing smart security inspection products with industry-specific adaptability such as X-ray scanners mobile phone
walk through metal detectors and high-precision walk through metal detectors to build professional products and solutions covering
specific fields.The Company's main smart security inspection products are as follows:
31
Integrated management series for
charging and parkingZKTeco 2024 Annual Report
Smart X-ray scanners Walk through metal detectors Periphery products
* Broadcasting audio
As an auditory perception system broadcasting audio plays a crucial role in smart building spaces. It provides efficient and precise
information transmission for building spaces ensuring clear and timely broadcasting services in various scenarios such as meetings
performances and emergency evacuations.The Company offers a wide range of broadcasting audio products including analog broadcasting and network broadcasting which
can be integrated into the ZKBio software platform. Through the ZKBio platform they can be seamlessly connected with other
intelligent systems in the smart space enabling coordinated control and enhancing overall operational efficiency.Moreover the Company's broadcasting audio products emphasize audio quality employing advanced audio processing
technologies to ensure clarity and fidelity thereby creating a superior auditory experience for users. The products are designed to blend
seamlessly with the building space featuring simple and elegant appearances flexible and convenient installation and adaptability to
different architectural styles and spatial layouts.In addition they support remote management and intelligent operation facilitating maintenance and upgrades. They provide
strong support for the management of smart building spaces.The Company's main broadcasting audio products are as follows:
Power amplifier Microphone Speaker Speaker
Entrance: Entrance: Wall- Economy
Amplification mounted moisture-proofing
Rack: 60W prelude
3/6/10W Wall-mounted
10W
Luxury: Wall- Intermediate. Main
Wall-mounted: Standard: Color mounted and secondary
2*30W screen desktop 100W indoor 2*10W indoor
paging
Speaker Matching Matching Matching
High-end: Ceiling
Preamplifier
IP indoor NTP server satellite time
synchronization 2U EMC gain Audio decoding
Compatible with PA01-CD01-01H
Horn IP Wall-mounted
25W outdoor Power sequencer MAX6600W Fire protection collection: control terminal
16/32 short circuit PA01-CD01-01H
matching
32ZKTeco 2024 Annual Report
* Intrusion alarm
In the smart building space the intrusion alarm system plays a crucial role in safeguarding security. It integrates multiple detection
technologies such as infrared microwave sound waves and vibrations to ensure precise perception of abnormal situations. In terms
of communication methods the Company offers a hybrid intrusion alarm system with both wireless and 485 bus connection options
which can be integrated into the ZKBio comprehensive software platform. Through the ZKBio software platform seamless integration
and linkage with sub-business systems such as CCTV and access control can be achieved forming an integrated security solution to
meet the needs of different building environments enhance overall security management levels and provide a solid guarantee for the
safe operation of smart building spaces.The Company's main intrusion alarm products are as follows:
Vibration Infrared Bus host Indoor invasion
optical fiber radiation/Button
Dual-beam
infrared
radiation Passive infrared detecGtoars/ Smoke detector
Alarm button
Vibration optical
fiber host ZKBio intrusion alarm Passive infrared Glass breakage/Water
system detector immersion detector
Perimeter Pulse fence Bus host Accessories
fence
Tension Pulse
Defence area module Defence area module
fence fence
host host
Split-line alarm
host Alarm keypad Other accessories
* Smart environmental perception
In smart building spaces IoT devices optimize office environments and resource utilization through interconnection and real-time
monitoring assisting enterprise parks and office buildings in achieving energy-efficient and low-carbon operations.The main IoT devices include smart lighting systems smart air conditioning systems and smart curtains among others. Smart
lighting systems can automatically adjust brightness based on natural light and human activities saving energy while providing a
comfortable light environment; smart air conditioning systems can automatically regulate temperature and air volume through
temperature and occupancy sensors improving energy efficiency; smart curtains can automatically open and close based on light and
time coordinating with indoor light management.In addition there is a smart meeting system that integrates functions such as meeting reservations access control and equipment
management. Users can reserve meetings through a PC or mobile phone and the system will automatically notify relevant personnel
and prepare necessary equipment such as projectors and audio systems in advance. During the meeting the system automatically
adjusts the indoor environment to the best state. After the meeting the system automatically turns off related power-consuming devices
saving energy.The application of these IoT devices not only reduces energy consumption but also reduces the need for human labor through
automated management achieving a win-win situation of cost-effectiveness and environmental protection.The Company's main smart environmental perception products are as follows:
33ZKTeco 2024 Annual Report
* Smart video
Visual perception technology is a technique that uses sensors (such as cameras lidars infrared sensors environmental sensors
etc. and their integration) and algorithms to simulate the human visual system obtaining understanding and processing image or video
data from the spatial environment. Its core objective is to endow machines with the ability to "understand the world". Video image
acquisition devices have always been one of the main visual data entry points for spatial IoT perception systems.Based on visual perception technology and combining the Company's long-term technological accumulation in deep learning
BioCV computer vision AI and Minerva IoT cloud platform during the reporting period the Company provided a complete set of
competitive smart video surveillance product matrix mainly including: front-end smart network cameras back-end smart network hard
disk recorders smart edge analysis servers video storage services decoders splicing screens and other hardware devices. At the same
time it is combined with the supporting ZKBio integrated comprehensive management software platform and the cloud video mobile
app based on the Minerva IoT cloud platform comprehensively covering the end edge cloud and service integration and collaboration
of the smart video surveillance security system.During the reporting period by integrating and connecting the smart video perception system with other subsystems of the
Company such as the smart attendance system smart access control system smart channel security inspection system smart parking
system and smart building system and relying on the ZKBio Intelligent Integrated Management Platform to achieve global linkage
and empowerment of software and hardware the intelligent visualization management and intelligent linkage control of the overall
system were achieved effectively forming an overall security solution applicable to the spatial environment IoT perception.The Company's main smart video product matrix is as follows:
34ZKTeco 2024 Annual Report
Cloud
platform/
Minerval OT: Cloud platform App
ZKBio app Antar View Plus
Integrated
management system
ZKBio Shang'an Yuntong BS ZKTeco Zhilian
Smart network camera Smart edge computing box
Smart network video recorder
An integrated and comprehensive solution based on visual perception can be widely applied in various scenarios such as parks
communities campuses and enterprises. During the reporting period the Company mainly focused on creating and implementing
solutions for the vertical and specific scenario of smart parks in the smart video perception subsystem.The typical scenarios of the Company's smart video are illustrated as follows:
Typical solution application - Smart park
Area around the park Office building
Special materials High-magnification PTZ Intrusion alarm for key
storage area camera monitoring areas
High-magnification Perimeter protection Flame detection and
PTZ camera solution
area intrusion alarm
monitoring solution
Perimeter protection In parks
solution
Behavior analysis sleep-on-
duty and absence detection
fire passage occupation
detection etc.Smart box behavior
analysis solution
Entrance and exit
Warehouse Facial recognition license
plate recognition and the
linkage of face and license
Flame detection high- plate for barrier opening
definition full-color lamp
and area intrusion alarm Smart box behavior
analysis solution
Smart box vehicle
recognition solution
Parking area
Perimeter protection
solution License plate recognition Monitoring center
vehicle attribute
recognition vehicle shape
Wall Shang'an Yuntong
detection and illegal Integrated Management
parking alarm
Smart bo x vehicle Perimeter protection human
recognition solution shape detection and area
intrusion alarm
Perimeter protection
solution
* Smart building space solution
The smart building space solution can provide timely background music to create a relaxing atmosphere control the fresh air
system to keep the air fresh and pleasant sense temperature and humidity to offer a comfortable environment simplify user operations
with smart voice interaction reduce elevator waiting time with smart elevator scheduling and automatically adjust the number of lights
by combining light perception and weather forecasts. Through advanced digital and intelligent technologies it enhances personal
experience from multiple dimensions.The smart building space solution aims to achieve intelligent and efficient building operation by integrating multiple functional
35
Cloud Service Edge End
Integrated management End edge and side smart devices
software platformZKTeco 2024 Annual Report
modules such as access control systems visitor systems elevator control systems public broadcasting systems parking systems video
perception systems and intrusion alarm systems along with full business integration and global linkage thereby improving the
building's safety and convenience.In addition the smart building space solution supports emergency response mode integrating smoke and fire detection systems
covering smoke detection emergency notifications broadcasting and opening of escape routes. It ensures rapid response from fire
occurrence to event handling and minimizes personnel and property losses in emergencies.The architecture diagram of the Company's smart building space solution is as follows:
Video Survellance
Fire Detection
Meeting Room
Montoring Room
Entrance Control &
3rdparty DCS System
Attendance
PerimeterProtection
Visitor Self-Sevice Kiosk
Muster Polnt
Parking
* Smart apartment space solution
The smart apartment space solution integrates multiple functional modules such as access control elevator control video intercom
smart locks parking lot management consumption systems video perception and alarm systems achieving intelligent and efficient
apartment operation.In terms of personnel management access control and entrance/exit control devices are installed at key locations such as apartment
entrances and passages effectively preventing unauthorized personnel from entering and reducing potential security risks.In terms of visitor management the solution offers an integrated solution including self-service reservation and biometrics
enhancing the visitor experience and management efficiency.The parking lot management module uses license plate recognition technology to automatically identify and restrict external
vehicles from entering enabling seamless passage and improving user experience.The video perception and smart analysis module deploys high-definition cameras and intelligent video analysis edge servers to
36ZKTeco 2024 Annual Report
comprehensively monitor and intelligently analyze key areas of the apartment such as perimeter protection and key personnel control
effectively enhancing security levels.Furthermore the solution emphasizes data security and privacy protection adopting the ZKBioHA high availability solution to
ensure data integrity and security meeting high standards for data security requirements.The architecture diagram of the Company's smart apartment space solution is as follows:
Access control for public areas and Resident's room
elevator control in the building
Video intercom
Smart lock Guest app
Corridor Video intercom Elevator indoor unit
surveillance facial machine control host
Convenience store/Shop
Parking lot/Public area
Point of Sale
Palm/Face (POS) cash Anti-theft video
Video surveillance + Video recognition alarm + POS register surveillance
Emergency assistance linkage
(Video evidence of the vehicle occupying the Public meeting
fire lane scraping and brushing)
room/Activity room
Security room
Conference Electronic IOT control panel + Air
information whiteboard conditioner/Light/Curtain control unit
screen
Handheld identity Visitor registration Video intercom Entrances and exits
verification machine management machine IT computer room
device of the building
Main entrance and exit
SIP 2.0 Audio and
ZKBio server Video Converged
Video intercom SIP video intercom access
Pedestrian gate ZKBio software platform
Communication
LPR + Vehicle gate Emergency rescue control integrated machine
Management Platform
machine
(2) Smart office business
The Company with multimodal BioCV technology and IoT perception technology as its core provides intelligent solutions for
enterprises and institutions covering scenarios such as attendance visitors meetings and consumption aiming to optimize time
management and operational efficiency. These intelligent solutions integrate AI agents and cloud technology to create an intelligent
time management solution and a one-stop smart office ecosystem making work more efficient and enjoyable.* ZKTeco Interconnection: AIoT Cloud Scene Ecosystem Platform
The Company continuously innovates cloud service products based on the demands of IoT scene ecosystems to meet the diverse
needs of SMEs. By deeply integrating technology and scenarios it is committed to providing efficient convenient and secure digital
solutions for SMEs helping them transform from a rough to a scaled and formalized operation.ZKTeco Interconnection adheres to the product philosophy of "miniaturization rapidity lightness and precision" and tailors
cloud service products for the digital transformation needs of SMEs. The Company emphasizes the ease of use and practicality of its
products to ensure that enterprise users can "use them proficiently effectively and frequently". Through the integration of "end-edge-
cloud + AI" technologies ZKTeco Interconnection products can achieve comprehensive perception intelligent analysis and efficient
management. By continuously investing in R&D the Company deeply integrates new technologies with scene solutions to provide
better cloud scene solutions for enterprises.The ZKTeco Interconnection: AIoT Cloud Scene Ecosystem Platform scenarios are as follows:
37ZKTeco 2024 Annual Report
ZKTeco Interconnection: AIoT Cloud Scene Ecosystem
Platform
Equipment display
Mobile phone Check-in
check-in reminder
Fieldwork Record
Cloud check-in query
attendance Check-in after Report ZQ1 ZQ2
leave export
application Cloud attendance Cloud attendance
machine machine
Cloud access control
Mobile Permission
phone access management
control
Remote door Event record
opening
Dynamic Event linkage
ZQ3 ZQ102-HL
password
Cloud attendance Cloud attendance
machine machine
Cloud video
Motion AI
detection analysis
Cloud alarm Region Record
control query
Anti- Gas alarm Status Event zFace1702-HL xFace600-HL
theft monitoring warning Cloud attendance Cloud access
alarm
Smoke Water machine control
alarm immersion
alarm
FViirsei tor EmVeirsgietonrc'sy
ianlvairtmat ion arleacrmor d
Cloud Visitor Trajectory
visitor
approval tracking
Visitor Report
access export
control xFace320-HL nFace260-HL
Cloud access Cloud access
control control
The ZKTeco Interconnection Cloud Scene Solution mainly includes the following contents:
? Cloud attendance: Achieve remote attendance management and improve attendance efficiency;
? Cloud access control: Remotely control and manage access control systems to enhance security levels;
? Cloud visitor: Manage visitor information and improve visitor management efficiency;
? Cloud video intercom: Realize video intercom functions and enhance communication efficiency;
? Cloud video: Achieve video perception and intelligent management to enhance security prevention capabilities;
? Cloud consumption: Record and manage enterprise consumption data and provide consumption analysis reports;
? Cloud alarm: Security alarm system achieving real-time monitoring of abnormal situations and timely issuance of
alarm notifications;
? Cloud store inspection: Achieve remote store inspection management and monitor store operation conditions through
digital means to improve management efficiency;
? Cloud device management: Facilitate device management and monitoring of device status to enhance O&M efficiency.Product value of ZKTeco Interconnection Cloud Scene Solution:
A. Product value provided to partners
38ZKTeco 2024 Annual Report
After the product is launched it can provide partners with customer management application subscription management product
after-sales service digital marketing tools and strategies intelligent equipment O&M systems etc. It can guide partners in transforming
their marketing models from the current role of channel service providers which primarily focus on product sales to a more
sophisticated marketing model that emphasizes delivering high-quality services to users and engaging with them on a deeper level.This transformation will facilitate connections with new business models.B. Product upgrade provided to customers
After the product is launched combined with the mobile Internet and IoT ecosystem it provides convenient product forms for
end users and various cloud-based SaaS applications such as cloud attendance cloud access control cloud visitor cloud consumption
and cloud video. Users can subscribe and combine them flexibly according to their current business needs and scenarios and can also
expand them elastically according to the needs of their own enterprise development. The product creates a software and hardware
integrated scenario-based and intelligent product experience through various product forms such as mini-programs and apps.C. Upgrade of product marketing and operation model for new business paradigms
After the product is launched combined with the current new trends in digital marketing it builds a marketing and operation
model suitable for new user groups through the WeChat official account ecosystem TikTok ecosystem etc. Based on the operation
strategies of public and private domain traffic it connects the entire chain of customer acquisition retention conversion repurchase
and viral growth playing a bridging role in the construction of a digital marketing system and connecting the "user - service provider
- ZKTeco" ecosystem platform to build new business competitiveness.D. Upgrade provided to ZKTeco
Through the refinement of the product and the agile iteration verification process in the market a new digital management
architecture for ZKTeco's marketing organization is gradually built to achieve the transformation from a one-size-fits-all market
demand to a personalized market demand. With a new and efficient organization it dynamically meets the agile demand chain of new
user groups. At the same time based on the analysis of various data such as user data device data application data scene data and
sales data it improves marketing decision-making efficiency and accurately positions the direction of product iteration.* ZKTeco Cloud Commerce: Digital and Intelligent Marketing Service Platform
By continuously promoting the construction of a new digital marketing system for "online + offline" channels it helps partners
enter the era of digital marketing. ZKTeco Cloud Commerce focuses on creating industrial internet community platform tools such as
product stores solution stores application stores knowledge stores and service stores serving millions of B2B practitioners and end
users. It helps partners continuously evolve throughout the entire chain of marketing customer expansion operational monetization
and online services strengthens industry chain's collaborative growth and achieves resource optimization and allocation. It is
committed to becoming a trusted one-stop high-quality product and service provider for users collaborating with service providers to
develop from traditional operations to digital operations and providing customers with high-quality products and services through a
one-stop digital marketing service platform.Interface and functions of ZKTeco Cloud Commerce digital and grid-based marketing system:
39ZKTeco 2024 Annual Report
Workbench
It integrates my order matching common tools
for ZKTeco's various product lines the
Service resource center and the service network of Business Card
authorized service providers among other
Service providers can query the common functions and contents. Multi-dimensional information display and minimalist business
problem-solving methods for general card creation. Users only need to fill in four basic pieces of
equipment through this section. information: name mobile phone number company and
position to generate a simple and professional digital business
card. It also supports multiple layout templates and background
customization. It offers a comprehensive display of personal and
company business and the content can be updated at any time to
ensure its accuracy and timeliness.Home My
The user's personal center where all personal
Content base enabling users to use
information and data of the user on the platform are
marketing materials easily serve
gathered. Users can view and manage their potential
customers drive new sales service
customer sources points mall my plans case
development quickly query product
management data analysis etc. here.library view best-selling products
prominently select favorite products by
one click and quickly switch to product
detail page.The relevant functions are as follows:
[Home]: It includes a product database solution database marketing material database case sharing library information database
etc. serving as a digital information supermarket for marketing and customer acquisition.[Service]: The product FAQ database empowers after-sales service convenience meeting the technical support needs of partners
or enabling end customers to quickly self-diagnose product usage issues thereby enhancing service efficiency.[Workbench]: It includes mobile order placement product debugging tools and common product issue troubleshooting etc.facilitating partners in marketing and service work. Based on location services it connects the online and offline marketing and service
networks making it easier for customers to find us.[Business Card]: Based on the efficient and fast ecological dissemination capability of electronic business cards the new business
card module enables partners to quickly create their company homepage information through the ZKTeco Cloud Commerce marketing
system and connect with customers through business cards to accumulate their own private domain traffic.[My]: A system management assistant that makes operations simpler.ZKTeco Cloud Commerce empowers B2B practitioners in marketing and service and in conjunction with the offline [Smart
Account] marketing service system and continuously builds an [offline + online] front-end marketing and service and back-end
organization and coordination of new organizations. Through continuous system construction and improvement it will provide digital
and intelligent assistants to partners throughout the entire sales process from pre-sale to post-sale. At the same time with the continuous
construction of the offline [Smart Account] marketing center it will provide convenient and reliable support to end users in product
experience marketing services training delivery and local after-sales support continuously enhancing end users' loyalty and stickiness
to the brand.* Ralvie AI: Intelligent Time Management and Productivity Engine
Ralvie AI is a new generation of AI agent tailor-made for the work management and efficient operation of enterprises and
individuals. Through in-depth analysis of work data by AI Ralvie AI helps enterprises optimize time accounting dig out the value of
every minute and second and comprehensively improve employee performance. It not only provides real-time key data insights but
also generates detailed analysis reports to support managers in making smarter decisions quickly. The core functions of Ralvie AI
include automatic work record grouping personalized summary generation and continuous optimization of operational efficiency
through machine learning analysis of employee behavior. Through Ralvie AI enterprises can precisely control the value of time
efficiently allocate resources and gain comprehensive business insights maintaining a leading edge in the rapidly changing market
environment.
40ZKTeco 2024 Annual Report
The functional diagram of Ralvie AI is as follows:
Ralvie AI is an agent designed for efficient work.It does not merely record time; it redefines its value. Through deep learning and behavior analysis Ralvie intelligently records
summarizes and optimizes every effort you make ensuring that every second yields real results.Core concept: Let time work for you.Ralvie AI utilizes an AI-driven automation mechanism to continuously observe learn from and optimize the work behaviors of
individuals or organizations. It not only provides real-time insights and detailed reports but also proactively offers optimization
suggestions to help you make efficient decisions and enhance performance.Ralvie AI Work Time Accounting Form Diagram:
Core functions of Ralvie AI:
41ZKTeco 2024 Annual Report
A. Automatic work record and activity grouping
? Precisely record users' operation behaviors and time spent on various applications and websites.? Automatically generate time logs for analysis and settlement.B. Intelligent project and time management
? Distinguish billable from non-billable time.? Analyze resource input and support better resource allocation strategies.C. Intelligent work hours statistics and performance suggestions
? Generate dynamic work reports by day week and project.? Provide actionable performance improvement suggestions.D. AI-driven summary and mapping function
? Provide daily and weekly work summaries extracting key events and data.? Smartly map user activities to corresponding projects and tags continuously learning user behavior
preferences.E. Visual reports and insight support
? Offer cross-dimensional insights for managers to enhance organizational decision-making speed and quality.Ralvie AI Work Time Accounting Form Diagram:
Applicable scenarios: Comprehensive coverage of all types of work roles
*Freelancers/Remote workers
? Precisely record the time spent switching between multiple projects.? Enhance the return on investment and optimize the allocation of working hours.*Corporate employees/Team members
? Improve collaboration efficiency and track progress bottlenecks.? Automatically analyze team resource waste points to help projects be completed on schedule.*Students/Researchers
? Track time input in courses and research.
42ZKTeco 2024 Annual Report
? Optimize personal learning paths and improve knowledge absorption efficiency.*Management/Founders
? Build a data-driven operational optimization closed loop.Business model: Flexible support for individuals and enterprises
*Enterprise subscription version: Can be distributed in bulk. It centrally manages project progress and employee time.*Personal subscription version: Suitable for freelancers and personal growth managers to use flexibly.
(3) Digital identity authentication business
ZKTeco integrates multimodal BioCV large models and blockchain technology to create a precise secure and convenient identity
authentication system laying a solid foundation of trust for the digital world. The Company's related products and system platforms
utilize the uniqueness of biometric features and the deep learning capabilities of large models and combine the decentralized and
immutable characteristics of blockchain to ensure the accuracy of identity verification and data security making identity authentication
safer and more trustworthy.* Smart terminal products:
The Company's digital identity authentication products mainly include multimodal biometric products reading machine products
trusted digital products and industry smart terminal products etc. During the reporting period the Company launched a new generation
of multimodal palm recognition products which integrate high-definition visible light cameras and near-infrared cameras and are
equipped with algorithm chips capable of achieving multimodal palm collection and recognition functions. Palm products are closely
integrated with scenarios such as attendance access control and channels providing users with safe and efficient identity verification
services.The Company's main digital identity authentication smart terminal products are as follows:
43ZKTeco 2024 Annual Report
Smart Human Certificate Verification Terminal
Biometric Products
Reading Machine Products
* One Card Solution Cube Identity Authentication Management System
The One Card Solution Cube Identity Authentication Management System is a "real person system" identity verification system
independently developed by the Company based on multimodal biometric technology for "the integration of people and certificates".It consists of two parts: the Human Certificate One Card Solution Cube Terminal Software (APP) and the Identity Authentication
Management Platform integrating the Company's ZKLiveFace facial recognition algorithm and ZKFinger V15.0 ID card fingerprint
comparison algorithm. The software can read 2nd-generation ID cards Residence Card for Hong Kong Macao and Taiwan Residents
foreign permanent residence permit and other certificate information compare the fingerprint or face of the holder on the spot for the
"integration of people and certificates" and accurately and quickly verify user identity information. One Card Solution Cube Identity
Authentication Management Platform has functions such as intelligent device management personnel management and black/white
44ZKTeco 2024 Annual Report
list monitoring which can achieve real-time and comprehensive multi-dimensional monitoring and analysis of devices personnel and
data. Moreover the One Card Solution Cube Identity Authentication Management System supports access to large capacity facial
recognition servers CTID Platform (Trusted Identity Authentication Platform) and million-level large capacity facial backend
verification and trusted identity authentication capabilities providing authoritative reliable stable and secure identity authentication
services for customers in different vertical fields and providing a one-stop industry solution of "core algorithm+smart
terminal+software platform+scenario application" for the identity authentication industry chain.The system topology diagram is as follows:
Third party
Visitor system
Visitor QR code Other functions
appointment
Scan the QR Manual Scan the QR code QR code Message Visitor's Account
code for appointmen QR code for sign in sign off notification record cancellation
appointment
Mobile t
passage Data
end APP
ERP
WeChat Data Scan QR code Scan QR code Docking system
invitation dashboard for follow-up to sign off
Appointment Message Reception Access QR
approval notification records code
Third party
Data Device Personnel device
management management management management
system
Original Statistical Regional Device Advertising Ordinary Whitelist Department
Blacklist records report settings management management personnel management
Visitor management Identity authentication
Visitor's Traffic Visitor Visitor Mini program Human Large capacity
certificate OA system
record records devices settings management verification comparison server
System settings
Basic Change User Database Command Operation https Dictionary Standard
settings password management backup monitoring log configuration configuration interface
Business API
interface
Nacos Application layer Docking
Basic framework Business services
Basic components
Public Service
Data Personnel Whitelist Blacklist Server
Device management management connection Product
perception
layer
Authentication Verification Advertising Visitor Visitor Adaptation
method function management settings function
* Biowhois CTID Platform
Biowhois CTID Platform is an identity authentication SaaS service platform launched by the Company based on multimodal
biometric technology and an "Internet+" CTID Platform. It can provide developers and industry users with multimodal biometrics
online identity authentication real name offline identity authentication and other open scalable cross-platform multi-dimensional
identity verification services. The data interconnection between Biowhois CTID Platform and "Internet+" CTID Platform can provide
users with authoritative reliable stable and secure online identity authentication services such as two real names two real people four
45
Visitor end Managem
ent
End
Application layer Service layer
One Card Solution Cube
Management SystemZKTeco 2024 Annual Report
real names four real people etc. which can not only intelligently upgrade the existing offline identity authentication scenarios in
finance medical care government affairs transportation education etc. but also is suitable for internet identity authentication
scenarios such as e-commerce online games social networking sites online education online healthcare and online live streaming in
the digital economy.The system topology diagram is as follows:
Finance Medical Government Traffic Educatio
treatment affairs n
Control Mini programs and Information collection
interface cloud platforms detection input and recognition
Fingerprint Large capacity Two Two Authenticat
comparison fingerprint real real ion Data/Device
comparison names people
certificate
Authentication Visual Large capacity Four Four
compar visual real real QR code
Human certificate Technical
capabilities comparison verification
ison names people support
Multimodal Privatization One Card
backend comparison CTID Platform Solution Cube Middleware
comparison server Identity
system Authentication
System
Privatized Internet Real name system
Service model hybrid biometrics services trusted identity offline identity
authentication service authentication service
Biowhois CTID Platform
Industry scenario solutions:
During the reporting period based on the existing rich identity verification products the Company deeply integrated specific
segmentation scenarios and incubated identity verification solutions for three major segmentation scenarios: "smart examination smart
healthcare and smart welcoming".In terms of intelligent examination solutions based on the needs of candidate identity verification can cover the entire business
scenario of candidate information collection candidate identity verification and examination data analysis before during and after the
examination. The solutions can not only be self-contained and directly implemented but also seamlessly connect with third-party
standardized examination place construction plans with competitive advantages such as intelligence convenience and flexible
deployment.In the medical field the Company has launched a smart medical identity verification solution for identity verification scenarios
such as newborn birth medical certificates and assisted reproductive management. The solution not only meets the information
collection and identity verification needs of various windows in the hospital but also can be securely integrated with the hospital and
third-party systems to achieve the embedding of identity verification function modules helping major medical institutions provide
patients with high-quality and caring medical services. The related products have been put into use in hospitals in multiple provinces
and cities in China providing effective assistance for standardized hospital services.In terms of smart welcoming it has driven the entire process with the core business of new student enrollment and registration
and created an integrated smart welcoming management solution that combines the new student Human Certificate Verification
Terminal and the management platform of the new student enrollment and registration. This solution comprehensively solves the
vertical connection of affairs and data between departments before during and after the new student enrollment in universities
improves the overall efficiency and quality of the new student enrollment work and can meet the identity verification and management
needs of different universities for new student enrollment.
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Standard system
O&M support system
Security management systemZKTeco 2024 Annual Report
(4) Smart business services
With "AI + digital signage" at its core the Company helps the retail and catering industries move towards a borderless smart
ecosystem enhancing consumer experience and business growth making business smarter and simpler.The topology diagram is as follows:
Level 3 (Managed and Service Application System) Level 3 (Digital Signage Mobile APP)
Organization Device Biometric
Certification management management Subscription Storage Position Notification Verification credential
Communication
layer
Hardware
As a smart business brand under the Company ZKDIGIMAX has launched a new digital visual marketing solution -
ZKDIGIMAX Level 3 which is tailor-made for the general retail and catering industries. This solution integrates five core services
and six smart perception terminals to build a new ecosystem of borderless retail that covers the entire scene and the entire chain. The
five core services include: Minerva IoT a cloud IoT platform from ZKTeco a machine vision analysis platform a big data analysis
platform an AIGC content generation platform and an advertising production and distribution platform; the six smart perception
terminals cover digital signage smart cameras smart edge gateways smart shopping carts intelligent robots and positioning sensors.ZKDIGIMAX Level 3 relies on scene perception AI interaction visual analysis and deep learning technologies to deeply
empower smart retail. Through advanced machine vision analysis technology it accurately captures multi-scenario data such as
consumer movement lines preference insights and product displays and structures and outputs it. Based on multi-dimensional smart
business analysis of the data lake it further helps enterprises achieve refined operations and decision-making optimization. Whether it
is enhancing the consumer experience or optimizing marketing strategies this solution helps the general retail and catering industries
move towards a new future of intelligence unmanned operation and borderlessness with its all-round digital capabilities.The architecture diagram of ZKDIGIMAX Level 3 is as follows:
47ZKTeco 2024 Annual Report
Scenario
Smart retail and smart commercial display Retail media services
O&M CMS information AI passenger flow Online content design
Electronic price tag
Level 3 release system analysis system system
system
IoT platform Big data analysis platform
Machine vision analysis
Minerva loT
platform
Content template Applications of large models Capability
AIGC DeepSeek Content distribution and
production platform
Equipment management identity authentication edge computing
subscription service Data lake
Communication TCP/IP WIFI 4G and communication base station
LCD & LED signs AI interactive signs AI passenger flow sensors electronic price tags smart shelves and
Terminal
retail robots
* Smart business terminal products
Horizontal screen digital signage Desktop digital signage LCD splicing screen Conference all-in-one machine
LCD Vertical advertising machine Welcome digital signage Mobile screen Shelf screen
products
Direct-display module Flexible module Magic cube screen
LED Crystal film screen Grille screen Poster screen
products
AI interactive signage Vertical AI interactive signage AI passenger flow camera
AI
products
E-ink screen Color screen price tag Communication base station
Electronic
price tags
* Smart business scenario solutions
A. Digital marketing solution for chain retail scenarios
The Company focuses on the convenience store industry within the chain retail scenario providing digital solutions for attracting
customers and increasing sales to operators as well as efficient and real-time marketing solutions to brand owners.The application scenario diagram of the digital marketing solution for chain retail scenarios is as follows:
48
Developer Services & Standard API AgreementZKTeco 2024 Annual Report
3. Vertical digital
signage
6. Electronic price tag
4. Shelf digital colored screen
1. LCD splicing signage
screen
5. Electronic price tag
e-ink screen
7. Smart shopping
2. Show window cart
digital signage for
customer attraction
8. Intelligent shopping
guide robot 9. AI passenger flow
sensor
10. Self-service POS
terminal
The digital marketing solution for chain retail scenarios covers five core areas:
a. Store windows providing LED all-in-one machines and magic cube screens. Through creative content design it attracts
attention and brings in customers for the store.b. Store checkout areas offering ultra-narrow four-sided LCD digital signage. Through physical splicing and content design it
provides a more impactful visual effect for in-store consumers enhancing the dissemination of corporate culture and brand power.c. Store promotion shelf areas providing intelligent shelf solutions that include digital signage AI cameras sensors and other
intelligent hardware. It offers comprehensive perception data for brand launches and promotions.d. Store cold storage areas as high-frequency marketing activity areas providing digital signage as activity carriers and advertising
production and distribution platforms for generating and releasing activity content. It efficiently and quickly completes marketing
activities.e. Store product areas providing a complete electronic price tag solution. Through system-level data connection it makes price
changes and adjustments for store products efficient and precise.B. Zero-carbon kiosk solution
The Company offers a zero-carbon kiosk smart retail solution that integrates supply chain stores and marketing for open spaces
such as scenic spots and parks. The zero-carbon kiosk aims to become a new benchmark for unmanned smart retail. This solution uses
photovoltaic power supply to achieve green energy conservation and cloud monitoring for 24-hour unmanned operation. Customers
enter by scanning a code self-check out and receive real-time support from back-end customer service. This solution can save costs
improve efficiency and provide consumers with a convenient and environmentally friendly new shopping experience.The application scenario diagram of this solution is as follows:
49ZKTeco 2024 Annual Report
The zero-carbon kiosk smart retail solution encompasses four major product clusters:
a. Clean energy: Using photovoltaic power generation and a complete energy storage system it provides 24/7 power supply for
core areas of the store's daily operations such as the checkout system and access control system ensuring that consumers can still shop
normally in case of abnormal mains power supply.b. Store integration: Using standard containerized cabinets the overall design and decoration of the store are completed in a
factory process and can be set up simply by transporting and placing them at the destination offering convenient delivery.c. Cloud agent store monitoring: Through self-checkout remote monitoring and personal credit authorization the overall concept
of unmanned retail is adopted to easily achieve store operation.d. Managed operation: On the basis of providing a supply chain the price tags and digital signage in the store are all managed
uniformly through the cloud enabling automatic price changes in the store regular updates of promotional content scenic area public
welfare content and brand advertisements on digital signage.(II) The Company business model
1. Procurement model
(1) Procurement execution
In order to fully leverage the advantages of centralized procurement reduce procurement costs improve operational efficiency
and optimize procurement resources the Company has a Procurement Center that manages the procurement of electronic materials
structural components and other materials required in the production process.The Procurement Center consists of three departments: Resource Development Department Executive Procurement Department
and Comprehensive Procurement Department. Among them the Resource Development Department is mainly responsible for
developing and managing supplier resources following up on samples and conducting business negotiations during the sampling
period. The Executive Procurement Department is mainly responsible for executing purchase orders and following up on material
delivery and reconciliation and payment request. The Comprehensive Procurement Department is mainly responsible for administrative
office and fixed asset procurement except for production materials.The Company mainly adopts the MRP procurement model. The material control specialist of the Company's Manufacturing Center
mainly analyzes the raw material usage based on the production plan and the material structure of the product formulates priority
levels allocates materials based on inventory and gradually deduces the raw material procurement plan required for the production of
the product. For some general materials the Company has set up a minimum safe stocking point for inventory warning and
replenishment.
50ZKTeco 2024 Annual Report
(2) Supplier selection and management
The Company has established strict supplier selection and management measures. For newly introduced suppliers who need to
develop new products expand supply resources and reduce costs after the supplier submits basic information the Resource
Development Department of the Company's Procurement Center will organize the Material Certification Department the Executive
Procurement Department the Manufacturing Center and the R&D Center to conduct on-site reviews of the supplier. For suppliers who
pass the assessment formal certification will be carried out for storage.In the daily procurement process in order to ensure the quality of the Company's raw material supply except for the SAM (security
module) involved in the card business which can only be purchased from Xingtang Communication Technology Co. Ltd. the only
supplier selected by the Ministry of Public Security the Company usually selects two or more suppliers that meet the Company's
certification standards for the main raw materials for supply. The Company will also strengthen the management of suppliers by signing
relevant "Supply Quality Agreement" and conducting monthly and annual reviews. Suppliers with scores below 60 for three consecutive
months will be disqualified from being suppliers.
2. Production model
From the perspective of process characteristics the Company's smart terminal products are mainly produced by the production
methods of processing and assembly. According to the different production planning methods the production method can be divided
into two production models: Make to Stock (MTS) and Make to Order (MTO). In MTS the Company makes production plans based
on historical sales data and sales strategies for standardized products and maintains an appropriate amount of finished goods inventory
to respond quickly to market demands. In contrast in MTO the Company organizes production based on customer orders taking into
account the customers' personalized demands for product types model specifications and performance. The finished products are
directly delivered to customers without the need for finished goods inventory thus avoiding inventory overstock and enhancing
customer satisfaction.The Company's application software and platform products support two delivery and service models: localization and cloud
subscription after being developed and tested. In the localization model the Company's application software and platform products are
independently deployed used and managed by users in their local environment. The Company provides software installation packages
which users can download from CDs or the official website and install. The basic version can be activated for free while the advanced
version software and platform functions require payment of software license fees. For large-scale engineering projects the Company
can dispatch engineering personnel to the user's site to provide installation commissioning and training services. In the localization
model the Company does not participate in software operation and only provides necessary after-sales technical support based on the
sales contract. In the cloud subscription model users can access and use the Company's application software and platform via the
Internet without local deployment and maintenance. Users can choose the subscription service that suits their actual needs. In the cloud
subscription model the Company is responsible for the continuous operation maintenance security protection and version updates of
the software and provides customer support and technical services to ensure a stable and reliable user experience.
3. Marketing and management models
The Company adopts a sales model that combines distribution and direct sales.
(1) Distribution model
In the distribution model the Company's customers are mainly dealers and the relationship between the Company and dealers
belongs to a purchase and sales relationship adopting a buyout sales method.
(2) Direct sales model
The Company's direct sales customers mainly include system integrators engineering contractors end users etc. On the one hand
the Company can provide smart terminal devices and application software platforms to system integrators and engineering contractors
which can integrate or include the aforementioned products in products systems or engineering services sold to downstream end users.On the other hand the Company can also directly sell to end users through offline direct sales or online self operated platforms.Normally the Company's direct sales business can be divided into two categories based on whether installation and O&M are
required: product sales and project implementation. For project implementation related businesses the Company will customize its
51ZKTeco 2024 Annual Report
own smart terminals and application software platforms based on different engineering project requirements and provide O&M services.(III) Market position of the Company's products during the reporting period
The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for five consecutive years from 2020
to 2024. In 2024 it ranked 15th on the list and was awarded awards such as "Top 50 Innovation" "Top 10 Brands in Smart Security"
"Top 10 Brands in Smart Transportation" "Top 10 Brands in Smart Education" "Top 10 Brands Intelligent Manufacturing" and "Top
10 Brands in Smart Buildings" in 2024 Global Industry Digital Innovation Ranking by asmag. It was selected by the organizing
committee and relevant institutions of the DC World as the "2024 DC World - Top Enterprise of the DC World Awards" and the "World
Digital City Construction Contribution Award" and awarded the "Honor Security Excellent Solution Award - ZKTeco Human
Certificate Verification and Identity Authentication Solution" "Honor Security Excellent Solution Award - ZKTeco Integrated Charging
and Parking Solution" and other awards. Meanwhile the zFace series facial and fingerprint access control terminals and the ZKTeco
X-ray security inspection equipment were awarded as the "Top 10 New Products" in China's security industry for 2024. It has been
awarded the "2024 Outstanding Security Industry Solution - Smart Park Solution" "2024 Pioneer of Chinese Security Enterprises
Going Global" "China Security 'Artificial Intelligence+' Initiative & 2024 AIIA 'AI+ Security' - Typical Case" and other awards by the
CHINA SECURITY & PROTECTION INDUSTRY ASSOCIATION (CSPIA). It has been awarded the "Outstanding IoT Solution
Award" and "Leading Brand in Access Control" by the organizing committee of the 2024 China IoT Industry Conference and the 21st
Huicong Brand Festival. It won the third place in the "2024 Top 10 Access Control Brands Award" and the "2024 Top 10 Smart Security
Brands Award" by China Intelligent Building and other entities. It ranked first on the "Top 15 Access Control Brands" list by the Latin
American security technology media SecuriTIC in 2023. In addition since 2016 the Company has been awarded the title of "Top 500
Manufacturing Enterprises in Guangdong Province" by Guangdong Manufacturers Association and other entities for 9 consecutive
years. In 2024 the Company joined the China Construction Industry Association and the Fujian Society of Artificial Intelligence
Science and Education (FSAISE). Guangdong Zkteco has been rated as a "SRDI small and medium-sized enterprise (SME)" by the
Department of Industry and Information Technology of Guangdong Province.During the reporting period Guangdong Zkteco has been recognized by the Department of Science and Technology of Guangdong
Province as the Guangdong Multimodal Computer Vision and Biometric Engineering Technology Research Center XIAMEN
ZKTECO has obtained the "ITSS Information Technology Service Standard Compliance Certificate" issued by the China Electronics
Standardization Association. The "ZKTeco Cloud IoT Platform" (Minerva IoT Platform) developed by XIAMEN ZKTECO has been
rated as "Information System Security Level Protection Filing Certificate (Level 3)".(IV) Key performance drivers
1. Biometric technology innovation and application expansion
The in-depth development of multimodal biometric technology: With the continuous improvement of information security
requirements multimodal biometric technology has become the mainstream trend in the market. ZKTeco has made continuous
breakthroughs in the field of multimodal BioCV technology such as the new generation of multimodal palm recognition technology
that combines the advantages of visible light palm recognition and palm vein recognition. By deeply analyzing the shape texture and
vein patterns of the palm it achieves higher authentication accuracy and security. The Company continuously optimizes multimodal
recognition algorithms and flexibly selects fusion methods and weight decisions based on different application scenarios and
requirements and its products cover multiple fields from employee attendance to smart access control and smart payment providing
users with more secure and accurate identity recognition solutions.The accelerated popularization of non-contact biometric technology: Non-contact biometric technology has experienced a
continuous expansion in its application scenarios driven by its efficiency and hygienic advantages. As an emerging non-contact
biometric method palm vein recognition technology is gradually becoming a new favorite in the field of biometrics. ZKTeco actively
participates in the formulation of relevant group standards for non-contact palm recognition technology promoting its application in
the financial and other fields and advancing the patent and technology layout of non-contact fingerprint capture devices. At the same
time the Company's facial recognition technology is also continuously optimized with the development of AI technology playing an
important role in scenarios such as real-name verification and intelligent monitoring and early warning.
52ZKTeco 2024 Annual Report
The deep application of biometric technology in mobile terminals: The application of biometric technology in mobile terminals is
becoming increasingly widespread. ZKTeco integrates biometric methods such as fingerprints faces and palms into mobile devices in
the form of BioCode QR codes providing convenient identity authentication and high-security application functions. In addition the
Company continuously explores the integration of biometric technology in mobile terminals with other applications such as combining
with mobile payment and smart office scenarios providing users with more convenient and secure mobile experiences.
2. Empowering business development with AI technology
Multimodal large models drive technological upgrades: Multimodal large models based on the Transformer architecture have
rapidly developed and become an important means for AI to perceive and understand the real world. ZKTeco closely follows
technological trends continuously iterates its BioCV VLM multimodal large model and applies it in the fields of biometrics and
computer vision. This not only improves recognition accuracy and efficiency but also enables the analysis of more dimensions of
information such as dynamic behaviors and environmental features providing users with more comprehensive identity verification
and scene analysis services.Widespread application of AI in various fields: The application value of AI in smart spaces smart offices digital identity
authentication and smart business is increasingly prominent. ZKTeco utilizes AI technology to achieve automatic monitoring and
automated office work enhancing security and work efficiency. In smart business scenarios through in-depth mining and analysis of
business data it provides accurate basis for enterprise decision-making and develops natural language interaction-based Q&A robots
to offer services such as intelligent frontend and intelligent customer service improving customer experience and operational efficiency.
3. Policy support and market demand growth
Continuous support from national industrial policies: The release of policy documents such as the "Outline of the 14th Five-Year
Plan (2021-2025) for National Economic and Social Development and Vision 2035 of the People's Republic of China" and the "Overall
Layout Plan for the Construction of Digital China" has provided a favorable development environment for the industry in which
ZKTeco operates. In the context of new infrastructure and Digital China construction the Company actively responds to policy calls
increases R&D investment in core technologies such as multimodal BioCV multi-dimensional perception smart terminals and scene
cloud service software accelerates product incubation and contributes to the construction of the digital industry ecosystem.Continuous growth in market demand: With the development of digitalization and intelligence the demand for biometric and AI
technologies in various industries continues to increase. ZKTeco leveraging its core technological advantages in "computer vision and
biometrics" and a rich array of product solutions can meet the needs of users in public services enterprises institutions and individuals
in areas such as identity recognition security protection and intelligent management presenting a broad market prospect.The global biometric technology has experienced significant advancements driven by the development of AI chips algorithms
and various other components. Driven by the need to enhance security and authentication the global application of biometric
technology is expanding to various industries and application scenarios. In governments and law enforcement agencies biometric
technology is used for border control national ID programs and public safety improving the overall security and efficiency of
government operations. In the banking and financial sector biometric authentication is used for customer verification and transaction
security reducing the risk of identity theft and fraud. In the healthcare industry biometric technology is used for patient identification
and access control reducing medical errors and ensuring secure access to health records. Moreover the integration of biometric
technology with self-service systems is increasing providing convenient and secure authentication for various services.III. Analysis of Core Competitiveness
1. Technological and R&D advantages
(1) Mastering the core algorithms of biometrics leading the industry in multimodal biometric technology
After years of in-depth R&D the Company has built a technology system focusing on single biometric technology and multimodal
biometric technology. In the field of single biometric recognition the Company has successfully developed biometric technologies
such as fingerprints palm veins palmprints facial features finger veins and irises. Among them the resident ID card fingerprint
53ZKTeco 2024 Annual Report
recognition algorithm has been recognized by regulatory agencies and is listed in the "Qualified List of Quality Consistency Evaluation
and Inspection of Resident ID Card Fingerprint Application Algorithms". The Company has become one of the seven recognized
manufacturers. In the field of multimodal biometrics the Company continues to innovate and has launched various multimodal
biometric technologies such as "fingerprint+facial recognition" "facial+palm vein recognition" "palm+finger vein recognition"
"fingerprint+finger vein recognition" "facial+iris recognition" and "fingerprint+palm+face recognition". It has obtained 18 invention
and utility model patents in the field of multimodal biometrics. In the future the Company will continue to increase investment in
multimodal technology R&D to provide users with more innovative products. In 2025 the Company ranked third in the international
fingerprint recognition evaluation FCV standard library test demonstrating the global competitiveness of its algorithms.The Company possesses core algorithms in the field of biometrics. In addition the Company also has a comprehensive industry
incubation ability to combine various application technologies with biometric technology providing strong technical support for the
development of smart retail finance security and other fields. As of December 31 2024 the Company has obtained a total of 963
patents including 171 invention patents and obtained a total of 739 computer software copyrights and 84 work copyrights
demonstrating its strong R&D capabilities.
(2) Ultra short delay supercomputing technology empowering edge deployment
The Company's unique ultra short delay supercomputing technology provides innovative solutions for the deployment of edge
and end devices in biometric technology with three prominent advantages:
Stability: This technology is deployed on edge and end devices without being constrained by network quality and stability. This
provides a more stable environment for applications and ensures efficient operation.Low cost: It can run on mid to low frequency chips (such as the ARM9 with 1GHz main frequency) which can effectively reduce
power consumption and hardware costs and avoid high requirements for chip manufacturing processes. It has achieved the freedom
of independent R&D.Security: This technology minimizes the transmission and centralized storage of sensitive information effectively avoiding the
risk of leakage and malicious attacks and ensuring privacy security.This technology maximizes the performance of edge devices providing revolutionary support for the wide application of biometric
recognition.
(3) Deep research on multimodal BioCV AI technology
The Company has evolved from a single biometric recognition technology to a pioneer in computer vision and biometric
multimodal BioCV AI technology. It is no longer just about identifying "I'll tell you who you are" but about combining computer
vision and biometrics to realize the multimodal AI attribute: "Who are you What kind of service should I provide for you" as well as
the empathetic experience ecology of scene interaction. Relying on its independently developed ZKTeco cloud IoT platform - Minerva
IoT the Company has launched the ZKDIGIMAX Level 3 digital marketing solution providing five core services (Minerva IoT
machine vision analysis big data analysis AIGC and advertising production and distribution) and smart terminal support for small
and medium-sized retailers. Through IoT big data and cloud computing the Company deeply explores the potential of smart retail
uses machine vision analysis technology to realize the interaction value between people and scenes builds a multi-dimensional smart
business analysis platform based on data lakes and creates a borderless retail service ecosystem covering all scenarios and the entire
chain.
(4) Large model technology + Edge AI + Smart space scenarios
Traditional entrance and exit management focus only on the passage control of people and vehicles limited to basic operations in
physical space. Baiaoruida focuses on the physical space computing of people vehicles and objects at entrances and exits emphasizing
the control of entities; ZKBio's proposed concept of "general entrance and exit" places people vehicles and objects in digital space
computing achieving a certain degree of digital upgrade. Based on the Mars Wisdom AI platform and BioCV TinyML edge AI
technology the Company has broken through the boundaries between the physical and digital spaces through AI cognitive space
computing technology. This enables the system to have a "smart brain" capable of deeply understanding the behavior patterns and
relationship networks of people vehicles objects and the environment within the space. Essentially it transforms the "physical space"
54ZKTeco 2024 Annual Report
into a "companion that understands you" bringing more convenient safe and comfortable personal and work experiences. It will also
redefine the relationship between humans and technology from "humans adapting to machines" to "smart devices serving humans".For example in large commercial complexes it can not only accurately identify every customer and vehicle but also analyze their
movement trajectories dwell times and other data to gain insights into consumption preferences and potential demands providing
precise decision-making basis for mall operations and achieving smart marketing and resource optimization allocation while
highlighting green environmental protection. The Company will continue to focus on technological integration and innovation
empowering traditional industries and providing in-depth customization for various industries. Facing the future of AIoT it will inject
more impetus into the intelligent transformation of industries.
(5) Large model technology + Smart office scenarios
The Company has launched the Ralvie AI time management agent tool. Ralvie agent with its efficient work record and data
analysis capabilities has become an indispensable smart assistant for enterprises. From helping employees optimize their work methods
to providing strategic support for managers Ralvie demonstrates a powerful ability to comprehensively cover business scenarios. In
the future Ralvie will further develop to a higher level and become the core engine driving the digital transformation of enterprises
helping them maintain a leading position in the competition.
(6) Large model technology + Smart retail scenarios
In the retail sector the Company utilizes computer vision technology to achieve shelf supervision product recommendation
customer flow analysis and support for unmanned stores. Through the research of the BioCV LLM3.0 large model the Company
empowers smart retail on the edge computing side supporting smart shopping guidance and content generation. The Company has
achieved local deployment of algorithms such as GPT and BERT and has reached the advanced level of open-source projects on
medium-scale corpora continuously enhancing product interaction experience and market competitiveness.
(7) R&D team and external cooperation advantages
The biometric industry is technology-intensive and R&D strength is of vital importance. As of December 31 2024 the Company
has 1118 global R&D and engineering personnel with R&D centers in Dongguan Shenzhen Xiamen Dalian and India. The Company
has been approved to establish the Guangdong Biometrics and Security Technology Engineering Technology Research Center which
can accelerate the transformation of the technology. Additionally it has jointly established a key laboratory for multimodal computer
vision and biometrics with the Dongguan Institute of Optoelectronics Peking University promoting the industrialization of research
results and providing talent and technical support for the development of the industry.
(8) Participation in industry standard setting occupying the high ground
The Company actively participates in the formulation of 32 national and local industry standards grasping the direction of
technological development and laying out product R&D in advance to ensure a leading position in market competition.
2. Product array advantages
The Company's products include hardware and software products connecting different product combinations through
digitalization and intelligence and creating diversified smart solutions to meet the needs of numerous industries. With the increasing
demand for downstream fragmentation the Company continues to expand a rich product array which can provide a full range of
product services in various segmentation scenarios such as smart space smart office digital identity authentication and smart business.In terms of smart terminals the Company can provide various products in the field of smart space management such as access
control management pedestrian channels vehicle channels security inspection products intelligent videos smart locks elevator
controls charging piles and self-service visitors; products in the field of digital identity authentication such as Human Certificate
Verification Terminal biometrics capture devices biometrics modules and card readers; products such as employee attendance smart
consumption and smart conferences in the field of smart office. The field of smart retail focuses on chain customers in various
industries providing smart terminal business system development and people goods and venue data analysis services for their digital
construction. Its core lies in empowering technology to improve sales efficiency enhance consumer experience and loyalty reduce
operating costs and risks thereby achieving sustainable growth in the retail industry.In terms of software systems and platforms the Company has always attached great importance to the development and design of
55ZKTeco 2024 Annual Report
software and hardware linkage focusing on building an AIoT ecosystem that integrates software and hardware. The Company can
provide diversified personalized and customized system software and platforms for different users application scenarios and vertical
fields. On the one hand the Company has laid out the ZKTeco cloud IoT platform Minerva IoT based on Amazon cloud technology as
the technical foundation providing deployment-free SaaS application products for smart space scenarios smart office scenarios and
smart home scenarios. Moreover for system integration customers the Company can provide ZKTeco Biowhois CTID Platform. For
large park type enterprise customers the Company can provide ZKBio Smart Park Integrated Management Platform V8800 and
ZKTeco ZKBio Intelligent Integrated Management Platform V6600. For medium to large enterprise customers the Company can
provide E-ZKEco Pro Time & Security Refined Service Platform. For overseas customers the Company can provide ZKTeco Cloud
Attendance and Access Control Management System such as BioTime 8.0; on the other hand the Company combines the mature
technical modules and software middleware of the aforementioned platforms for application providing users with flexible platform
function customization and development services thereby meeting their personalized needs and forming a good brand awareness.The Company's main products rely on multimodal BioCV technology. In the future as the boundaries of user application scenarios
continue to expand and extend the Company will continue to enrich and improve its diversified product array to meet the needs of
users in the field of multimodal BioCV applications and provide customers with comprehensive professional and high-quality solutions.
3. Global marketing service network and localized service advantages
After years of development the Company has accumulated rich experience in operating channel products has a large number of
customer resources and has established a relatively complete global marketing service network system. Sales channels and service
networks cover major cities in China and in multiple countries and regions around the world. Moreover the Company actively expands
its online sales channels and has established a comprehensive online marketing network on major e-commerce platforms and self built
shopping malls. The integration and complementarity of international domestic online and offline channels have formed a strong
marketing service network advantage.As of December 31 2024 the Company has established 28 branches 14 subsidiaries and 202 service outlets across China
mainland with a sales and service system covering the whole country. The Company has established a total of 49 controlling
subsidiaries overseas located in 34 countries and regions worldwide with product sales covering over 100 countries and regions.The Company continued to implement regional expansion and market lead strategies in China worked together with core partners
and distributor customers to continuously promote terminal image construction mainly focused on lightboxes doors car stickers
outdoor advertising etc. actively participated in regional industry exhibitions and forums and expanded precise brand coverage in
multiple dimensions; accelerated the establishment of marketing service centers of ZKTeco and the establishment of digital marketing
service platforms and accelerated the sinking of marketing and service networks to county-level cities around the third fourth and
fifth tier cities in the region and core cities. The Company has deeply explored the innovative marketing model of "short video+live
streaming+e-commerce". In the future the Company will continue to develop the market in the third fourth and fifth tier cities to build
marketing and service outlets together with partners and simultaneously promote the integration of online and offline channels.The Company always adheres to the concept of localized services in the process of developing global markets. The Company
continued to expand its marketing and service network to second and third tier cities in medium-sized and large countries. The Company
has resident business technical service personnel and marketers in the global market which can provide customers with comprehensive
pre-sales in-sales and after-sales support and services. The localized service system helps the Company quickly understand the
personalized needs of local users based on factors such as local economic development level social stability religion and culture
providing flexible software and hardware personalized customization services thereby improving customer satisfaction and brand
awareness and enhancing customer viscosity. Based on a localized service team the Company actively guides some overseas
subsidiaries to transform from traditional channel sales to value-added development expanding vertical and deep projects and thereby
improving the Company's sales revenue and profit level.
4. Production and manufacturing advantages
(1) Integrated production process system
With a highly integrated production process system and high-quality production facilities at the forefront of the industry the
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Company has built a rich and diverse product portfolio. From injection molding and laser precision cutting to precise optical processing
and sheet metal precision machining to the application of SMT through-hole component soldering operations algorithm burning and
programming implementation PCBA board-level assembly product final assembly integration full-process testing and verification
and finished product packaging the Company has established a complete and interlinked process chain at every key process node. This
deeply vertically integrated process architecture has laid a solid foundation for a demand-driven pull production model enabling
efficient collaboration and precise alignment among various process links. The production capacity layout and production rhythm are
in perfect harmony endowing the Company with a prominent competitive edge in the industry.
(2) Customized and flexible production capacity
The Company can provide comprehensive product services in various niche markets such as smart spaces smart offices digital
identity authentication and smart business and has the ability to quickly respond to customized needs in mass production. The
Company's customized and flexible production capacity benefits from a professional R&D and engineering technical team diverse
product component production capabilities and flexible product component coupling characteristics. The Company has achieved
SMED in the production process from SMT to injection molding which can achieve rapid exchange of production equipment. In
addition the refined material supply system and lean line design in the assembly workshop can meet the flexible production needs of
customers from different countries for small batches multiple varieties and customization.
(3) Advantages of lean production
The Company has achieved industry-leading lean production model in multiple production lines through overall planning of
various processes in the product production process and optimization of process flow. The lean production model can effectively
reduce waste throughout the entire production and manufacturing process reduce workers improve labor productivity improve output
and product quality shorten delivery cycles and quickly meet customer needs while reducing manufacturing costs.
(4) Advantages of automation and informatization
The Company continues to promote and improve the automation and informatization of production processes. During the
production process the Compay has introduced robotic arms for multiple procedures and successfully deployed the first automated
production line improving production continuity and product quality. In the digital transformation systems such as MES QMS and
APS will be introduced. Through technologies like IoT and big data production equipment will be networked and data shared precisely
controlling the production process reducing waiting times and human errors in production steps and enhancing production efficiency.
5. Brand advantages
The Company is committed to creating a high-quality brand image and always regards brand strategy as a systematic project.After years of deep cultivation the Company's brand has been highly recognized by customers both domestically and internationally
and has received numerous honors both domestically and internationally.The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for five consecutive years from 2020
to 2024. In 2024 it ranked 15th on the list and was awarded awards such as "Top 50 Innovation" "Top 10 Brands in Smart Security"
"Top 10 Brands in Smart Transportation" "Top 10 Brands in Smart Education" "Top 10 Brands Intelligent Manufacturing" and "Top
10 Brands in Smart Buildings" in 2024 Global Industry Digital Innovation Ranking by asmag; it was selected by the organizing
committee and relevant institutions of the DC World as the "2024 DC World - Top Enterprise of the DC World Awards" and the "World
Digital City Construction Contribution Award" and awarded the "Honor Security Excellent Solution Award - ZKTeco Human
Certificate Verification and Identity Authentication Solution" "Honor Security Excellent Solution Award - ZKTeco Integrated Charging
and Parking Solution" and other awards. Meanwhile the zFace series facial and fingerprint access control terminals and the ZKTeco
X-ray security inspection equipment were awarded as the "Top 10 New Products" in China's security industry for 2024. It has been
awarded the "2024 Outstanding Security Industry Solution - Smart Park Solution" "2024 Pioneer of Chinese Security Enterprises
Going Global" "China Security 'Artificial Intelligence+' Initiative & 2024 AIIA 'AI+ Security' - Typical Case" and other awards by the
CHINA SECURITY & PROTECTION INDUSTRY ASSOCIATION (CSPIA). It has been awarded the "Outstanding IoT Solution
Award" and "Leading Brand in Access Control" by the organizing committee of the 2024 China IoT Industry Conference and the 21st
Huicong Brand Festival. It won the third place in the "2024 Top 10 Access Control Brands Award" and the "2024 Top 10 Smart Security
57ZKTeco 2024 Annual Report
Brands Award" by China Intelligent Building and other entities. It ranked first on the "Top 15 Access Control Brands" list by the Latin
American security technology media SecuriTIC in 2023. In addition since 2016 the Company has been awarded the title of "Top 500
Manufacturing Enterprises in Guangdong Province" by Guangdong Manufacturers Association and other entities for 9 consecutive
years. In 2024 the Company joined the China Construction Industry Association and the Fujian Society of Artificial Intelligence
Science and Education (FSAISE). Guangdong Zkteco has been rated as a "SRDI small and medium-sized enterprise (SME)" by the
Department of Industry and Information Technology of Guangdong Province.During the reporting period Guangdong Zkteco has been recognized by the Department of Science and Technology of Guangdong
Province as the Guangdong Multimodal Computer Vision and Biometric Engineering Technology Research Center XIAMEN
ZKTECO has obtained the "ITSS Information Technology Service Standard Compliance Certificate" issued by the China Electronics
Standardization Association. The "ZKTeco Cloud IoT Platform" (Minerva IoT Platform) developed by XIAMEN ZKTECO has been
rated as "Information System Security Level Protection Filing Certificate (Level 3)".
6. Advantages of management team and mechanism
The core team of the Company has over two decades of industry experience and has a deep understanding of the development
trends of biometrics related technologies and products. They have a clear understanding of the Company's development strategy
product direction technology roadmap and marketing strategy. From user needs to solutions from product architecture to software
and hardware development from product trial production to standardized mass production from large-scale production organization
to improved quality assurance system from model market creation to global sales service network construction the Company has
accumulated rich operational management experience laying a solid foundation for the Company's sound development. The core
management team of the Company is stable and currently core team members and key employees of the Company also directly or
indirectly hold shares in the Company through the employee shareholding platform or equity incentive plan and employee stock
ownership plan established before the listing.
7. Quality control advantages
The Company has always firmly regarded quality as the core driving force and has built a complete and efficient quality control
system. During the R&D and design stage it strictly follows the "Design and Development Management Control Procedure" to carry
out work. Starting from the project initiation review it actively introduces a cross-departmental collaboration mechanism to fully
leverage the professional advantages of all parties. In the production and manufacturing process the Company strictly implements the
"Production Process Control Procedure" relying on advanced automated equipment and mature lean production models to conduct
meticulous management and control of the production process. To ensure the quality of raw materials the Company has established
the "Supplier Management Control Procedure" to select high-quality and reputable suppliers within the industry. In terms of quality
after-sales service the Company adheres to the principle of "customer first" and has built a complete after-sales service system. Through
an efficient feedback system it promptly collects and deeply analyzes the problems and suggestions raised by customers during the
use of products.With a complete quality control system strict control throughout the entire process and a continuous and effective improvement
mechanism the Company has established a strong competitive advantage. Looking to the future the Company will continue to adhere
to the principle of quality first continuously optimize the quality control system and constantly improve the quality of products and
services to create greater value for shareholders.IV. Main Business Analysis
1. Overview
See relevant contents of "II. Main Businesses Engaged by the Company During the Reporting Period".
58ZKTeco 2024 Annual Report
2. Revenue and costs
(1) Composition of operating revenue
Composition of revenue
Unit: RMB
20242023
Proportion in Proportion in YoY change
Amount Amount
operating revenue operating revenue
Total operating
1991200391.75100%1970183682.34100%1.07%
revenue
By industry
By product
Smart office
303727652.0915.25%331576965.3116.83%-8.40%
products
Smart space
1499690452.9575.32%1437066596.6972.94%4.36%
products
Digital identity
authentication 114134724.26 5.73% 155828574.29 7.91% -26.76%
products
Smart business
65780942.953.30%37036168.301.88%77.61%
products
Others 7866619.50 0.40% 8675377.75 0.44% -9.32%
By region
Domestic sales 578972159.13 29.08% 643710059.42 32.67% -10.06%
Overseas sales 1412228232.62 70.92% 1326473622.92 67.33% 6.46%
By sales model
Distribution 1375597572.70 69.08% 1347955344.48 68.42% 2.05%
Direct sales 607736199.55 30.52% 613552960.11 31.14% -0.95%
Others 7866619.50 0.40% 8675377.75 0.44% -9.32%
(2) Industries products regions or sales models that accounted for more than 10% of the Company's operating revenue
or profit
□Applicable □ Not applicable
Unit: RMB
YoY change of
Operating Gross profit YoY change of YoY change of
Operating cost gross profit
revenue margin revenue costs
margin
By industry
By product
Smart office
303727652.0998325792.7767.63%-8.40%-23.51%6.40%
products
Including:
196489609.0582270922.4658.13%-15.47%-24.43%4.96%
attendance products
Other products 107238043.04 16054870.31 85.03% 8.18% -18.47% 4.89%
Smart space
1499690452.95779723331.4148.01%4.36%3.17%0.60%
products
Including: access
954366727.58464734236.0551.30%6.52%7.88%-0.62%
control products
Other products 545323725.37 314989095.36 42.24% 0.78% -3.08% 2.30%
59ZKTeco 2024 Annual Report
Digital identity
authentication 114134724.26 78250118.16 31.44% -26.76% -18.74% -6.76%
products
Including:
biometrics sensor 35343224.32 14863965.85 57.94% -38.61% -41.29% 1.91%
products
Including: card
70532991.6961340396.2213.03%-3.07%-5.09%1.85%
products
Other products 8258508.25 2045756.09 75.23% -67.60% -67.80% 0.15%
Smart business
65780942.9550302231.5723.53%77.61%108.79%-11.42%
products
Including:
commercial 28318053.72 19877659.56 29.81% -10.18% -1.87% -5.94%
products
Including: digital
13167050.7511608084.4011.84%280.01%363.69%-15.91%
signage products
Other products 24295838.48 18816487.61 22.55% 1089.62% 1311.41% -12.17%
Other products 7866619.50 1641172.08 79.14% -9.32% -20.86%
By region
Domestic sales 578972159.13 395644140.04 31.66% -10.06% -10.60% 0.41%
Overseas sales 1412228232.62 612598505.95 56.62% 6.46% 8.96% -1.00%
By sales model
Distribution 1375597572.70 763784945.17 44.48% 2.05% 2.35% -0.16%
Direct sales 607736199.55 242816528.74 60.05% -0.95% -6.06% 2.18%
Others 7866619.50 1641172.08 79.14% -9.32% -20.86%
In the event that the statistical scope of the Company's main business data is adjusted during the reporting period the main business
data of the Company has been adjusted according to the scope at the end of the reporting period in the past year
□Applicable □ Not applicable
Unit: RMB
YoY change of
Gross profit YoY change of YoY change of
Revenue Cost gross profit
margin revenue costs
margin
By industry
By product
Smart office
331576965.31128553981.2361.23%8.86%-19.66%13.76%
products
Smart space
1437066596.69755801111.8647.41%2.92%-3.36%3.42%
products
Digital identity
authentication 155828574.29 96296978.63 38.20% -16.83% -8.32% -5.74%
products
Smart business
37036168.3024092464.7034.95%46.38%30.36%8.00%
products
Other
8675377.750.00100.00%73.30%-0.00%
businesses
By region
Domestic sales 643710059.42 442537191.43 31.25% -10.54% -10.77% 0.18%
Overseas sales 1326473622.92 562207344.99 57.62% 10.63% -1.31% 5.13%
By sales model
Distribution 1347955344.48 746275643.23 44.64% 4.90% -2.95% 4.48%
Direct sales 613552960.11 258468893.19 57.87% -2.40% -12.89% 5.07%
Others 8675377.75 0.00 100.00% 73.30% - 0.00%
60ZKTeco 2024 Annual Report
Explanations on the reasons for changing the standard
To help investors clearly understand the Company's comprehensively upgraded business system built around the new mission and
vision and better reflect the classification of the Company's main business composition and the strategic planning and development
direction of the Company.
(3) Whether the Company's physical products sales greater than revenue from labor services
□Yes □ No
Industry
Item Unit 2024 2023 YoY change
classification
Computer Sales volume Pcs./Set 2611717 2688539 -2.86%
communication
Production Pcs./Set 2616073 2681533 -2.44%
and other
electronic
equipment
Inventory Pcs./Set 466029 461673 0.94%
manufacturing
industry
Explanations on the reasons for the year-on-year change of over 30% in relevant data
□ Applicable □ Not applicable
(4) Performance status of major sales and procurement contracts signed by the Company as of this reporting period
□ Applicable □Not applicable
(5) Composition of operating costs
Unit: RMB
20242023
YoY
Industry classification Item Proportion in Proportion in
Amount operating Amount operating change
costs costs
Computer communication
and other electronic Raw
915878563.4090.84%908660143.8290.44%0.79%
equipment manufacturing materials
industry
Computer communication
and other electronic -
Labor cost 27850655.11 2.76% 31398131.60 3.12%
equipment manufacturing 11.30%
industry
Computer communication
and other electronic Manufacture
64513427.486.40%64686261.006.44%-0.27%
equipment manufacturing cost
industry
Total 1008242645.99 100.00% 1004744536.42 100.00% 0.35%
Remarks
No major change
61ZKTeco 2024 Annual Report
(6) Any change in consolidation scope during the reporting period
□Yes □ No
Percentage
Establishment Registered Reason for
S/N Company Name of Shares
Date Capital Change
(%)
ZKTeco Huayun (Xiamen) Integrated Circuit RMB 3.69388 Cancellation
12017/7/551
Co. Ltd. million (Note 1)
Taken over by
Shenzhen Zhongjiang Intelligent Technology RMB 10
2 2017/4/26 51 the liquidation
Co. Ltd. million
group (Note 2)
ZKTeco Cloud Brain-Computer (Hangzhou) RMB 20
3 2024/10/29 100 Establishment
Technology Co. Ltd. million
ZKTECO BUSINESS SOLUTIONS
4 2024/5/15 SAR 1 million 100 Establishment
COMPANY
5 ZKTeco Polska Sp. z o.o. 2024/8/2 PLN 400000 75.69 Establishment
6 ZKTeco Egypt LLC 2024/1/4 USD 120000 100 Establishment
ARS 2.926
7 ZKTeco Latam R＆D S.A. 2018/8/27 98.088 Assignment
million
Note 1: On April 23 2024 the registered capital of ZKTeco Huayun (Xiamen) Integrated Circuit Co. Ltd. was reduced from RMB 10
million to RMB 3.69388 million and the Company was deregistered on December 20 2024.Note 2: The subsidiary of the Company Shenzhen Zhongjiang Intelligent Technology Co. Ltd. is not included in the consolidated
scope for this year as it has entered compulsory liquidation due to poor operation. The court appointed Shenzhen Zhongtianzheng
Clearing Affairs Co. Ltd. to form a liquidation group to take over the Company starting from April 10 2024. As of December 31
2024 the Company is still in the process of liquidation.
(7) Significant changes or adjustments of the Company's business products or services during the reporting period
□Applicable □ Not applicable
As an internationally recognized innovative enterprise the Company has consistently committed itself to the domains of smart
space smart office and digital identity authentication. We provide advanced smart terminals industry-specific application software
and platforms equipped with object detection as well as identity recognition and verification capabilities tailored for relevant sectors.In light of the rapid advancements characterizing the intelligent era the Company has officially unveiled its new mission and vision
with its robust AI cognitive technology serving as the core driving force. Based on this the Company has comprehensively upgraded
its business system and will appropriately increase investment in the smart business in 2023. The Company's smart business segment
propelled by multimodal models emphasizes the integration of "AI + digital signage" within the general retail and catering sectors.This segment supports traditional businesses in their transition towards intelligent ecosystems. It offers IoT infrastructure digital
solutions and operational services thereby establishing a new type of borderless retail platform that is comprehensive scenario-
inclusive and fully integrated across the supply chain.The revenue share of the smart business in 2022 and 2023 was still relatively small. With the continuous advancement of this
business in 2024 its revenue experienced a significant increase. Therefore the business scenario has been adjusted to be presented
separately. The above adjustment can better reflect the composition of the Company's main business and its strategic planning and
development direction and also help investors clearly understand the comprehensively upgraded business system constructed by the
Company around its new mission and vision.
62ZKTeco 2024 Annual Report
(8) Major customers and suppliers
Major sales customers of the Company
Total sales amount of the top five customers (RMB) 251392915.46
Proportion of the total sales amount to the annual total sales
12.63%
amount among the top five customers
Proportion of related party sales to annual total sales among the
2.71%
top five customers
Information of top five customers of the Company
Proportion to Annual Total
S/N Customer Name Sales Amount (RMB)
Sales
1 Customer 1 83003799.79 4.17%
2 Customer 2 79768721.77 4.01%
3 PT HIT INTERNATIONAL 33013373.25 1.66%
4 Customer 4 31128137.49 1.56%
5 Zhejiang Shangji Co. Ltd. 24478883.16 1.23%
Total -- 251392915.46 12.63%
Other information of major customers
□ Applicable □Not applicable
Main suppliers of the Company
Total procurement amount of the top five suppliers (RMB) 136626921.54
Proportion of the total procurement amount to the total annual
15.75%
procurement amount among the top five suppliers
Proportion of related party procurement amount to annual total
0.00%
procurement amount among the top five suppliers
Information of top five suppliers of the Company
Proportion to Annual Total
S/N Supplier Name Procurement Amount (RMB)
Procurement Amount
1 Supplier 1 35236065.42 4.06%
2 Supplier 2 33332667.27 3.84%
3 Shenzhen Junmingwei Technology Co. Ltd. 23242774.99 2.68%
4 Supplier 4 22621771.33 2.61%
5 SHENZHEN FRIDA LCD CO. LTD. 22193642.53 2.56%
Total -- 136626921.54 15.75%
Other information of major suppliers
□ Applicable □Not applicable
3. Expenses
Unit: RMB
2024 2023 YoY change Description of major changes
Selling
446509619.84441537714.421.13%
expenses
Administrative 117559541.39 122693501.96 -4.18%
63ZKTeco 2024 Annual Report
expenses
Mainly due to the decrease in interest income from
Financial fund deposits and the increase in exchange losses
-34273821.14-54330867.7336.92%
expenses (gains for the previous year) caused by exchange rate
fluctuations
R&D expenses 215470991.40 213613414.56 0.87%
4. R&D Investment
□Applicable □ Not applicable
64ZKTeco 2024 Annual Report
Main R&D Project Expected Impact on the Company's Future
Project Objective Proposed Objective
Project Name Progress Development
With the rapid development of computer vision and 1. To ensure that the Company remains at the 1. Enhancing the Company's technological strength
natural language processing multimodal vision forefront of multimodal visual model technology we in the field of computer vision improving the
model has become a research direction of great will continue to track the latest technological intelligence level of products providing customers
concern and one of the most promising and developments in this field and continuously optimize with better and more efficient solutions and
potential fields in recent years. The innovative and improve BioCV VLM 3.0. consolidating the Company's competitive advantage
model combines computer vision and natural 2. Based on this model we are committed to in the industry.language processing capabilities and can process improving the accuracy of biometrics algorithms and 2. Promoting the Company's innovation and
BioCV VLM images videos and text information at the same maintaining the sustained competitiveness of our development in the field of AI and providing strong
3.0 Multimodal time to achieve more efficient and intelligent image products. technical support for the Company's long-term
Completed
Computer and video recognition and understanding. The 3. Based on this model we will improve computer strategic goals.Vision Model objective of this project is to develop advanced vision algorithms to further enhance their accuracy 3. Accelerating the Company's technological
multimodal visual representation techniques train and reliability. iteration and innovation in the field of computer
universal base models track the latest 4. We will explore the application of multimodal vision improving the application ability of
developments in NLP model technology and vision models in various fields such as security computer vision algorithms in various scenarios
prepare relevant technical reserves. We will use this monitoring smart home office automation etc. to and laying a solid foundation for business expansion
model as a basis to improve the accuracy of current provide technical support for the Company to expand in the global market.computer vision algorithms and biometrics into new business areas.algorithms.The Supermarket Customer Flow Attribute 1. We will implement counting and analysis of 1. Being expected to attract more supermarkets and
Analysis Project aims to achieve a comprehensive supermarket customer groups as well as age and retail enterprises to adopt it thereby helping the
understanding and accurate analysis of supermarket gender attribute analysis optimize algorithms to Company expand its market share.Supermarket customer flow through in-depth mining of customer ensure recognition accuracy and reach the forefront 2. The Company can promote the system to a wider
Customer Flow attribute data providing strong decision support for level of similar products currently. range of fields by expanding into international
Attribute supermarkets optimizing operational management Completed 2. We will achieve convenient and efficient customer markets or collaborating with other industries.Analysis SDK improving customer satisfaction and ultimately flow statistics and analysis for supermarket stores 3. Expanding market share can help improve the
2.0 achieving better performance. It achieves a thereby guiding them to develop more scientific Company's profitability and make it more influential
transition from "rough" to "refined" management reliable and targeted operational strategies in the industry.for supermarket stores enabling users to directly empowering offline scenarios and improving
benefit from fierce commercial retail competition. business efficiency.Multimodal AI intelligent products are the third- 1. We will precisely identify the pain points of the 1. The Company can build a full-scenario audio and
generation intelligent device terminal products industry and closely follow the trend of IoE. Through video interconnection network to achieve seamless
created by the Company relying on multimodal the integration of communication technologies we integration and efficient collaboration of diversified
R&D of a
algorithms ChatGPT audio and video artificial have successfully broken the situation of information hardware devices for entrances and exits. Focusing
Communication
intelligence (AI) cloud services and other silos and created a set of entrance and exit industry on the entrance and exit scenarios of the Company
Platform Based
technologies. These products integrate information solutions that integrate "intelligent vision and through unified interface standards and
on Multimodal
publishing professional access control visual Completed interconnection". communication protocols the Company can deeply
AI Audio and
intercom and digital human interaction functions. 2. This solution not only realizes seamless connection integrate audio and video hardware such as access
Video
Its core purpose is to provide comprehensive between devices and efficient data flow but also control systems surveillance cameras intercom
Technology
scenario solutions for enterprises leveraging enhances the intelligent level of entrance and exit terminals and visitor verification devices forming
Fusion
diverse online and offline system applications as management providing users with a safe convenient an interconnected and integrated network to ensure
well as intelligent hardware devices to promote the and efficient passage experience thereby promoting real-time data sharing and functional linkage
smooth transformation of enterprise users from thereby improving security response efficiency and
65ZKTeco 2024 Annual Report
traditional business models to digital business the intelligent upgrade and innovative development of user experience.models. the entrance and exit management industry. 2. The Company can deeply integrate international
standard protocols such as SIP (Session Initiation
Protocol) and ONVIF (Open Network Video
Interface Forum) to create a standardized solution
for cross-brand device interoperability. Based on
global common protocols such as SIP and ONVIF
the Company can develop protocol conversion
middleware and intelligent gateways to break down
communication barriers between devices from
different manufacturers achieving bidirectional
transparent transmission of audio and video streams
control instructions and metadata providing a
highly scalable and low-coupling technical
foundation for system integration in complex
environments.
3. The Company can empower the intelligent
upgrade of frontend hardware and reshape scene
competitiveness through audio and video AI
analysis and two-way interaction. By integrating
computer vision speech recognition and natural
language processing technologies the Company can
inject intelligent analysis capabilities (such as
behavior analysis and abnormal event detection) and
real-time interaction capabilities (such as voice
inquiry and remote visual intercom) into entrance
and exit hardware creating a "perception-analysis-
decision-response" closed loop helping enterprises
build differentiated competitive advantages and
promoting the transformation of traditional security
equipment into smart service terminals.
66ZKTeco 2024 Annual Report
1. We innovate the traditional entrance and exit mode 1. The application of the platform will assist the
ZKBio V6600 Wide Access IoT Perception by utilizing smart entrance and exit intelligent video Company in providing more comprehensive and
Application Platform V3.0 with multimodal and IoT intelligent perception technology endowing intelligent solutions for medium and large-scale
BioCV technology as its core combines years of it with intelligent video analysis and IoT device security projects accurately meeting the diversified
experience in entrance and exit management and perception capabilities. This not only achieves a needs of customers for security management and
intelligent video technology to comprehensively comprehensive upgrade of security management but monitoring thereby significantly enhancing the
achieve security protection and intelligent also realizes intelligent management of time fully Company's market competitiveness in the security
monitoring management of project scenarios. This meeting the diverse and fragmented application needs field.platform deeply integrates multiple business of users. 2. By effectively solving the problem of
subsystems including personnel access control 2. We focus on perception and data empowerment independent management of equipment by branch
attendance consumption visitors parking elevator and through technological innovation and modular offices and unified supervision of resources by the
control patrol channels storage cabinets intrusion design concepts create a standardized and unified central group in cross regional and multi-
alarms monitoring centers intelligent scenarios platform to continuously promote innovation and organizational projects the Company will be able to
and system management. Through the intelligent development in industry applications. integrate internal and external resources more
perception capabilities of security entrances and 3. We are committed to continuously improving the efficiently significantly improve operational
ZKBio V6600
exits intelligent video and IoT technology the base capacity of ZKBio and integrating it into various efficiency and management level and create more
Wide Access
ZKBio V6600 platform can monitor intelligently industries providing high-quality services for value for the Company.IoT Perception Completed
identify and analyze the management of entrance ecological partners and continuously refining
Application
and exit situations in real time. By utilizing big data excellent solutions to meet the ever-changing needs
Platform V3.0
analysis and AI algorithms the platform can of the market.automatically identify abnormal behavior achieve 4. Based on the ZKTeco IoT platform foundation we
pre-warning in-process handling and post analysis have built a hybrid cloud platform that solves the
ensuring timely detection and handling of safety challenge of independent management of devices by
hazards. In addition through seamless integration branch offices and unified supervision of resources by
with IoT devices the ZKBio V6600 platform can the central group in cross regional and multi-
achieve intelligent control and management of organizational projects. This innovative measure
entrances and exits significantly improving the provides strong support for the digital transformation
operational efficiency and convenience of entrances of enterprises.and exits. This innovative platform not only 5. Through in-depth mining and precipitation of user
enhances the security management level of scenario data we provide value-added services to
enterprises but also brings users a more intelligent existing ZKBio users and future project clients
efficient and convenient entrance and exit achieving maximum conversion of commercial value
experience. and creating more business opportunities for
enterprises.Based on the Company's BioCV biometric core 1. Based on a deep foundation of customer data we 1. Based on the new integrated model of Android
technology capabilities we are committed to provide more comprehensive integrated support intelligent hardware+software+cloud services we
Low Code optimizing the underlying infrastructure services of empower customer innovation and help customers aim to connect cloud business customers promote
Android Android achieving clear separation of business quickly launch localized new products. By the implementation of more cloud intelligent
Development functions and providing customers with more implementing a business localization strategy we aim solutions and create a new performance growth
Completed
Platform V2.0 efficient and flexible solutions. By providing rich to accurately meet market demands continuously model.based on underlying services we offer EDK services strengthen our close ties with customers and achieve 2. We assist the Company in its efforts in the
BIOCV (Embedded Development Kit) aimed at supporting mutual growth. Android integration market by providing one-stop
customers in achieving efficient application 2. Leveraging the cloud capabilities of the Minerva integration business support continuously
development on Android hardware. At the same IoT we aim to build efficient cloud communication consolidating existing customer relationships and
67ZKTeco 2024 Annual Report
time through close integration with the Minerva bridges for our customers promote the flourishing attracting numerous new customers to increase the
IoT we provide our customers with ADK development of cloud services and assist in Company's market share in the integration market.
(Application Development Kit) enabling third- enterprise cloud transformation. This strategy will 3. In numerous cooperation cases we deeply
party integration customers to easily integrate greatly expand the application areas of our products explore the advantages and requirements of
devices and related data into their software and services provide customers with more customer products and expand into new business
promoting the intelligence of 3rd business software. comprehensive and cutting-edge solutions and attract areas bringing more growth opportunities for the
In this process we fully leverage the more like-minded partners. Company.comprehensive advantages of ZKTeco intelligent 3. By closely collaborating with integrated clients and
hardware Minerva IoT recognition capabilities and continuously incorporating innovative features and
Minerva IoT platform to provide powerful business concepts from third-party clients we lay a
integrated business support for enterprises system solid foundation for the development of mainstream
integrators and solution providers. Our goal is to and new projects in the Company enhancing the
help these partners achieve breakthroughs and overall competitiveness of our products.innovations in areas such as smart office and smart
entrance and exit management and jointly build a
smarter and more efficient business ecosystem.
1. Based on the base capacity of India Minerva IoT 1. Assisting the Company in leveraging its customer
and focusing on the terminal needs of IoT scenario base in the long tail market and creating a new
Based on the Company's core business of "smart solutions and SME digital and reality integration performance growth model focusing on the needs of
office smart entrance and exit and smart identity serve as the SME cloud scenario linker; small and medium-sized enterprise customer base
recognition" focusing on the SMB small and 2. Through ZKTeco Interconnection (for small and based on cloud service scenarios and the digital and
medium-sized enterprise (SME) customer group medium-sized enterprise users) and ZKTeco Cloud reality integration;
serve the long tail market leverage the Commerce (for intermediate service provider users) 2. By utilizing a digital and intelligent scenario
ZKTeco comprehensive three-dimensional advantages of jointly establish a comprehensive operation system solution of software+hardware+cloud services
Interconnection ZKTeco frontend intelligent hardware+backend for IoT product research sales operation and service laying out a new track in advance to meet the needs
Cloud Scenario offline smart account service system+ Minerva IoT through end-edge-management-cloud-use-service- of the post-90s and post-00s for enterprise
Completed
Service PaaS+SaaS application provide a "business operation; management and business management;
Platform premises management scenario+business 3. Based on the precipitation of user scenario data we 3. Driving the sales of hardware or scenario
V3.0.0 management scenario+service scenario" solution provide a market soil for commercial verification of solutions through cloud services and bringing about
for the small and medium-sized enterprise customer customer foundation and operational transformation changes in business models such as operational
group accompany small and medium-sized for SaaS subscription services. model validation through cloud service subscription
enterprises in the growth and provide multiple 4. Based on the dual scenario business model of models;
digital and intelligent "assistants" for enterprises "intelligent business space+digital marketing 4. Through the precipitation of user data and
from "rough" to "refined" management. management" we will continue to promote product scenario data providing rich product R&D support
iteration and provide rich cloud scenario business for commercial transformation models.functions for SME users.
68ZKTeco 2024 Annual Report
1. Based on the base capacity of the Company's IoT 1. Assist the Company in expanding its arsenal of
PaaS Platform in India and focusing on the smart smart retail business provide more powerful
retail scenario we provide a one-stop cloud platform weapons and create a new performance growth
information publishing solution to meet the terminal model based on cloud services and hosting services
This project develops an information release service needs of integrating data and reality for small and around enterprise customer groups in the retail
software based on the L3 platform with a SaaS medium-sized enterprises (SMEs) serving as the industry;
business model. Users can continue to use the SME cloud scenario linker. 2. By utilizing a digital and intelligent scenario
software services through subscription. The 2. Integrate the rich AIoT hardware ecosystem AI solution of cloud software+AI hardware+cloud
ZKDIGIMAX
software functions focus on the "Al+Digital big data and cloud service capabilities of ZKTeco hosting services laying out a new track in advance
CMS
Signage" field in the retail and catering industries Completed and provide end/edge/cloud/server one-stop smart for smart retail scenarios;
ScreenDirect
providing digital infrastructure and smart business retail scenario solutions; 3. Providing long-term O&M services to increase
v3.0
cloud services for front-end carriers accelerating 3. Based on the perception and labeling of the Company's service attributes driving the sales
the transformation of traditional retail industry to multidimensional data in user scenarios we provide growth of hardware and scenario solutions through
data-driven smart retail and helping global retail customers with commercial advertising operation cloud hosting services and bringing about changes
customers create greater commercial value. conversion value through SaaS subscription services in business models and operational model validation
and use digital technology to enhance the operational through cloud service subscription models;
efficiency of the retail industry. 4. Through the precipitation of user data and
scenario data creating richer product models for
commercial transformation models.
1. Break through the difficulties of on-site debugging: 1. The application of rack mounted controllers has
In response to the complexity of on-site debugging of significantly improved the intelligence level of the
existing controller device we are committed to device making the Company's products more
developing a new type of rack mounted controller. competitive in the market and meeting the growing
Through intelligent design and functional demand of consumers for intelligent and convenient
This project is suitable for rack mounted controllers optimization it greatly simplifies the debugging products.in the field of smart entrances and exits supporting process saving customers a lot of time and cost and 2. As an important part of technological innovation
4-door or 8-door control and enabling centralized achieving a convenient plug and play experience; rack mounted controllers not only promote the
management. The controller is designed to be 2. Real time status monitoring and visualization Company's in-depth R&D in fields such as AI and
compact and can be easily placed in computer operation: Our rack mounted controller supports real- IoT but also lay a solid foundation for the Company
rooms or cabinets seamlessly integrated with time viewing of the door status corresponding to each to maintain its technological leadership.InBIO P3000
existing IT hardware facilities forming an device. Through an intuitive visualization interface 3. With the widespread application of intelligent
rack mounted
integrated smart entrance and exit solution. It can Completed customers can easily grasp the operating status of the controllers in various industries the Company is
access
provide customers with a plug and play product that equipment and achieve efficient O&M management. expected to further expand its market share broaden
controller
significantly reduces the workload of on-site wiring This intelligent management method not only its revenue sources and achieve sustained growth
and installation debugging thereby helping improves work efficiency but also enhances the through high-quality rack mounted controller
customers reduce construction wiring costs stability and security of the device. products.improve engineering efficiency and provide 3. High performance and flexible installation design: 4. Rack mounted controllers with their excellent
customers with safer and more efficient access We create a high-performance rack mounted stability and reliability we provide customers with a
control services. controller for our customers which not only has better service experience significantly improving
excellent performance but also is easy to integrate customer satisfaction and loyalty and enhancing the
with other IT hardware facilities forming an brand influence of the enterprise.integrated smart entrance and exit solution. At the
same time the controller supports cabinet entry and
wall mounted installation flexibly adapting to
69ZKTeco 2024 Annual Report
various installation environments meeting the diverse
needs of customers and truly realizing the design
concept of easy integration and easy maintenance.
4. Rack mounted controllers have comprehensive
security protection functions which can effectively
protect the core data and critical equipment of
enterprises ensure the security of enterprise
information and stable operation of business and
safeguard the development of enterprises.This project develops a hybrid biometric device based 1. To further enhance the Company's brand image
This project develops a recognition device based on on multimodal AI technology which will reconstruct the Company has carefully crafted a series of family
multimodal AI technology which can achieve the ZKTeco new business model of hard technology style intelligent product terminal designs aimed at
multimodal biometrics. It can realize palmprint and brand stories and digital service operations. It will showcasing the Company's innovation strength and
R&D of Hybrid
palm vein hybrid recognition from multiple angles comprehensively drive the base capacity of technological leadership.Biometric
close range and high precision and support RFID end/edge/cloud/service create multimodal AI 2. With the help of the cutting-edge technologies of
Access Control
and QR codes. It is simultaneously equipped with Completed attendance and AI access control and drive the multimode AI audio video and cloud
Terminal Based
digital visual intercom function supporting digital overall technology and product upgrade of our broadcasting combined with the advantages of the
on Multimodal
service operation functions such as advertising entrances and exits in the era of cloud networking. IoT and the Internet we can accelerate the
AI
O&M thereby driving the overall technology and deployment of the Company's cloud strategy
product upgrade of our entrances and exits in the accelerate the implementation of commercial
era of cloud networking. closed-loop and improve the enterprise's overall
competitiveness.R&D of This project develops a multimodal ID authentication 1. Catering to the trend of domestication of industry
Domestic This project develops a device for nationwide device that is expected to achieve full localization of equipment.Multimodal production of hardware operating system and software hardware and system effectively 2. Filling the gap in the Company's domestic
Identity software which can achieve multimodal identity addressing customer scenarios with high products.Authentication recognition and authentication such as fingerprint requirements for localization. 3. Establishing a foundation for the Company in the
Completed
Device Based facial recognition card swiping palm recognition domestic equipment industry market.on Smart and QR code. This device can be widely used in
Identity identity verification scenarios such as government
Verification affairs hotels telecommunications and visitors.Scenario 1.0
70ZKTeco 2024 Annual Report
This project aims to develop a multimodal high- 1. Leading the industry to gradually promote the
This project develops a multimodal non-contact
precision payment grade security level palm application of new biometrics in payment smart
R&D of Non- palm acquisition and recognition system which can
recognition solution. This device adopts palmprint access control smart attendance smart channels and
contact Palm achieve multi-angle close range high-precision
and palm vein multiple fusion recognition to improve other industries through the further update of palm
Recognition hybrid palmprint and palm vein recognition. It
recognition accuracy and live recognition ability recognition technology;
Technology simultaneously supports RFID and QR codes etc. It
Ongoing solve the problems of user height compatibility and 2. Enriching the usage scenarios of product line of
Based on realizes cross platform system registration and
projects twin misidentification and greatly improve safety biometric modules and panel machines and
Multimodal application and adapts to indoor semi-outdoor and
stability and usability. improving the core competitiveness of the products;
Palm outdoor application environments mainly used for
3. Responding to the Company's strategic plan and
Acquisition and non-contact identity recognition in various entrance
launching a strategic deployment of intelligent
Recognition and exit scenarios such as smart attendance and
recognition terminals that meet market demand
smart access control.based on new platforms and technologies.This project develops an attendance and access 1. Strengthening the soft power of enterprise brands
control system device based on NFC technology for by collaborating with leading mobile and RFID
This project develops an attendance and access
Apple Wallet and Google Wallet virtual card enterprises such as Apple Google HID and Legic;
control system device based on NFC technology for
R&D of Apple technology. The device can interact with the built-in 2. Filling in or improving the support of attendance
Apple Wallet and Google Wallet virtual card
Wallet and wallet applications on iPhone and Android phones access control devices for identity recognition based
technology. The device can obtain user virtual card
Google Wallet through NFC communication and advanced on mobile personal devices;
information encrypted and stored in the virtual card
Virtual Card encryption technology to obtain encrypted user 3. Meeting the majority of users' demand for using
loaded by the user in the built-in wallet of iPhone
Technology virtual card information stored in the virtual card mobile personal devices instead of traditional
and Android phone systems through NFC Completed
Based on NFC loaded by the user. After decryption the device can physical cards and improving the convenience of
communication and encryption technology. This
Technology in obtain the user's ID information and achieve user users in identifying and using attendance and access
can meet the needs of most customers who use their
Attendance and identity recognition. This can meet the needs of most control devices;
mobile phones for attendance or access control and
Access Control customers who use their mobile phones for 4. Realizing value-added services for virtual cards
can effectively enhance the user experience by
System Devices attendance or access control and can effectively such as card counting renewal customization and
recognizing personal identities through non
enhance the user experience by recognizing personal other services by implementing a virtual card
biometric technology non RFID entity cards etc.identities through non biometric technology non issuance platform based on mobile personal devices.RFID entity cards etc.By continuously iterating and improving the 1. Improve the accuracy of biometric technology: By 1. By continuously improving biometric technology
biometric technology including facial recognition optimizing algorithms and models we continuously the Company will be able to provide more accurate
palm recognition and fingerprint recognition we improve the accuracy of facial recognition palm and reliable solutions in areas such as security
aim to enhance recognition accuracy anti- recognition and fingerprint recognition to ensure access control and payment authentication thereby
counterfeiting accuracy and quality accuracy. For more accurate biometric results; enhancing the market competitiveness of its
facial recognition we are committed to improving 2. Strengthen anti-counterfeiting capabilities: By products;
the accuracy of biometrics preventing false introducing advanced anti-fraud technologies and 2. Strengthening anti-counterfeiting capabilities will
Multimodal
authentication and strengthening quality algorithms we improve the anti-counterfeiting effectively curb false authentication and fraudulent
Biometrics Completed
assessment. In terms of palm recognition we will capabilities of identification systems and effectively behaviors enhance product security and credibility
SDK V3.0
continue to optimize algorithms to improve curb false authentication and fraudulent behaviors; and help establish a good reputation for the
recognition accuracy prevent fraud and promote 3. Improve the accuracy of quality assessment: We Company in the industry;
the development of engineering application improve the quality assessment algorithm to ensure 3. By promoting the development of engineering
products. At the same time regarding fingerprint accurate judgment of the quality of biometric images application products the Company can better meet
recognition we are concerned about the thereby improving the stability and reliability of the market demand and provide users with safer and
development of non-contact fingerprint recognition overall recognition system; more convenient application experiences thereby
technology hoping to bring higher security and 4. Promote the development of engineering increasing customer satisfaction and loyalty.
71ZKTeco 2024 Annual Report
more convenient user experience through its non- application products: We apply optimized biometric
contact characteristics. Through these efforts we technology to engineering product development
aim to promote the advancement of biometric including security access control systems payment
technology enhance security and user experience authentication systems etc. to provide users with a
and lay a solid foundation for the development of safer and more convenient application experience;
engineering application products. 5. Pay attention to the development of non-contact
fingerprint recognition technology: We continuously
monitor and research non-contact fingerprint
recognition technology and apply it to practical
scenarios to enhance security and user experience.
1. We will build a hybrid cloud capability for ZKBio 1. Being committed to further enhancing the
which will serve as the core of the Minerva IoT Company's professional level in the field of smart
service middleware to achieve efficient transmission entrance and exit solutions we fully demonstrate
of data between the Intranet ZKBio platform and the Company's innovation and excellent
In the context of the IoE the construction of ends ZKBio APP. This measure will not only promote the professional capabilities by carrying out
edges and clouds as well as the large-scale layout sales of software licenses hardware devices and comprehensive construction of ends edges and
of points lines and surfaces have become the core other system module products but also form a clouds of the IoE. We adhere to technology as the
melody of industry development. We are complete solution closed-loop value providing driving force constantly improving service quality
developing service middleware based on the customers with comprehensive services and value; to meet the ever-changing needs of the market;
R&D of End-
Mlinerva loT Platform aiming to seamlessly 2. We are committed to providing mobile solutions 2. Guided by the Company's cloud strategy we fully
Edge-Cloud
integrate the ZKBio platform with APP data and for enterprise management offering convenient leverage the powerful capabilities of the Mlinerva
Collaborative
achieve comprehensive integration of "end edge online personnel registration and remote control loT Platform combined with our years of rich
Hybrid
and cloud" by building a cloud forwarding server. Completed applications for enterprise administrators to meet the experience in the field of smart entrance and exit to
Communication
The core goal of the project is to provide a flexible growing management needs of enterprises and quickly respond to the needs of enterprise
Application
efficient and secure "online+offline" deployment improve work efficiency and security control; customers. By leveraging our technological
Based on IoT
solution further improve the smart space security 3. We will fully utilize the advantages of the ZKBio innovation advantages we ensure that we always
Platform
management solution deeply understand and meet platform to promote the sales conversion of products maintain a leading position in the industry;
the needs of user scenarios and promote the derived from this platform. For existing customers 3. We will quickly capture the growing market of
digitalization process of enterprise users in complex we will actively explore opportunities for sales and security software APPs. With the continuous
multi-scenario management to a higher level of repurchase to achieve sustained business growth. expansion of the market size our solutions and
development. products will continue to meet the growing needs of
users ensuring that we maintain a leading
advantage in the field of smart entrance and exit
mobile solutions and create more value for
customers.
72ZKTeco 2024 Annual Report
1. Implement a content management business system Implementing the Company's strategic layout in the
with market competitiveness supporting advanced retail scene and providing a comprehensive smart
layout functions virtual screens and integrated retail solution with market competitiveness.ZKDigimax-L3 This project develops a one-stop management screen playback functions;
V3.0 (Smart solution for enterprise level advertising operations 2. Provide rich external interfaces to easily integrate
Retail Cloud content marketing management product price Completed key data with POS and ERP systems;
Management management and marketing data analysis based on 3. Realize the unified module for managing digital
Platform) cloud architecture. signage electronic price tags and AI terminal
devices;
4. By integrating AIGC technology achieve rapid
deployment and implementation of marketing ideas.Based on the R&D of multi-dimensional perception Based on the Company's R&D capabilities and 1. The Company can build the core competitiveness
smart passage this project mainly combines multi- guided by market demand we continuously launch and market share of channel products and provide
dimensional perception AIoT terminals cloud- visitor management and solutions. They cater to the customers with more professional product
edge-end integrated digital intelligence platforms access control scenarios of high-end buildings applications and services.and millimeter-wave radar detection technology to government agencies transportation tracks etc. 2. The Company can achieve technological
Multi-
achieve the overall layout of keel architecture and upgrades of products meeting the demands of high-
dimensional
industrial intelligent manufacturing. By accurately end access scenarios.Perception Completed
analyzing complex and changeable human
Smart Passage
behaviors through multi-dimensional perception it
Terminal 1.0
provides real-time behavior tracking and analysis
for passage targets and ensures the safety of
visitors. It is mainly applied in high-end access
scenarios such as buildings government agencies
and transportation tracks.The project develops a smart office terminal This project aims to develop a smart office terminal 1. Connect IoT devices such as smart office
management platform and device based on the management platform and device based on the cloud attendance access control visitors and videos to
cloud service Minerva IoT platform mainly service MinervaIoT platform. This platform takes provide a one-stop O2O solution for enterprise
combining the ZKTeco Minerva IoT smart office "time management+security management" as its core smart office. It improved the management efficiency
R&D of Smart cloud platform with "time management+security service providing enterprises with a more refined and security of the enterprise;
Office management" as the key service core cloud smart office management model by integrating the 2. Provide support for the Company's digital cloud
Terminal platform as the core application as the carrier and ZKTeco Minerva IoT smart office cloud platform platform strategic layout.Management hardware devices as the foundation archiving applications and hardware devices. It simultaneously
Platform and device data on a high security cloud platform for supports intelligent O&M functions such as device
Completed
Device Based management and providing a more refined O&M and OTA upgrade while transforming from
on Cloud enterprise smart office management mode; the traditional O&M methods to digital O&M methods.Service feature is that the terminal device supports various
Minerva IoT biometric (fingerprint face) RFID QR code
Platform V2.0 information collection and video intercom
capabilities and supports intelligent O&M
functions such as device O&M OTA upgrade etc.connecting smart office attendance access control
visitors videos and other IoT devices providing a
73ZKTeco 2024 Annual Report
one-stop O2O solution for enterprise smart office. It
is mainly used in smart office scenarios.
74ZKTeco 2024 Annual Report
R&D personnel of the Company
2024 2023 Change ratio
Number of R&D staff (ppl) 1118 1226 -8.81%
Proportion of R&D personnel 31.42% 29.86% 1.56%
Education background of R&D personnel
Bachelor's degree 761 794 -4.16%
Master's degree 64 76 -15.79%
Age composition of R&D personnel
Under 30 years old 497 652 -23.77%
30~40 years old 501 459 9.15%
Amount of R&D investment and its proportion in operating revenue of the Company in the past three years
202420232022
R&D investment amount
215470991.40213613414.56187983847.42
(RMB)
Ratio of R&D investment to
10.82%10.84%9.80%
operating revenue
Amount of R&D expenditure
0.000.000.00
capitalization (RMB)
Ratio of capitalized R&D
expenditure to R&D 0.00% 0.00% 0.00%
investment
Proportion of capitalized
R&D expenditure to current 0.00% 0.00% 0.00%
net profit
Reasons and impacts of significant changes in the composition of R&D personnel in the Company
□ Applicable □Not applicable
Reasons for significant changes in the proportion of total R&D investment to operating revenue compared to the previous year
□ Applicable □Not applicable
Reasons for significant changes in the capitalization rate of R&D investment and their rationality explanation
□ Applicable □Not applicable
5. Cash flow
Unit: RMB
Item 2024 2023 YoY change
Subtotal of cash inflows from
2394049601.812165751516.5310.54%
operating activities
Subtotal of cash outflows
2165713018.761929750626.3212.23%
from operating activities
Net cash flows from operating
228336583.05236000890.21-3.25%
activities
Subtotal of cash inflows from
1663237967.53787667352.37111.16%
investing activities
Subtotal of cash outflows
1829043721.44718997205.91154.39%
from investing activities
75ZKTeco 2024 Annual Report
Net cash flows from investing
-165805753.9168670146.46-341.45%
activities
Subtotal of cash inflows from
23810988.13171289430.52-86.10%
financing activities
Subtotal of cash outflows
199897055.95237940435.66-15.99%
from financing activities
Net cash flows from financing
-176086067.82-66651005.14-164.19%
activities
Net increase in cash and cash
-102676225.59239412294.92-142.89%
equivalents
Main influencing factors for significant year-on-year changes in relevant data
□Applicable □ Not applicable
(1) In 2024 the net cash flow generated from operating activities decreased by 3.25% year-on-year mainly due to an increase in
payment for purchasing materials in the current period;
(2) The net cash flow generated from investing activities decreased by 341.45% year-on-year mainly due to the fact that the amount
of time deposits maturing and the redemption of financial products in the current period was less than the amount of time deposits and
wealth management products purchased resulting in a decrease in the net cash flows from investing activities.
(3) The net cash flow generated from financing activities decreased by 164.19% year-on-year mainly due to the Company's share
repurchase in the current period and the increase in cash dividends paid for the 2023 annual profit distribution.Explanations on the significant difference between the net cash flow generated by the Company's operating activities and the net
profit of the current year during the reporting period
□ Applicable □Not applicable
V. Non-main Business
□Applicable □ Not applicable
Unit: RMB
Amount Proportion to Total Profit Description of Reason Sustainable or Not
Mainly due to the profit and
loss generated during the
Investment income 4195000.74 1.95% holding period of the financial No
products purchased during the
reporting period
Mainly due to the profit and
loss generated during the
Profits and losses from
14859953.45 6.90% holding period of the financial No
fair value changes
products purchased during the
reporting period
Mainly due to the provision for
impairment of current inventory
Losses from
-7654897.66 -3.55% and provision for impairment of No
impairment of assets
contract assets during the
reporting period
Mainly due to the transfer of the
amount that does not need to be
Non-operating revenue 5545326.30 2.57% No
paid during this reporting
period to non-operating income.Mainly due to expenses such as
Non-operating 6513782.84 3.02% No
external donations and disposal
76ZKTeco 2024 Annual Report
expenditure of stagnant materials during the
reporting period
Mainly due to income from
Gains from disposal of
-653718.36 -0.30% disposal of fixed assets during No
assets
the reporting period
Mainly due to other income
generated by government
Other income 18367589.83 8.53% No
subsidies during the reporting
period
Mainly due to the provision of
Losses from credit bad debt reserves for accounts
-21206975.03 -9.85% No
impairment receivable during the reporting
period
VI. Analysis of Assets and Liabilities
1. Material changes of asset items
Unit: RMB
At the end of 2024 At the beginning of 2024 Proportion
Description of major
Proportion to Proportion to increase or
Amount Amount changes
total assets total assets decrease
Mainly due to the
purchase of financial
products investment
expenses for construction
Monetary projects implementation
1473334905.9736.70%1990924954.7850.74%-14.04%
funds of share repurchases and
distribution of profits
(cash dividends) from the
previous year in current
period
Increase in overseas
business resulting in
Accounts accounts receivable
519014337.8912.93%479803313.6612.23%0.70%
receivable increase due to the
relatively long collection
cycle of overseas business
Contract
212795.14 0.01% 282186.31 0.01% 0.00% No major change
assets
Mainly due to the
reduction in strategic raw
Inventories 335306397.14 8.35% 372714784.31 9.50% -1.15%
material reserves this
year.Investment
21504316.77 0.54% 23145488.85 0.59% -0.05% No major change
real estate
Long-term
equity 28982092.23 0.72% 29781888.62 0.76% -0.04% No major change
investment
Mainly due to transfer to
fixed assets for the current
Fixed assets 535337384.82 13.33% 470121791.29 11.98% 1.35% period by the Hybrid
Biometrics IoT Intelligent
Industrial Base Project
77ZKTeco 2024 Annual Report
and partial transfer to
fixed assets by the Thai
factory construction
project.Mainly due to new
investment in the
Multimodal Biometrics
Construction Digitalization Industrial
226445932.025.64%138986483.733.54%2.10%
in progress Base Construction Project
and the Thai factory
construction project in
current period
Right-of-use
48352214.14 1.20% 38669718.86 0.99% 0.21% No major change
asset
Contract
71168318.91 1.77% 65331106.17 1.66% 0.11% No major change
liabilities
Long-term
7021328.89 0.17% 7810405.04 0.20% -0.03% No major change
loan
Lease
29108076.76 0.73% 19713286.21 0.50% 0.23% No major change
liabilities
Trading
Mainly due to the increase
financial 491331815.79 12.24% 80980203.63 2.06% 10.18%
in financial products
assets
High proportion of overseas assets
□Applicable □ Not applicable
Proportion of
Control Is there a
Specific overseas
Cause of Operation measures to significant
content of Asset size Location Income assets to the
formation mode ensure asset impairment
assets Company's
security risk
net assets
ZK Wholly-
Overseas Subsidiary
INVESTME owned 16977.77 America 4080.72 5.03% No
investment control
NTS INC. subsidiary
ZK
Controlling Overseas Subsidiary
TECHNOL 7199.82 America 6900.51 2.13% No
subsidiary sales control
OGY LLC
ZKTECO Wholly-
Overseas Subsidiary
CO. owned 47627.08 Hong Kong 866.87 14.10% No
sales control
LIMITED subsidiary
Note: Significant overseas assets mean that the assets of overseas individual companies exceed 10% of the
Other consolidated assets or the net profit of overseas individual companies exceeds 10% of the consolidated net profit
explanations of the Group.Unit: RMB '0000
2. Assets and liabilities measured at fair value
□Applicable □ Not applicable
Unit: RMB
Profits and Cumulativ
Impairmen
losses from e changes Purchase Sales amount
Beginning t accrued Other Ending
Item fair value in fair amount in the in current
balance in the changes balance
changes in value current period period
current
the current recognized
78ZKTeco 2024 Annual Report
period in equity period
Financial assets
1. Trading
financial
assets
(excludin
80887585.8114952571.271499634199.551104583406.82440865.98491331815.79
g
derivative
financial
assets)
2.
Derivativ
e 92617.82 -92617.82
financial
assets
Subtotal of
financial 80980203.63 14859953.45 0.00 0.00 1499634199.55 1104583406.82 440865.98 491331815.79
assets
Total 80980203.63 14859953.45 0.00 0.00 1499634199.55 1104583406.82 440865.98 491331815.79
Financial
0.000.00
liabilities
Other changes
Other changes are mainly due to exchange rate fluctuations.Has there been any major change in the measurement attributes of the Company's main assets during the reporting period
□ Yes □No
3. Assets right restrictions as of the end of the reporting period
Please refer to "Section X Financial Report VII. Consolidated Financial Statements 23. Assets with Restricted Ownership or Use
Rights" in this report for details.VII. Investment Analysis
1. Overall
□Applicable □ Not applicable
Investment in 2024 (RMB) Investment in 2023 (RMB) YoY
1725309509.06508828238.94239.08%
2. Significant equity investments obtained during the reporting period
□ Applicable □Not applicable
3. Significant non-equity investments during the reporting period
□Applicable □ Not applicable
Unit: RMB
79ZKTeco 2024 Annual Report
Reasons for
Accumulated
Accumulated Not
Investment Actual
Realized Achieving
Fixed Asset Investment Amount Investment Disclosure Disclosure
Project Investment Source Project Expected Income as of Planned
Assessment Project During the Amount as of Date (if Index (if
Name Mode of Funds Progress Income the End of the Progress
or Not Industry Reporting the End of the any) any)
Reporting and
Period Reporting
Period Expected
Period
Benefits
Hybrid
Own funds
Biometrics IoT Plant and
bank loans Under Not Not
Intelligent Self-built Yes supporting 1208099.23 226519519.55 38067128.95
and raised construction applicable applicable
Industrial Base facilities
funds
Project
Multimodal
Biometrics
Plant and Own funds
Digitalization Under Not Not
Self-built Yes supporting 100910810.31 188328218.01 and raised
Industrial Base construction applicable applicable
facilities funds
Construction
Project
Thai factory
Plant and
construction Under Not Not
Self-built Yes supporting 53656399.97 79867187.37 Own funds
and office construction applicable applicable
facilities
buildings
Not
Total -- -- -- 155775309.51 494714924.93 -- -- 38067128.95 -- -- --
applicable
4. Financial asset investment
(1) Securities investment
□ Applicable □Not applicable
There were no securities investments during the Company's reporting period.
(2) Derivative investment
□Applicable □ Not applicable
1) Derivative investments for hedging purposes during the reporting period
□Applicable □ Not applicable
Unit: RMB '0000
Profits and Ratio of ending
losses Cumulative Purchase Sales investment
Types of Initial from fair changes in amount amount amount to the
Opening Closing
derivative investment value fair value during the during the Company's net
amount amount
investments amount changes in recognized reporting reporting assets at the end
the current in equity period period of the reporting
period period
Forward
foreign
exchange 824.27 824.27 -9.26 0 0 815.01 0 0.00%
settlement and
sales
80ZKTeco 2024 Annual Report
Total 824.27 824.27 -9.26 0 0 815.01 0 0.00%
Accounting
policies and
specific
accounting
principles for
hedging
business during
the reporting
period as well No major change
as description
on whether
there have been
significant
changes
compared to the
previous
reporting period
Explanations on
actual profit During the reporting period the Company obtained investment income of RMB 68.2 thousand through forward
and loss during foreign exchange settlement and sales and generated profits and losses from fair value changes of RMB -92.6
the reporting thousand.period
In the daily operation process of the Company foreign currency transaction is involved. In order to prevent
exchange rate fluctuation risks it is necessary for the Company to carry out foreign exchange derivative trading
Explanations on business related to daily operation needs according to specific circumstances to reduce the risk of exchange rate
hedging effect or interest rate fluctuations that the Company continues to face. The Company's forward foreign exchange
settlement and sales business can achieve the goal of locking in business contract profits at most time points
without significant risks which achieves the purpose of hedging.Source of
funding for
Own funds
derivative
investment
I. Risk analysis of the Company's hedging business
Forward foreign exchange settlement and sales business can reduce the impact of exchange rate fluctuations on
the Company's production and operation in the event of significant fluctuations in exchange rates but there are
still certain risks in conducting forward foreign exchange settlement and sales transactions:
1. Exchange rate fluctuation risk: In cases of significant fluctuations in exchange rate courses exchange losses
Risk analysis
may occur when the exchange rate of the forward foreign exchange settlement and sales agreed in the
and control
confirmation letter for the forward foreign exchange settlement and sales is lower than the real-time exchange
measures of
rate.derivatives
2. Risk of payment collection prediction: Business departments make payment prediction based on customer
positions during
orders and expected orders. During the actual execution process customers may adjust their own orders and
the reporting
predictions resulting in inaccurate company payment prediction and the risk of delayed delivery of forward
period
exchange settlement.(including but
3. Internal control risk: Forward foreign exchange settlement and sales transactions are highly specialized and
not limited to
complex which may result in risks due to imperfect internal control systems.market risk
4. Customer default risk: If the customer's accounts receivable are overdue and the payment cannot be collected
liquidity risk
within the predicted payment period it will cause a delay in forward exchange settlement and result in losses to
credit risk
the Company.operational risk
5. Transaction performance risk: Conducting financial derivative trading business carries the risk of default
legal risk etc.)
caused by the inability of counterparties to perform when the contract expires.II. Preparation work and risk control measures for hedging by the Company
The Company follows the principle of hedging when conducting forward foreign exchange settlement and sales
transactions and does not engage in speculative arbitrage transactions. The main risk control measures are as
follows:
81ZKTeco 2024 Annual Report
1. When signing forward foreign exchange settlement and sales contracts transactions are carried out in strict
accordance with the Company's predicted collection amount and all forward foreign exchange settlement and
sales businesses have a true trade background.
2. The Company has formulated the "Management System for Forward Foreign Exchange Settlement and Sales
of ZKTECO CO. LTD." which clearly stipulates the amount variety approval authority internal audit process
information disclosure and other aspects of forward foreign exchange settlement and sales. Moreover the
Company has strengthened the business training and professional ethics of relevant personnel improved the
quality of relevant personnel and established a timely reporting system for abnormal conditions to avoid the
occurrence of operational risk to the maximum extent.
3. To prevent the delayed delivery of forward foreign exchange settlement and sales the Company will attach
great importance to the management of foreign currency accounts receivable avoid the phenomenon of overdue
accounts receivable and strive to improve the accuracy of payment collection prediction and reduce prediction
risks. Meanwhile the Company has purchased credit insurance for some export products thus reducing the
customer default risk.
4. To control transaction performance risks the Company carefully selects counterparties engaged in financial
derivatives business. The Company only conducts financial derivative trading business with legally qualified
large commercial banks and other financial institutions and carefully reviews the contract terms signed with the
counterparties to prevent credit and legal risks.Changes in
market price or
fair value of
products during
the reporting
period of the
invested
The Company's accounting for the fair value of derivatives mainly focuses on the unexpired contracts for
derivatives. The
forward foreign exchange settlement and sales transactions signed between the Company and banks during the
analysis of the
reporting period. Trading financial assets or trading financial liabilities are recognized based on the difference
fair value of
between the quoted price of the unexpired forward foreign exchange settlement and sales contract at the end of
derivatives
the period and the forward foreign exchange price.shall disclose
the specific
methods used
and the setting
of relevant
assumptions
and parameters
Litigation
situation (if Not applicable
applicable)
2) Derivative investments for speculative purposes during the reporting period
□ Applicable □Not applicable
There were no derivative investments for speculative purposes during the Company's reporting period.
5. Use of raised funds
□Applicable □ Not applicable
(1) Overall use of raised funds
□Applicable □ Not applicable
82ZKTeco 2024 Annual Report
Unit: RMB '0000
Proportion of Total amount Proportion of The purpose
Accumulated Amount
raised funds of raised funds accumulated Total and
Total Total amount Accumulated total amount of raised
Listing date Net amount utilized at the with changed total amount amount of destination of
Year of Fundraising amount of of raised total amount of raised funds idle
of of raised end of the purposes of raised unused the raised
fundraising method raised funds used in of raised funds with for more
securities funds (1) reporting during the funds with raised funds that
funds this period funds used (2) changed than two
period (3) = reporting change funds have not been
purposes years
(2)/(1) period purposes used yet
Stored in the
Initial bank's special
public August 17 account for
2022160816.89145729.8410098.3063001.3143.23%3548.3932085.4122.02%88550.680
offering of 2022 fundraising
stocks and wealth
management
Total -- -- 160816.89 145729.84 10098.30 63001.31 43.23% 3548.39 32085.41 22.02% 88550.68 -- 0
Description of the overall use of raised funds
1. According to the approval of the "Reply of CSRC to Approval for the Registration of Initial Public Offering of Stocks of ZKTECO CO. LTD." (ZJXK [2022] No. 926) the Company has publicly issued 37123013 RMB
denominated ordinary shares (A shares) with a face value of RMB 1.00 per share an issuance price of RMB 43.32 per share and a total amount of raised funds of RMB 1608168923.16. After deducting the issuance expenses
(excluding value-added tax) of RMB 150870545.46 the actual net amount of raised funds is RMB 1457298377.70. The receipt date of the raised funds is August 12 2022. The availability of the raised funds has been
verified by Baker Tilly China Certified Public Accountants (Special General Partnership) and a "Capital Verification Report" (TZYZ [2022] No. 38658) has been issued.
2. All the raised funds mentioned above have been deposited in a special account for raised funds for management and a regulatory agreement for raised funds has been signed with the sponsor and the commercial bank that
deposited the raised funds.
3. As of December 31 2024 the cumulative amount used for the investment projects was RMB 630013073.72 and the balance of the remaining raised funds (including interest income and financial product income net of
bank handling fees) was RMB 885506773.97.
(2) Committed projects with raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Committed Has the Committed Adjusted Investment Accumulated Investment Date Benefits Accumulated Have the Has there
Listing
Financing investment Project project total total Amount investment progress when the achieved benefits expected been a
date of
project name projects and nature been investment investment During the amount as of as of the project during achieved as benefits major
securities
the investment changed amount of (1) Reporting the end of end of the reaches this of the end of been change in
83ZKTeco 2024 Annual Report
direction of (including raised Period the period period its reporting the reporting achieved the
over-raised partial funds (2) (3)=(2)/(1) expected period period feasibility
funds changes) conditions of the
for use project
Committed investment projects
1. Tangxia
Initial public
Production Production
offering of August Not Not Not
Base and Yes 24841.18 0 Yes
stocks in 17 2022 applicable applicable applicable
Construction construction
2022
Project
2. Hybrid
Initial public
Biometrics Production
offering of August March 31 Not
IoT Intelligent and No 43689.94 43689.94 1184.51 27742.37 63.50% 2096.09 3806.71 No
stocks in 17 2022 2026 applicable
Industrial construction
2022
Base Project
3. American
Initial public
Manufacturing Production
offering of August August Not Not Not
Factory and Yes 17392.21 14392.65 214.19 320.18 2.22% No
stocks in 17 2022 31 2026 applicable applicable applicable
Construction construction
2022
Project
Initial public 4. R&D
offering of August Center R&D December Not Not Not
Yes 18240.58 14692.19 649.39 10923.73 74.35% No
stocks in 17 2022 Construction project 31 2025 applicable applicable applicable
2022 Project
5. Global
Initial public Marketing
offering of August Service Operational August Not Not Not
No 26802.01 26802.01 513.19 8705.31 32.48% No
stocks in 17 2022 Network management 31 2025 applicable applicable applicable
2022 Construction
Project
6. Remaining
funds after the
Initial public
previous Production
offering of August Not Not Not
change in the and Yes 0 2999.56 No
stocks in 17 2022 applicable applicable applicable
American construction
2022
Manufacturing
Factory
84ZKTeco 2024 Annual Report
Construction
Project
7. Multimodal
Biometrics
Initial public
Digitalization Production
offering of August June 30 Not Not Not
Industrial and Yes 0 39605.1 7537.02 15309.72 38.66% No
stocks in 17 2022 2026 applicable applicable applicable
Base construction
2022
Construction
Project
8. Remaining
Initial public funds after the
offering of August change in the R&D Not Not Not
Yes 0 3548.39 No
stocks in 17 2022 R&D Center project applicable applicable applicable
2022 Construction
Project
Subtotal of committed investment projects -- 130965.92 145729.84 10098.30 63001.31 -- -- 2096.09 3806.71 -- --
Direction of over-raised fund investment direction
1. Production
August Not
Undetermined 14763.92 and Yes 14763.92 No
17 2022 applicable
funds construction
Subtotal of over-raised fund investment direction -- 14763.92 -- -- -- --
Total -- 145729.84 145729.84 10098.30 63001.31 -- -- 2096.09 3806.71 -- --
R&D Center Construction Project: It has been affected by fluctuations in the domestic and international macroeconomic environment changes in the market environment and other
factors. The Company has formed a more mature consideration for project construction. In order to control project investment risks the procurement research equipment selection
Describe the situation and
project construction and other aspects of the investment project have gradually been carried out cautiously resulting in a delay in the implementation progress of the project compared to
reasons why the planned
the original plan and it is unable to reach the expected conditions for use within the original schedule. Therefore the Company has postponed the scheduled date for the expected
progress and expected
conditions for use of the "R&D Center Construction Project" to December 31 2025.benefits have not been
Hybrid Biometrics IoT Intelligent Industrial Base Project: It has been actively promoting the implementation of the investment project since the funds were received. However due
achieved by projects
to changes in terminal demand and external objective environmental factors the equipment and material procurement and overall construction progress of the investment project have
(including the reason for
been delayed compared to the original plan. In order to safeguard the interests of all shareholders and the Company and considering the prudence of the raised funds while ensuring the
selecting "not applicable"
effectiveness of the investment and avoiding additional resource waste the Company will steadily promote the implementation of this project based on its medium - and long-term
for "whether the expected
development strategy without changing the investment content total investment amount and implementation subject of the project under the principle of gradually laying out the
benefits have been
project. The Company reasonably arranges production capacity construction based on customer orders to ensure the smooth implementation of the project. Therefore after careful
achieved")
consideration the Company has decided to extend the deadline for the project to reach its expected conditions for use until March 31 2026. This adjustment aims to ensure the effective
implementation of the project and is also in line with the Company's long-term development vision.
85ZKTeco 2024 Annual Report
For these two projects on April 22 2024 the Company held the Ninth Session of the Third Board Meeting and the Eighth Session of the Third Supervisory Board Meeting. On May
15 2024 the Company held 2023 Annual General Meeting and deliberated and approved the "Proposal on Adjusting the Implementation Method Total Investment Amount and Delay
of Part of the Raised Fund Investment Projects". The Company agreed to postpone the scheduled date for the "Hybrid Biometrics IoT Intelligent Industrial Base Project" and the "R&D
Center Construction Project" to reach their expected conditions for use. Based on the market environment and the actual construction situation of the investment projects for the R&D
Center Construction Project the scheduled date for the project to reach its expected conditions for use before the adjustment is August 17 2024 and the scheduled date for the project to
reach its expected conditions for use after the adjustment is December 31 2025. For the Hybrid Biometrics IoT Intelligent Industrial Base Project the scheduled date for the project to
reach its expected conditions for use before the adjustment is August 17 2024 and the scheduled date for the project to reach its expected conditions for use after the adjustment is
March 31 2026. For details please refer to the "Announcement on Adjusting the Implementation Method Total Investment Amount and Delay of Part of the Raised Fund Investment
Projects" (Announcement No. 2024-020) disclosed by the Company on CNINFO (http://www.cninfo.com.cn) on April 24 2024.Global Marketing Service Network Construction Project: The original Global Marketing Service Network Construction Project was planned in 2020. The overall planning of the
overseas marketing network was formulated by the Company based on the global marketing network layout market environment economic environment industry development trends
and the Company's actual situation at that time. However with the changes in global geopolitics economic conditions industry competition and other factors the original investment
project planning cannot well match the actual market demand and respond to global development. The current actual situation has deviated from the original planning. The original
overall planning of the domestic marketing network was formulated by the Company in 2020 based on the market environment industry development trends and the Company's actual
situation at that time to build and expand the network by itself. With the fluctuations in the macroeconomic situation causing changes in the market environment the domestic overall
planning of the original Global Marketing Service Network Construction Project cannot well match the latest domestic market environment.American Manufacturing Factory Construction Project: Given that the American Manufacturing Factory Construction Project is implemented in the US due to differences in
regulatory environments the Company's customized requirements and the coordination of supply chain and construction resources the project has been delayed. The specific influencing
factors are as follows: * Regulatory environment differences: The US government has extremely strict reviews on industrial land planning environmental protection standards and
safety regulations. For example it requires the submission of detailed environmental impact assessments and complex safety risk analyses and other large amounts of additional materials
to prove the project's compliance which has led to an unexpected approval cycle for building permits; * Customized design requirements: To meet the Company's intelligent production
processes the factory design incorporates non-standard contents such as customized production line layouts. The teams from China and the US have had multiple rounds of discussions
on the engineering details which has extended the design cycle beyond expectations; * Coordination of supply chain and construction resources: In the general contractor bidding
process the Company conducted a comprehensive assessment from multiple dimensions such as qualification levels construction period commitments and cost budgets. After several
rounds of strict screening a contractor with rich engineering experience was finally selected. Due to the detailed and comprehensive assessment process the time for determining the
winner in this bidding process was extended.The American Manufacturing Factory Construction Project and Multimodal Biometrics Digitalization Industrial Base Construction Project are in the construction stage and have not
yet generated benefits. The R&D Center Construction Project and Global Marketing Service Network Construction Project are investment projects and do not generate benefits.Explanations on
significant changes in Not applicable
project feasibility
Applicable
The amount of over-raised funds from the Company's initial public offering of stocks was RMB 147.6392 million. On January 18 2023 the Company held the 23rd Session of the
The amount purpose and Second Board Meeting and the 17th Session of the Second Supervisory Board Meeting. On February 6 2023 the Company held the Second Extraordinary General Meeting of 2023 and
progress of the over-raised deliberated and approved the "Proposal on Changing the Investment Projects of Raised Funds Changing the Special Account for Raised Funds Increasing Capital and Providing Loans
funds to Subsidiaries to Implement Investment Projects". The Company agrees to use the over-raised funds of 147.6392 million to invest in the construction of the Multimodal Biometrics
Digitalization Industrial Base Construction Project. The Company transferred the over-raised funds into the special account for the Multimodal Biometrics Digitalization Industrial Base
Construction Project on March 1 2023 for project construction. It is expected to be completed by June 2026.
86ZKTeco 2024 Annual Report
Changes in the
implementation location
Not applicable for 2024
of projects invested with
raised funds
Applicable
Occurred during the reporting period
Adjustment of
On April 22 2024 the Company held the Ninth Session of the Third Board Meeting and the Eighth Session of the Third Supervisory Board Meeting. On May 15 2024 the Company
implementation methods
held 2023 Annual General Meeting and deliberated and approved the "Proposal on Adjusting the Implementation Method Total Investment Amount and Delay of Part of the Raised
for projects invested with
Fund Investment Projects". The Company agreed to change the construction of Tangxia R&D Center in the investment project "R&D Center Construction Project" from self building to
raised funds
utilizing existing site. Due to the adjustment of the above implementation method the corresponding total project investment has been adjusted from RMB 182.4058 million to RMB
146.9219 million a decrease of RMB 35.4839 million.
Applicable
The Company held the 19th Session of the Second Board Meeting and the 13th Session of the Second Supervisory Board Meeting on September 29 2022 and deliberated and approved
the "Proposal on Using Raised Funds to Replace Self Raised Funds for Pre-invested Raised Investment Projects and Paid Issuance Expenses". It is agreeed that the Company will use the
raised funds to replace the self raised funds of RMB 358.6078 million invested in the raised investment project and paid issuance expenses as of August 21 2022 as well as the pre-paid
issuance fees of RMB 13.8425 million (excluding value-added tax) with the self raised funds.On September 16 2022 the Company held the 18th Session of the Second Board Meeting and the 12th Session of the Second Supervisory Board Meeting and deliberated and approved
the "Proposal on Using Its Own Funds and Foreign Exchange to Pay for Part of the Funds Raised for Investment Projects and Exchanging Them with the Raised Funds in Equal
Amounts". On January 18 2023 the Company held the 23rd Session of the Second Board Meeting and the 17th Session of the Second Supervisory Board Meeting. On February 6 2023
the Company held the Second Extraordinary General Meeting and deliberated and approved the "Proposal on Changing the Investment Projects of Raised Funds Changing the Special
Advance investment and Account for Raised Funds Increasing Capital and Providing Loans to Subsidiaries to Implement Investment Projects". The salaries social insurance premiums housing provident fund
replacement of raised utilities etc. of domestic personnel of the Company in implementing the investment projects "Hybrid Biometrics IoT Intelligent Industrial Base Project" "R&D Center Construction
funds for investment Project" "Global Marketing Service Network Construction Project" and the "Multimodal Biometrics Digitalization Industrial Base Construction Project" are planned to be paid by the
projects Company or its subsidiary implementing the investment projects in advance with their own funds. The Company collected and calculated the aforementioned advance expenses incurred
by each investment project on a monthly basis and then transferred an equal amount of funds from the special account for investment to the Company's or its subsidiary's own fund
account for implementing the investment projects. The implementation location of the Company's investment project "American Manufacturing Factory Construction Project" is in the
United States and the investment project construction funds need to be paid in USD. The Company's investment projects "Global Marketing Service Network Construction Project" and
"R&D Center Construction Project" include overseas construction content and the operability of paying funds required for overseas construction directly from the special account for
raised funds is poor. Therefore the Company plans to use its own foreign exchange to pay the required funds for the overseas parts of the "Global Marketing Service Network
Construction Project" "American Manufacturing Factory Construction Project" and "R&D Center Construction Project". Subsequently the amount of advance payments will be
calculated monthly and equal amounts will be transferred from the special account for raised funds to the Company's own fund account.As of December 31 2024 the Company has used its own funds and foreign exchange replaced with the raised funds to pay a portion of the funds raised for the investment project
totaling RMB 56.9527 million.Temporary replenishment
of working capital with Not applicable
idle raised funds
The amount and reasons Not applicable
87ZKTeco 2024 Annual Report
for the surplus of raised
funds during project
implementation
The purpose and As of December 31 2024 the balance of the Company's unused IPO raised funds is RMB 885.5068 million (including interest income and financial product income net of bank handling
destination of the raised fees) including RMB 353.4168 million of demand deposit in the special account for raised funds and RMB 532.09 million of time deposit and other financial products. The above
funds that have not been financial products have high safety meet the requirements of capital preservation and have good liquidity which does not affect the normal operation of the investment plan for raised
used yet funds.Problems or other
situations in the use and Not applicable
disclosure of raised funds
Note: On April 21 2025 the Company held the 17th Session of the Third Board Meeting and the 16th Session of the Third Supervisory Board Meeting which reviewed and approved the "Proposal
on Adjusting the Internal Investment Structure Implementation Method and Extension of Some Raised Fund Investment Projects". It is agreed that the Company under the premise that the
investment purposes and scales of the raised fund investment projects remain unchanged would adjust the internal investment structure and implementation methods of the Global Marketing
Network Construction Project based on the actual progress of the project implementation and extend the expected dates of the Global Marketing Network Construction Project and the American
Manufacturing Factory Construction Project to reach the expected conditions for use. The planned date for the Global Marketing Network Construction Project to reach its expected conditions
for use is August 31 2025 before the adjustment and August 31 2028 after the adjustment. The planned date for the American Manufacturing Factory Construction Project to reach its expected
conditions for use is August 31 2026 before the adjustment and August 31 2027 after the adjustment.
(3) Change in the use of raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Has there
Date
Actual been a
The total Actual Investment when the Benefits
accumulated Have the significant
amount of raised investment progress project achieved
Corresponding investment expected change in
Financing Fundraising funds to be amount as of the reaches during
Changed project original committed amount as benefits the
project name method invested in the during this end of the its this
projects of the end been feasibility of
project after the reporting period expected reporting
of the achieved the project
change (1) period (3)=(2)/(1) conditions period
period (2) after the
for use
change
88ZKTeco 2024 Annual Report
Multimodal
Biometrics
Tangxia Production
Initial public Initial Digitalization
Base Construction 39605.10 7537.02 15309.72 38.66% June 30 Not Not
offering of public Industrial Base No
Project 2026 applicable applicable
stocks in 2022 offering Construction
Project
American
American
Manufacturing
Initial public Initial Manufacturing
Factory 14392.65 214.19 320.18 2.22% August Not Not
offering of public Factory Construction No
Construction 31 2026 applicable applicable
stocks in 2022 offering Project
Project
Initial public Initial R&D Center
R&D Center December Not Not
offering of public Construction 14692.19 649.39 10923.73 74.35% No
Construction Project 31 2025 applicable applicable
stocks in 2022 offering Project
Not
Total -- -- -- 68689.94 8400.60 26553.63 -- -- -- --
applicable
Multimodal Biometrics Digitalization Industrial Base Construction Project: On January 18 2023 the Company held the 23rd Session of
the Second Board Meeting and the 17th Session of the Second Supervisory Board Meeting. On February 6 2023 the Company held the
Second Extraordinary General Meeting of 2023 and deliberated and approved the "Proposal on Changing the Investment Projects of Raised
Funds Changing the Special Account for Raised Funds Increasing Capital and Providing Loans to Subsidiaries to Implement Investment
Projects". The original investment project Tangxia Production Project was changed to the Multimodal Biometrics Digitalization Industrial
Base Construction Project.Reasons for change: (1) At present the Company's production sites are scattered. According to the overall plan of the Company at this
stage Guangdong Zkteco will mainly undertake the Company's manufacturing functions and will transfer the investment projects of
production nature to Guangdong Zkteco for implementation facilitating the Company's centralized production management saving
Explanations on reasons for changes decision-
management costs and improving production efficiency; (2) As the current production model and capacity of Guangdong Zkteco are not
making procedures and information disclosure
conducive to controlling the Company's costs quality and delivery time and cannot meet the Company's future sustainable development
(by specific project)
needs after Guangdong Zkteco mainly undertakes the Company's manufacturing function. The change of investment projects helps to
enhance the Company's production capacity and technological process level thereby improving product quality production efficiency and
market competitiveness; (3) With the change of the market multimodal biometrics and non-contact biometric technology have developed
rapidly. Computer vision products such as edge computing and intelligent perception self-help of the IoT intelligent robots and so on have
entered the field of smart wide entrance and exit and the business model has also been upgraded rapidly from the original products and
solutions to the subscription and cloud service model. The Company closely tracks cutting-edge technologies and standards in the market
continuously promotes production technology innovation and conducts technological application engineering transformation based on
biometrics core technology continuously develops and designs products to meet market demand. The changes in investment projects are also
necessary for the Company's business development and technological achievement transformation.
89ZKTeco 2024 Annual Report
American Manufacturing Factory Construction Project: (1) The Company held the 17th Session of the Second Board Meeting and the
11th Session of the Second Supervisory Board Meeting on August 29 2022 and the First Extraordinary General Meeting of 2022 on
September 15 2022 and deliberated and approved the "Proposal on Changing the Implementation Location and Total Investment Amount of
Partial Raised Fund Investment Projects". The Company plans to adjust the implementation location of the "American Manufacturing Factory
Construction Project" from "1600 Union Hill Rd Alpharetta GA 30005" to "6775 Meadow Ln Alpharetta GA 30005". Due to the
Company's use of purchased existing buildings and renovation at a new location the total investment of the Project has been reduced by
RMB 33.477 million after adjustment. The total investment of the Project has decreased from RMB 173.9221 million to RMB 140.4451
million.Reason for change: The increase in construction and labor costs in the United States. After careful evaluation and investigation by the
Company implementing the investment plan at the new location can reduce cost investment while shortening the construction cycle and
accelerating the construction of the investment project without affecting the original planned production capacity of the Project.
(2) On April 26 2023 the Company held the Second Session of the Third Board Meeting and the Second Session of the Third
Supervisory Board Meeting. On May 19 2023 the Company held 2022 Annual General Meeting and deliberated and approved the
"Proposal on Changing the Implementation Location and Total Investment Amount of Some Raised Funds Investment Projects and Adjusting
the Construction Content of Some Projects". The Company adjusted the implementation location of the investment project "American
Manufacturing Factory Construction Project" from "6775 Meadow Ln Alpharetta GA 30005" to "1600 Union Hill Rd Alpharetta GA
30005" and the construction method of the Project was changed from purchase to self-construction. After this adjustment the Project
planned to use the raised funds of RMB 143.9265 million for investment and construction. The remaining funds after this change were
changed to RMB 29.9956 million.Reason for change: Due to the continuous rise in real estate prices in Georgia the original planned purchase price of the factory building
has been constantly adjusted. The adjusted purchase cost of the building has increased by more than 40% compared to the Company's initial
budget which has hindered the Company's purchase plan for the factory building. At the same time the Company has been actively seeking
suitable locations for the implementation of the American Manufacturing Factory Investment Project but has not been able to find suitable
properties for the construction of the investment project. Given the importance and urgency of implementing the US investment project as
well as considering various factors such as supply chain stability and security the Company plans to adjust the implementation location of
the US investment project to "1600 Union Hill Rd Alpharetta GA 30005" and to implement the US factory construction project from
purchasing factory buildings to building new facilities on the US subsidiary's own premises.R&D Center Construction Project: On April 22 2024 the Company held the Ninth Session of the Third Board Meeting and the Eighth
Session of the Third Supervisory Board Meeting. On May 15 2024 the Company held 2023 Annual General Meeting and deliberated and
approved the "Proposal on Adjusting the Implementation Method Total Investment Amount and Delay of Part of the Raised Fund Investment
Projects". The Company agreed to change the construction method of the Tangxia R&D Center in the investment project "R&D Center
Construction Project" from self building to utilizing the existing site for construction. Due to the adjustment of the above implementation
method the corresponding total project investment has been adjusted from RMB 182.4058 million to RMB 146.9219 million a decrease of
RMB 35.4839 million.Reason for change: In the implementation process of the investment project the Company adheres to the principles of rationality
efficiency and economy scientifically and prudently uses the raised funds based on the actual needs of the project fully utilizes the existing
site of the Company and strengthens the supervision and control of project costs while ensuring the quality of project construction and
controlling risks effectively reducing project implementation costs. The adjustment of the above implementation methods and the reduction
90ZKTeco 2024 Annual Report
of the total investment amount of the project due to the adjustment of the implementation methods will not have a substantial impact on the
investment project.R&D Center Construction Project: It has been affected by fluctuations in the domestic and international macroeconomic environment
changes in the market environment and other factors. The Company has formed a more mature consideration for project construction. In
order to control project investment risks the procurement research equipment selection project construction and other aspects of the
investment project have gradually been carried out cautiously resulting in a delay in the implementation progress of the project compared to
the original plan and it is unable to reach the expected conditions for use within the original schedule. Therefore the Company has
postponed the scheduled date for the expected conditions for use of the "R&D Center Construction Project" to December 31 2025.American Manufacturing Factory Construction Project: Given that the American Manufacturing Factory Construction Project is implemented
in the US due to differences in regulatory environments the Company's customized requirements and the coordination of supply chain and
The situation and reasons for not achieving the construction resources the project has been delayed. The specific influencing factors are as follows: * Regulatory environment differences:
planned progress or expected benefits (by specific The US government has extremely strict reviews on industrial land planning environmental protection standards and safety regulations. For
project) example it requires the submission of detailed environmental impact assessments and complex safety risk analyses and other large amounts
of additional materials to prove the project's compliance which has led to an unexpected approval cycle for building permits; * Customized
design requirements: To meet the Company's intelligent production processes the factory design incorporates non-standard contents such as
customized production line layouts. The teams from China and the US have had multiple rounds of discussions on the engineering details
which has extended the design cycle beyond expectations; * Coordination of supply chain and construction resources: In the general
contractor bidding process the Company conducted a comprehensive assessment from multiple dimensions such as qualification levels
construction period commitments and cost budgets. After several rounds of strict screening a contractor with rich engineering experience
was finally selected. Due to the detailed and comprehensive assessment process the time for determining the winner in this bidding process
was extended.Explanations on major changes in project
Not applicable
feasibility after the change
Note: On April 21 2025 the Company held the 17th Session of the Third Board Meeting and the 16th Session of the Third Supervisory Board Meeting which reviewed and approved the
"Proposal on Adjusting the Internal Investment Structure Implementation Method and Extension of Some Raised Fund Investment Projects". It is agreed that the Company under the premise
that the investment purposes and scales of the raised fund investment projects remain unchanged would adjust the internal investment structure and implementation methods of the Global
Marketing Network Construction Project based on the actual progress of the project implementation and extend the expected dates of the Global Marketing Network Construction Project and
the American Manufacturing Factory Construction Project to reach the expected conditions for use. The planned date for the Global Marketing Network Construction Project to reach its
expected conditions for use is August 31 2025 before the adjustment and August 31 2028 after the adjustment. The planned date for the American Manufacturing Factory Construction Project
to reach its expected conditions for use is August 31 2026 before the adjustment and August 31 2027 after the adjustment. The proposal still needs to be reviewed and approved by the Board of
Shareholders before implementation.
91ZKTeco 2024 Annual Report
VIII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable □Not applicable
There is no disposal of significant asset for the Company during the reporting period.
2. Disposal of significant equity
□ Applicable □Not applicable
IX. Analysis of Major Holding and Joint-stock Companies
□Applicable □ Not applicable
Major subsidiaries and partially-owned companies with an impact on the Company's net profit of over 10%
Unit: RMB
Comp
Company Main Registered Operating Operating
any Total assets Net assets Net profit
Name business Capital revenue profit
type
ZK
Subsidi Sales of
TECHNOLOG Not applicable 71998246.32 27409678.52 142360759.61 69425000.59 69005127.60
aries goods
Y LLC
ZK
Subsidi
INVESTMEN Established 100.001 169777680.11 169763303.31 0.00 52909969.23 40807167.48
aries
TS INC.XIAMEN Software
Subsidi
ZKTECO CO. development 100000000.00 174024849.27 154584351.89 115405582.91 21142800.72 20943632.39
aries
LTD. and sales
R&D
ZKTECO production
Subsidi
(GUANGDON and sales of 800000000.00 1360211358.94 944278085.29 759709999.39 68320817.93 62617537.53
aries
G) CO. LTD products and
software
Note 1: USD.Acquisition and disposal of subsidiaries during the reporting period
□Applicable □ Not applicable
Method of acquiring and disposing of Impact on overall production operation
Company Name
subsidiaries during the reporting period and performance
New establishment with no significant
ZKTECO BUSINESS SOLUTIONS impact on the overall production
New establishment
COMPANY operation and performance of the
Company
New establishment with no significant
impact on the overall production
ZKTECO EGYPT LLC New establishment
operation and performance of the
Company
New establishment with no significant
impact on the overall production
ZKTeco Polska Sp. z o.o. New establishment
operation and performance of the
Company
ZKTeco Latam R&D S.A. Assignment With no significant impact on the overall
92ZKTeco 2024 Annual Report
production operation and performance
of the Company
With no significant impact on the overall
Shenzhen Zhongjiang Intelligent
Liquidation production operation and performance
Technology Co. Ltd.of the Company
New establishment with no significant
ZKTeco Cloud Brain-Computer impact on the overall production
New establishment
(Hangzhou) Technology Co. Ltd. operation and performance of the
Company
With no significant impact on the overall
ZKTeco Huayun (Xiamen) Integrated
Cancellation production operation and performance
Circuit Co. Ltd.of the Company
Explanations on the main controlling and participating companies
Please refer to the relevant content of "Section X Financial Report - X. Equity in Other Entities" for details
X. Structured Entities Controlled by the Company
□ Applicable □Not applicable
XI. Outlook for the Future Development of the Company
(I) Industry structure and trends
Since its establishment the Company has been focusing on multimodal BioCV and computer vision as its core technologies and
is committed to providing integrated identity recognition and verification smart terminals industry application software and platform
solutions for smart spaces digital identity authentication smart offices smart business and other fields. During the reporting period
the Company's business further expanded into innovative fields such as smart home and smart health care and continuously accelerated
the strategic layout of new businesses.The application and trends of biometric technology in relevant scenarios are as follows:
(1) Application of biometric technology in the smart space field
The application of biometric technology in smart space management integrates computer vision and AI cognitive space computing
technology through the collection storage and analysis of data and image information to build a comprehensive perception system of
people vehicles objects and the environment. This technology promotes the transformation of smart space from passive management
to autonomous decision-making and intelligent evolution achieving a comprehensive upgrade in space management. Its core
application scenarios include physical access control pedestrian channels and smart locks etc.In recent years with the increasing demand for security convenience and intelligent management of entrances and exits in cities
communities enterprises parks and hospitals various biometric technologies such as fingerprint recognition facial recognition and
palmprint recognition have been increasingly applied in the field of smart space. The intelligent transformation of offline scenarios
such as transportation hubs buildings communities parks and parking areas has been accelerating which enables the rapid
development of the smart space market. In the future based on the consideration of labor costs the current combination of manual
management and equipment management will gradually develop towards self-service and unmanned operation. As an important market
for biometrics equipment and supporting solutions smart space will continue to maintain a high growth trend.The main product of smart space is access control products. China’s access control market was initially dominated by keys and
keypad password locks. With the development of biometric and sensor technologies the access control product market has shown a
trend of product diversification and intelligence. New access control management methods such as fingerprint door opening facial
recognition door opening code scanning door opening and remote door opening are becoming increasingly common. With the maturity
of biometric technology it has become more and more outstanding in terms of security convenience non-contact and ease of
93ZKTeco 2024 Annual Report
management and its application fields are Becoming wider and wider.Overall in the field of biometrics access control management with the proposal of the national policy for new types of
infrastructure smart space management devices based on multimodal biometric technology have been widely applied in scenarios such
as parks communities and construction sites bringing new business needs and development opportunities for solution providers of
smart space. In the future biometric technology will further empower smart space and drive the industry towards higher levels of
intelligence.
(2) Application of biometric technology in the igital identity authentication field
The application of biometric technology in the field of information security has also started very early in the Chinese market. The
application of information security starts with simple product forms such as fingerprint USB drives fingerprint mice and fingerprint
hard drives (mainly used for system access authorization and file encryption) and gradually occupies the market starting from the
financial industry (internal personnel operation authorization). The development and promotion of authentication systems (platforms)
that belong to infrastructure and are compatible with various biometric technology products started around 2014 and the initial progress
was slow. Now they have achieved fruitful results and the number and strength of manufacturers involved in this application field
have greatly increased.With the continuous maturity of biometric technology biometric authentication is widely used in industries such as government
affairs public security finance social security civil aviation railways hotels etc. The continuous development of the IoT cloud
applications intelligent devices and gradually mature biometric technology are key factors driving the growth of the biometric
authentication market. In addition an increasing number of identity theft and fraud behaviors have made small and medium-sized
enterprises and large enterprises realize the importance of identity verification and they have begun to adopt biometric authentication
solutions and services to combat these behaviors.In addition with the requirements of the real name system for various public services and the increasing awareness of safety
requirements in society China's identity verification is currently developing from the initial public security needs to various industries
including aviation railways hotels finance campuses and hospitals.Biometric authentication is the only large-scale commercial application of biometrics today. The application technology covers
facial recognition fingerprint recognition palm recognition iris recognition etc. and the huge demand will inevitably promote the
continuous iterative progress of these technologies.
(3) Application of biometric technology in the smart office field
The biometric office market is a series of intelligent office scene products and solutions that utilize technologies such as
biometrics generative AI and cloud computing to create a new type of office system that is "safe efficient energy-saving healthy
and intelligent". The main products include attendance machines visitor machines meeting attendance systems and cloud office
systems.With the improvement of enterprise informatization level and the increasing demand for intelligent office as well as the
continuous development and upgrading of biometric technology this biometric office market has developed rapidly. In the future
based on the integrated development and application of various technologies such as biometric technology and the IoT the global
level of office intelligence will further improve and the biometric office market will enter a broad development space. In China the
application of biometric technology in smart office scenes such as attendance devices meeting attendance systems and visitor
registration devices is becoming increasingly widespread driving the continuous expansion of the market size.Attendance machines as the core tool for scientific human resource management are an important part of the smart office
scenarios. New-generation attendance products such as biometric attendance machines and cloud attendance solutions meet the
demands of enterprises for improving administrative management efficiency and intelligence levels through technological
innovation. Among them biometric attendance machines have gradually expanded from early fingerprint recognition and facial
recognition to non-contact palm recognition and other technologies adapting to the society's higher expectations for comfortable
convenient and smart office methods. They have become an industry trend.In the overall attendance market the proportion of biometric attendance market is also constantly increasing. In the future with
94ZKTeco 2024 Annual Report
the rapid development of non-contact biometric technology and cloud attendance systems as well as the integration and upgrading of
multiple technologies the introduction of generative AI technology further enhances the intelligence level of the system such as
optimizing attendance management and office experience through data analysis injecting new growth momentum into smart offices.
(4) Application of digital humans and large models in the smart business field
In the smart retail scenario the integration of digital humans and large model technologies is profoundly reshaping the interaction
between consumers and retail spaces especially in enhancing the interaction experience of digital signage and optimizing the O&M
efficiency of advertising content. The following analysis is conducted from two dimensions: scenario application and future trends.Scenario application: Upgraded interaction experience
Virtual shopping guide digital humans provide customers with product knowledge and promotional strategy explanations through
natural language interaction. When customers focus on specific products the digital humans automatically trigger the "object-aware
speech" function presenting product parameter comparisons and matching recommendations and enhancing emotional resonance by
dynamically adjusting voice tone and facial expressions. This capability relies on large models voice recognition natural language
understanding and BioCV technology combined with intelligent digital signage to achieve real-time advertising material rendering.For instance when a product is out of stock the signage instantly switches to recommend alternative products; by analyzing the
customer's style of dress and shopping cart contents personalized advertisements are precisely pushed. Additionally based on
spatiotemporal prediction models and integrating data such as weather traffic and business district activities advertising strategies
are dynamically optimized (e.g. pushing hot drink advertisements on rainy days).The application of large models and AIGC technologies further empowers smart retail:
* Automated content production: AIGC creative workshops generate graphic and video advertisements and short video scripts
in batches by inputting product SKU data significantly enhancing production efficiency;
* Cross-modal adaptation optimization: Diffusion models are used to generate advertising materials of various sizes (from mobile
phone vertical screens to large LED screens in shopping malls) seamlessly adapting to various terminals;
* Compliance verification: Legal large models are integrated to automatically review advertising copy ensuring compliance and
reducing the risk of manual review.Future trends in smart business
Emotional interaction upgrade: Digital humans will possess micro-expression generation and contextual empathy capabilities
strengthening emotional connections with customers;
Metaverse entry point: Digital signage will become an AR interaction entry point allowing customers to scan codes to enter brand
virtual spaces and experience immersive shopping and transactions;
Full-channel content synchronization: Offline advertising and online private domain traffic are linked in real time building an
integrated online and offline closed-loop ecosystem.The deep integration of digital humans and large models is driving the transformation of retail spaces from "product display areas"
to "immersive service bodies". The Company has built a digital asset system centered on customers' psychological data through the
layout of L3 multimodal interaction middleground striving to achieve a new smart retail landscape of "personalized experiences".(II) The Company's future development strategy and specific plans
1. Overall development strategy of the Company
AI-driven innovation reshaping industry landscape
In the era of rapid technological advancement ZKTeco with its deep accumulation in biometric technology is leveraging its core
multimodal BioCV technology as the engine to actively embrace the AI wave and drive intelligent transformation across various
industries. ZKTeco will continue to increase R&D investment attract top AI talents integrate cutting-edge algorithms and technologies
optimize product performance expand application boundaries and reshape industry standards. Driven by AI technology the Company
will focus on core technologies empower more industries to undergo intelligent transformation create greater value on the global stage
and lead the industry towards a brilliant future. The Company is committed to becoming a global leader in smart space evolution
services and leading the industry to new heights.
95ZKTeco 2024 Annual Report
Smart space: Intelligent upgrade spanning physical and digital worlds
Under the digital wave entrance and exit management is transitioning from traditional models to intelligent ones. Unlike
traditional systems that only focus on human and vehicle passage control ZKTeco's Baiaruida focuses on physical space computing
and its ZKBio makes initial breakthroughs in the digitalization of the general entrance and exit. ZKTeco's AI space cognition computing
technology achieves a qualitative leap. This technology integrates full-scenario perception of people vehicles objects and the
environment endowing the space management system with a "smart brain" to deeply analyze behavior patterns and correlations.In terms of efficient passage the system integrates video visual perception and high-precision radar technologies to quickly and
accurately identify people vehicles and objects optimizing the passage verification process. Whether in busy commercial centers or
high-density office areas it can effectively alleviate congestion and improve circulation efficiency. In terms of energy conservation
and environmental protection the system senses environmental factors such as light and temperature in real time intelligently regulates
lighting and ventilation equipment to reduce energy consumption; and optimizes material circulation to reduce transportation carbon
emissions.Taking large commercial complexes as an example the system analyzes the trajectories and dwell times of people vehicles and
objects to gain insights into consumer preferences and operational needs assisting in precise marketing and resource allocation thereby
enhancing economic benefits and promoting green development. Additionally users can make remote reservations and self-service
passage through mobile devices enjoying convenient services. In the future entrance and exit management will further evolve towards
intelligence and humanization.Smart office: Innovative transformation of time management
In the field of smart office ZKTeco with its Ralvie AI technology at the core revolutionizes the time management model. By
accurately recording and analyzing employees' working hours and efficiency it converts time into quantifiable value certificates. This
not only provides a basis for performance evaluation but also helps enterprises optimize processes and resource allocation enhancing
operational efficiency and giving time management a new meaning.Digital identity authentication: Fusion innovation of biometrics and blockchain
In the digital age identity authentication is the cornerstone of security. ZKTeco integrates leading biometric and blockchain
technologies to create a secure and efficient digital identity authentication system. Biometric recognition accurately captures user
identities AI intelligent analysis quickly verifies the identities and blockchain ensures decentralized storage and immutability of data.In the financial sector this system effectively prevents identity fraud and ensures fund security; in access control scenarios it enables
fast passage and efficient management providing security for various venues.Smart business: AI large model-driven marketing revolution
In the field of smart business ZKTeco with its AI large model technology at the core relies on intelligent digital signage to drive
the digital operation revolution of advertising. By deeply analyzing consumer behavior data it accurately identifies needs and achieves
personalized marketing enhancing effectiveness and satisfaction. The digital signage management service integrates AI large models
achieving full-process intelligence from content creation to precise placement and effect tracking and injecting new energy into smart
business.Cloud services: Flexible and reliable technical support platform
ZKTeco's cloud service platform is characterized by high flexibility and security. By leveraging cloud computing it breaks through
the limitations of local devices and supports anytime access and real-time updates providing solid technical support for enterprises'
digital transformation and ensuring that users always have the advantages of cutting-edge technologies.
2. Business plan of the Company for 2025
* Mission and vision upgrade: Reshaping the value system with AI cognition as the engine
In the intelligent era ZKTeco driven by AI cognitive technology officially releases its new mission and vision embarking on a
new chapter of value system reformation. From a pioneer in biometric technology to a leading enterprise in the global smart smart
entrance and exit field the Company now aspires to become a global leader in smart space evolution services. The dramatic changes
in the external environment have prompted us to more clearly examine ourselves and define our future positioning. The new mission
96ZKTeco 2024 Annual Report
and vision integrate technological innovation and humanistic care endowing spaces with the ability to "think" and "evolve" through
AI cognition. In the global digital wave it aims to drive efficiency innovation safeguard security and trust and support a green future
through smart space experiences truly serving people and lighting up a better world.* Implementing a multi-brand strategy: Precise positioning and synergistic development
The Company launches a new multi-brand strategy operating four brands: "ZKTeco" "ZKDIGIMAX" "NGTeco" and
"Armatura". "ZKTeco" leads core business covering smart spaces digital identity authentication and smart offices; "ZKDIGIMAX"
focuses on smart business; "NGTeco" is dedicated to smart living; and "Armatura" targets the high-end market in Europe and America.Through the global coordinated operation of these four brands the Company in collaboration with partners precisely meets the needs
of different industries and customers while consolidating core business and opening up new growth spaces.* Deepening AI+ application layout: Leading innovation creating end-to-end solutions
The Company establishes a wholly-owned subsidiary ZKTeco Cloud Brain-Computer inheriting ZKTeco's leading AI spatial
cognition computing technology and focusing on the R&D and optimization of BioCV TinyML (tiny machine learning) edge models.This subsidiary aims to equip edge devices with autonomous decision-making and evolutionary capabilities enhancing the spatial
perception level of "people vehicles objects and the environment" scenarios promoting the deep integration of AI with industry
scenarios and building end-to-end intelligent solutions. Its technological layout covers visual language multimodal edge models
vehicle-road-cloud edge computing intelligent brain-computer technology and wet computing research injecting new energy into
leading innovation.* Continuously advancing the marketing and service network: Deepening cooperation building an ecological value chain
The Company will continue to deepen regional expansion and market leadership strategies strengthen cooperation with high-
quality partners integrate external resources and enhance customer stickiness. By promoting the breadth and depth of the service
provider system it aims to build a complete ecological value chain from products solutions to scene services enhancing market
competitiveness and service capabilities.* Continuously promoting the construction of a global supply chain system
In 2025 the Company will accelerate the construction and commissioning of the ZKTeco multimodal biometric digital industrial
base and the US manufacturing plant. At the same time it will comprehensively introduce digital tools such as MES (Manufacturing
Execution System) APS (Advanced Planning and Scheduling System) and QMS (Quality Management System) initiating the digital
transformation of the production system. Additionally by deploying more automated production lines and optimizing processes it aims
to enhance efficiency and product quality. These measures are intended to strengthen supply chain resilience and core competitiveness
providing global customers with higher-quality products and services.(III) Risks Faced by the Company and Countermeasures
1. Operational risk
(1) Market competition risk
After years of deep cultivation in the biometric industry the Company has formed competitive advantages in the fields of smart
space smart office digital identity authentication smart business and computer vision applications including technological and R&D
strength flexible production capacity brand influence and marketing service network. However in recent years the relevant business
sectors of the Company have shown an increasing number of market entities increased industry concentration and increasingly fierce
market competition. With a large number of domestic competitors turning to "going global" the competitive situation in overseas
markets has further intensified. The Company's businesses are facing competition pressure from various aspects such as price service
and brand. Other competitors may compete for market share through different market positioning strategies or cost controls making
the competition more intense. In order to maintain the Company's leading position in the industry the Company has continuously
increased its R&D investment in recent years insisting on developing and optimizing single and multimodal biometrics and computer
vision technology and continuously expanding and enriching the types of biometric and computer vision products and services. With
the development of AI the Company pays more attention to the application of AI technology in business and focuses on the overall
linkage design of product software and hardware strengthening competitiveness of multiple categories thus consolidating the
97ZKTeco 2024 Annual Report
Company's leading position in the industry. However with the increasing market competition if the Company cannot continuously
optimize product design improve production quality enhance brand competitiveness expand and consolidate sales network and
improve market penetration the Company's existing industry and market position will be affected and the Company will face the risk
of declining market share and profitability.
(2) Overseas business operational risks
In 2024 the Company's overseas sales revenue from countries and regions was RMB 1.4115242 billion accounting for 71.17%
of the Company's main business income. The Company's overseas business income accounted for a relatively large proportion.In recent years the international market has been facing changes in trade policies of major economies the rise of international
trade protectionism the deterioration of local economic environments geopolitical conflicts and maritime restrictions caused by
geopolitical conflicts the depreciation of currencies in many countries around the world caused by the continuous interest rate hikes
of the USD rising freight rates and the fluctuations in the US tariff policy resulting in strong uncertainty in global trade policies. The
Company's international sales business may face international trade friction especially the risk of trade disputes between China and
the United States. If trade disputes between China and the United States worsen in the future it may have a certain adverse impact on
the Company's product sales which in turn will affect the Company's future business performance. In addition the Company's
international business accounts for a relatively large proportion of exports to developing countries such as India Mexico and Indonesia.Although the overall political financial and economic systems of relevant countries are currently relatively stable the economic
development momentum is good their infrastructure is relatively weak and government efficiency is relatively inefficient compared
to developed countries which poses potential social instability factors. If major changes occur in its political environment economic
environment geopolitics trade policies with China tariff and non-tariff barriers and industry standards in the future it will have a
negative impact on the Company's export business.In addition to the risks of economic and political environment changes trade frictions and tariffs that the Company may face the
multinational enterprise business model of the Company will increase the difficulty of operating financial management and personnel
management and the operation will be influenced by the legal and regulatory environments and business environments of different
countries and systems. Although the Company has accumulated rich experience in international business development if the
Company's management personnel and various systems cannot meet the requirements of global operation cross regional management
and standardized operation it will also affect its operational efficiency and profitability.
(3) Tax compliance risks caused by transfer pricing arrangements between various tax entities within the Company both
domestically and internationally
As of December 31 2024 the Company has a total of 49 overseas controlling subsidiaries located in countries and regions such
as Hong Kong the United States Mexico the United Arab Emirates and India. During the reporting period there were cases where
the Company sold products to overseas subsidiaries and sold them locally through these subsidiaries due to business needs between
the Company and some overseas subsidiaries. There was a situation of transfer pricing in the above-mentioned transaction links.According to the Company's self inspection there were no cases of the Company or its overseas subsidiaries being punished by the tax
department due to transfer pricing issues during the reporting period. From the perspective of its own compliance the Company
regularly hires professional consulting agencies to analyze and demonstrate the transfer pricing strategies involved in the operation of
the Company and some overseas subsidiaries and issues special reports.If there are major changes in the tax policies of the Company in different tax jurisdictions in the future or if the Company fails to
be correctly or timely informed of the changes in tax policies or if there are cases of tax recovery and fines due to the re-approval of
transaction prices by the competent tax authorities it may lead to adverse effects on the Company's operations.
(4) Legal risks of the impact of industry regulatory policies related to personal information protection and data protection on
company operations
Laws regulations and industry norms such as the "Civil Code of the People's Republic of China" the "Cybersecurity Law of the
People's Republic of China" the "Data Security Law of the People's Republic of China" the "Personal Information Protection Law of
the People's Republic of China" the "Measures for the Security Management of the Application of Facial Recognition Technology"
98ZKTeco 2024 Annual Report
and the "General Data Protection Regulation" all stipulate the collection and use of personal information by citizens as well as the
compliance obligations of personal information controllers and emphasizes the legal liability for violating personal information
protection and data security has been strengthened. The "Provisions of the Supreme People's Court on Several Issues concerning the
Application of Law in the Trial of Civil Cases Relating to Processing of Personal Information by Using the Facial Recognition
Technology" (FS [2021] No. 15) provides detailed provisions on the behavior and civil liability of information processors who violate
the personal rights and interests of natural persons by processing facial information in violation of regulations.In recent years personal information protection and data security have become regulatory priorities in various countries around
the world and regulatory policies related to them have been increasingly strengthened. Although the Company invited a professional
compliance lawyer team in 2024 to thoroughly review and improve personal information protection and data security if it fails to make
timely and effective adjustments and responses to relevant policies and regulations in its future business operations there may be
potential legal risks in data compliance caused by changes in legislation or regulatory policies. Meanwhile if the Company is unable
to strictly comply with the relevant laws regulations and industry norms mentioned above in the future and if employees violate the
Company's internal regulations or data collaborators customers etc. violate agreements or cause improper use or leakage of data due
to other personal reasons it/they may be subject to administrative penalties from relevant departments or complaints from users and
even lead to disputes such as litigation or arbitration which may have adverse effects on the Company's reputation and business.
2. Technology and product innovation risks
Driven by market demand and technological development biometric technology has achieved rapid development globally.Biometric technology is gradually iterating towards non-contact and multimodal biometrics. In addition with the development of
cutting-edge technologies such as cloud computing the IoT and AI users' personalized needs for smart terminal products and even
ecological platforms are constantly increasing in the fields of biometric technology applications such as smart space smart office
digital identity authentication and smart business where the Company is located. Industry technology is updated and iterated quickly
requiring industry enterprises to have strong technological innovation capabilities to adapt to the rapid development of the industry.The continuous innovation ability of products and technologies is increasingly becoming an important component of the core
competitiveness of related product and solution suppliers. The Company always attaches great importance to technological innovation
and new product R&D. In 2024 the Company's R&D expenses were RMB 215.471 million accounting for 10.82% of operating
revenue.As of December 31 2024 the Company has 963 patents including 171 invention patents 739 computer software copyrights and
84 work copyrights as well as strong sustained innovation capabilities. However if the Company cannot keep up with the development
trends of domestic and foreign biometric technology and related application products and fully pay attention to the diverse individual
needs of customers and the subsequent R&D investment is insufficient resulting in the Company's technology development and
product upgrading not being able to adapt to industry technology iterations and market demand changes in a timely manner it will face
the risk of declining market competitiveness due to the inability to maintain sustained innovation capabilities.
3. Internal control risk
(1) Management risks caused by future expansion of the Company's scale
With the construction of the marketing network of the Company the Company's scale has constantly expanded and the number
of sales R&D and management personnel has increased significantly posing higher requirements for the Company's management
level and system. Although the Company has established a series of relatively complete enterprise management systems such as clear
institutional processes in procurement production sales R&D and service to ensure the competitiveness and reliability of the
Company's products and services if the Company's management ability cannot be further effectively improved it may trigger
corresponding management risks hinder the Company's future development and have a negative impact on the overall profitability of
the Company.
99ZKTeco 2024 Annual Report
(2) Dealer management risk
During the reporting period the Company mainly adopted a sales model that combines distribution and direct sales and the
proportion of distribution was relatively high. In 2024 the Company achieved a revenue of RMB 1.3755976 billion through the
distribution model accounting for 69.36% of the Company's main business income of 2024.Except for business cooperation each dealer is independent of the Company and its business plan is determined independently
based on its own business goals and risk preferences. Although the Company has established strict dealer management systems and
effective and reasonable rebate policies and maintains good cooperative relationships with major dealers the coverage area of
marketing and service networks will continue to expand in the future with the development of the Company and the difficulty of
training organizing and risk management for dealers will also continue to increase. If the Company is unable to improve its
management capabilities for dealers in a timely manner and if dealers engage in disorderly management poor management illegal or
irregular behavior or if the Company cannot maintain good relationships with dealers in the future resulting in dealers ceasing to
cooperate with the Company and the Company is unable to quickly obtain orders from other channels in the short term or the incentive
effect of the rebate policy decreases it may lead to a regional decline in the sales of the Company's products and have a negative
impact on the Company's market promotion.
4. Financial risk
(1) Risk of bad debt losses on accounts receivable
At the end of the reporting period the book balance of the Company's accounts receivable was RMB 573.6711 million accounting
for 28.81% of the current operating revenue. With the further expansion of the Company's business scale the amount of accounts
receivable may continue to increase. If there are changes in the economic environment customer operating conditions etc. and
accounts receivable cannot be recovered in a timely manner resulting in bad debt losses the Company's operating results may be
adversely affected.
(2) Inventory depreciation risk
With the growth of the Company's business scale the inventory scale has been increasing year by year. At the end of the reporting
period the book value of the Company's inventory was RMB 335.3064 million accounting for 11.40% of the total current assets at the
end of the period. During the reporting period the Company comprehensively considered factors such as expected selling price and
inventory age and made sufficient provision for inventory impairment. At the end of the reporting period the provision ratio for
inventory impairment was 5.17%. The Company's inventory mainly consists of raw materials inventory goods etc. The Company has
always maintained a good cooperative relationship with raw material suppliers and customers and reasonably arranged the inventory
of raw materials and inventory goods. However with the further growth of the Company's sales revenue and asset size the Company's
inventory also increases accordingly which may lead to a decline in price backlog and unsold inventory due to market changes
resulting in the risk of deteriorating financial position and declining profitability.
(3) Risk of RMB exchange rate fluctuations
The Company's current business layout is highly internationalized and there are many local controlling subsidiaries and
participating companies in the overseas export market. The majority of export sales are settled in USD or EUR resulting in significant
exchange rate fluctuations in production and operation. On the one hand the fluctuations of the RMB exchange rate will directly affect
the sales prices of the Company's exported products thereby affecting the price competitiveness of the Company's products; on the
other hand fluctuations of the RMB exchange rate may also affect exchange gains and losses of the Company. If the RMB appreciates
in the future it will have a significant adverse impact on the Company's operating performance.
(4) Risk of exchange rate fluctuations in mainstream countries
Due to the high degree of internationalization of the Company with the increase in interest rates in the United States in recent
years currencies in many countries have depreciated and countries with weak industrial capabilities may even implement foreign
exchange controls which will lead to longer payment collection times for downstream customers and increased risks. Although the
Company has effectively reduced this risk through measures such as Sinosure in the past year the unpredictability of future policies
will still bring related collection risks to the Company.
100ZKTeco 2024 Annual Report
5. Risks related to raising funds to invest in projects
(1) The risk of raising funds to invest in projects that do not yield expected returns
The investment projects with raised funds are a prudent decision and planning made by the Company based on a thorough analysis
of the current market situation development speed industrial environment and future development trends of the industry as well as
the Company's existing technological level management ability and expected future customer needs combined with development
prospects of the biometric industry and related application fields as well as the expected changes in the international trade environment.However if there are significant changes in the future market demand industry structure industrial policies or the economic and
political situation it may prevent the smooth implementation of investment projects with raised funds as planned or prevent them from
achieving expected returns.
(2) The risks of cross-border implementation of investment projects
The American Manufacturing Factory Construction Project R&D Center Construction Project and Global Marketing Service
Network Construction Project among these investment projects with raised funds all involve overseas investment. Although the
Company has accumulated rich experience in cross-border operations and management in overseas markets including the United States
through various overseas subsidiaries the construction progress of the Company's American Manufacturing Factory Construction
Project R&D Center Construction Project and Global Marketing Service Network Construction Project may be affected by multiple
factors considering the international market situation and the complex diversity of policies and cultures in various countries. Operations
in various countries also face certain uncertainties. In addition during the implementation process of the overseas investment projects
there may be a risk of delaying the implementation of the investment projects due to the need to increase or re-fulfill the filing or
approval procedures due to subsequent needs policy changes and other reasons. The Company reminds investors to pay attention to
the risks of cross-border investment projects.XII. Reception of Activities including Research Communication and Interviews During
the Reporting Period
□Applicable □ Not applicable
The main
Reception content of the
Reception Reception Index of basic
Reception time object Reception object discussion and
location methods information of research
type the materials
provided
CNINFO
http://www.cninfo.com.Value Online Investors
Online cn Announcement
(https://www.ir- participating in the See CNINFO
Communication date: May 7 2024
May 7 2024 online.cn/) Others Company's 2023 (http://www.cni
on Online Investor Relations
Network annual performance nfo.com.cn)
Platforms Activity Record Form
Interaction briefing online
of ZKTECO CO. LTD.(No. 2024-01)
CNINFO
http://www.cninfo.com.Investors
Value Online cn Announcement
Online participating in the
(https://www.ir- See CNINFO date: September 2
September 2 Communication Company's 2024
online.cn/) Others (http://www.cni 2024 Investor
2024 on Online semi-annual
Network nfo.com.cn) Relations Activity
Platforms performance briefing
Interaction Record Form of
online
ZKTECO CO. LTD.(No. 2024-02)
Online TF Securities See CNINFO CNINFO
December 18
Online Meeting Communication Institution Zheshang Securities (http://www.cni http://www.cninfo.com.
2024
on Online and Yinhua Fund nfo.com.cn) cn Announcement
101ZKTeco 2024 Annual Report
Platforms date: December 18
2024 Investor
Relations Activity
Record Form of
ZKTECO CO. LTD.(No. 2024-03)
XIII. Formulation and Implementation of the Market Value Management System and the
Plan for Enhancing Valuation
Has the Company established a market value management system
□ Yes □No
Has the Company disclosed its plan for enhancing valuation
□ Yes □No
XIV. Implementation of the Action Plan for "Double Improvement of Quality and
Return"
Has the Company disclosed an action plan for "dual improvement of quality and return
□ Yes □No
102ZKTeco 2024 Annual Report
Section IV Corporate Governance
I. Basic Situation of Corporate Governance
During the reporting period the Company continuously improved its corporate governance structure based on the specific
situation of the Company established and improved the internal management and control system of the Company continuously carried
out in-depth corporate governance activities and promoted standardized operation of the Company in strict accordance with the
requirements of laws regulations and normative documents such as the "Company Law" "Securities Law" "Code of Corporate
Governance for Listed Companies" "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange"
"Shenzhen Stock Exchange Guideline No. 2 on Self Regulation of Listed Companies - Normative Operation of Listed Companies on
the Growth Enterprise Board". The Company has established a corporate governance structure composed of the board of shareholders
Board of Directors Board of Supervisors and management established and improved the rules of procedure for board of shareholders
Board of Directors Board of Supervisors and independent director work system and established an Audit Committee Strategy and
Development Committee Salary and Assessment Committee and Nomination Committee under the Board of Directors.
1. Shareholders and shareholders' meeting
The Company standardizes the convening of the shareholders' meeting in strict accordance with the requirements of the "Rules
for the Shareholders' Meetings of Listed Companies" "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen
Stock Exchange" "Articles of Association" "Rules of Procedure for Shareholders' Meeting" and other regulations treats all
shareholders equally and creates convenient conditions for shareholders to participate in the shareholders' meeting as much as possible
enabling them to fully exercise their shareholder rights and protect the interests of all shareholders. Meanwhile the Company hires
professional lawyers to witness the shareholders' meeting ensuring that the convening and voting procedures of the meeting comply
with relevant laws and regulations and safeguarding the legitimate rights and interests of shareholders.During the reporting period the Company held one annual general meeting and two extraordinary general meetings all of which
were held through a combination of on-site and online voting. The Company hired lawyers to attend and witness the General Meetings
and provides legal opinions on the convening and voting procedures of the General Meetings fully respecting and safeguarding the
legitimate rights and interests of all shareholders.
2. The Company and the controlling shareholders
The Company has independent and complete business and independent management capabilities which are separated from the
controlling shareholders in terms of personnel assets finance institutions business and other aspects. Each of them independently
calculates and assumes responsibilities and risks. During the reporting period major decisions of the Company were made by the
board of shareholders and the Board of Directors in accordance with the law. The controlling shareholders exercised their shareholder
rights through the board of shareholders and there were no direct or indirect interventions beyond the shareholders' meeting in the
Company's decision-making and operating activities. There were no violations of commitments and there were no situations such as
occupying company funds or requiring guarantees for them or others.
3. Directors and the Board of Directors
The Company's Board of Directors has 7 directors including 3 independent directors. The number of directors and personnel
composition meet the requirements of laws regulations and the Company's Articles of Association. All directors fulfill their duties
with integrity diligence and conscientiousness attend meetings on time actively participate in training and continuously improve
their performance level. The Board of Directors of the Company has four specialized committees: the Audit Committee the Strategy
and Development Committee the Salary and Assessment Committee and the Nomination Committee. Each specialized committee
strictly performs its duties in accordance with relevant laws and regulations the Company's "Articles of Association" and the rules of
procedure of each specialized committee of the Board of Directors and operates well. During the reporting period the Company
established a special meeting mechanism for independent directors of the Board of Directors to make decisions on relevant matters
103ZKTeco 2024 Annual Report
which played a positive role in improving the Company's governance structure and standardizing operations and safeguarding the
interests of public shareholders.
4. Supervisors and the Board of Supervisors
The Company's Board of Supervisors is composed of three supervisors with one employee representative supervisor. The
number of members appointment and removal of members composition and qualifications of the Board of Directors all comply with
the requirements of the Company's "Articles of Association" and the "Rules of Procedure for the Board of Supervisors".The supervisors and Board of Supervisors of the Company strictly implement the relevant provisions of the Company's "Articles of
Association" and the "Rules of Procedure for the Board of Supervisors" conscientiously fulfill their responsibilities and are able to
attend the supervisory board meetings attend board meetings and shareholders' meetings in a spirit of being responsible to
shareholders; review the regular reports prepared by the Board of Directors and provide written verification opinions effectively
supervise the legality and compliance of the Company's significant events financial position and the performance of duties by
directors and senior managers and effectively safeguard the legitimate rights and interests of all shareholders.
5. Performance appraisal and incentive and restraint mechanisms
The Company has gradually established and improved an enterprise performance evaluation and incentive system and the
appointment of senior managers is open and transparent in accordance with laws and regulations. During the reporting period the
senior managers of the Company have conscientiously fulfilled their work responsibilities as indicated by assessment.
6. Improve the quality of information disclosure and effectively protect the rights and interests of investors
The Company truthfully accurately timely fairly and completely discloses relevant information in strict accordance with
relevant laws and regulations as well as the requirements of the "Articles of Association" and the "Information Disclosure
Management System". The Board Secretary of the Company is designated to be responsible for information disclosure and investor
relationship management strengthen communication with investors through channels such as investor hotlines faxes dedicated email
exchange interactive platforms and receiving shareholder visits strictly implement the requirements for insider information
management ensure that all shareholders and investors of the Company can obtain information fairly and continuously improve the
transparency of the Company.
7. Regarding stakeholders
The Company fully respects and safeguards the legitimate rights and interests of stakeholders achieves coordination and balance
of interests among shareholders employees society and other parties and jointly promotes the sustained and sound development of
the Company.Are there significant differences between the actual situation of corporate governance and laws administrative regulations and the
regulations on listed company governance issued by the CSRC
□ Yes □No
There are no significant differences between the actual situation of corporate governance and laws administrative regulations and the
regulations on listed company governance issued by the CSRC.II. Company's Independence in Assets Personnel Finance Organizations and Businesses
from Controlling Shareholders and Actual Controller
The Company operates in strict accordance with relevant laws regulations and the requirements of the "Company Law"
"Securities Law" and the "Articles of Association". It is independent of the controlling shareholders and actual controllers of the
Company in terms of assets personnel finance institutions and business and has a complete asset and business system and the ability
to operate independently in the market.
1. Asset completeness
The ownership of the necessary assets for the Company's current business and production operations is fully enjoyed by the
Company independently with complete control and domination over all assets and there is no situation of sharing with shareholder
104ZKTeco 2024 Annual Report
units. The Company has an independent R&D procurement production and sales system as well as a business system and main assets
related to operations.
2. Personnel independence
The Company shall appoint directors and supervisors in accordance with the relevant provisions of the "Company Law" and the
"Articles of Association". The Board of Directors shall appoint senior managers and the labor personnel and salary management of
the Company shall be completely independent of the shareholder entities. The General Manager Deputy General Manager CFO and
Board Secretary and other senior managers of the Company have not held any positions other than directors or supervisors in other
enterprises controlled by the controlling shareholder or actual controller and have not received salaries in other enterprises controlled
by the controlling shareholder or actual controller. The financial personnel of the Company do not work part-time in other enterprises
controlled by the controlling shareholder or actual controller.
3. Financial independence
The Company has established an independent financial accounting system capable of making financial decisions independently
with standardized financial accounting systems and financial management systems for branches and subsidiaries. The Company has
not shared bank accounts with controlling shareholders actual controllers and other enterprises under its control.
4. Independence in organizations
The Company has established and improved its internal business management structure independently exercising its business
management powers and there is no institutional confusion with other enterprises controlled by controlling shareholders or actual
controllers.
5. Business independence
The Company uses multimodal "Computer Vision and Biometrics" (BioCV) as its core technology and does not rely on
shareholder entities or their affiliated enterprises. There is no situation where shareholders intervene in the Company's business
operations by retaining procurement and sales institutions monopolizing business channels etc. There is no horizontal competition or
significantly unfair related party transactions between the Company and other enterprises controlled by the controlling shareholder or
actual controller and the controlling shareholder or actual controller has promised not to engage in any business or activity that
constitutes or may constitute horizontal competition with ZKTeco and enterprises controlled by ZKTeco.III. Horizontal Competition
□ Applicable □Not applicable
IV. Annual General Meetings and Extraordinary General Meetings Convened During the
Reporting Period
1. General Meetings convened during this reporting period
Proportion of
Convening
Meeting Meeting Type participating Disclosure Date Resolution of the Meeting
Date
investors
Deliberation and approval of the
"Proposal on Changing the Registered
The 1st
Capital Amending the Articles of
Extraordinary
Extraordinary Association and Handling the
General January 8
General 70.34% January 8 2024 Procedures for Changing Industrial
Meeting of 2024
Meeting and Commercial Registration" and
Shareholders in
Deliberation and approval of the
2024
"Proposal on Revising and Adding
Relevant Governance Systems" item
105ZKTeco 2024 Annual Report
by item
Deliberation and approval of the
"Proposal on the 2023 Annual Report
and Its Summary" the "Proposal on
the 2023 Work Report of the Board of
Directors" the "Proposal on the 2023
Work Report of the Board of
Supervisors" the "Proposal on the
2023 Annual Financial Settlement
Report" the "Proposal on the 2023
Profit Distribution Plan" the
"Proposal on Applying for
Comprehensive Credit Line from
Annual General Annual General May 15
71.15% May 15 2024 Banks and Handling Bank Loans and
Meeting of 2023 Meeting 2024
Providing Guarantee Limit for
Holding Subsidiaries" the "Proposal
on the 2024 Annual Salary Plan for
Directors" the "Proposal on the 2024
Annual Salary Plan for Supervisors"
the "Proposal on Adjusting the
Implementation Method Total
Investment Amount and Delay of Part
of the Raised Fund Investment
Projects" and the "Proposal on Using
Idle Self-owned Funds to Purchase
Financial Products"
The 2nd
Extraordinary
Extraordinary Deliberation and approval of the
General November November 15
General 70.56% "Proposal on Proposed Change of
Meeting of 15 2024 2024
Meeting Accounting Firm"
Shareholders in
2024
2. Extraordinary General Meetings Convened at the Request of Preferred Shareholders with Resumed
Voting Rights
□ Applicable □Not applicable
V. Arrangement for Differences in Voting Rights of the Company
□ Applicable □Not applicable
VI. Governance of Red Chip Structured Companies
□ Applicable □Not applicable
VII. Information about Directors Supervisors and Senior Managers
1. Basic information
106ZKTeco 2024 Annual Report
Shares Shares Other
Shares held at Shares held Reasons for
increased decreased changes in
Tenure Commencement Termination of the beginning at the end of changes in share
Name Gender Age Positions during the during the increase or
status of term of office term of office of the period the period increase or
period period decrease
(shares) (shares) decrease
(shares) (shares) (shares)
Che December 14
Male 56 Chairman Incumbent April 6 2026 34022300 34022300
Quanhong 2007
Registration of
Jin ownership of
Male 43 Director Incumbent April 11 2020 April 6 2026 7800 7800 15600
Hairong Class II
restricted shares
Registration of
Jin General January 31 ownership of
Male 43 Incumbent April 6 2026 7800 7800 15600
Hairong manager 2019 Class II
restricted shares
Ma
Male 42 Director Incumbent June 28 2016 April 6 2026
Wentao
Ma Deputy General
Male 42 Incumbent June 28 2016 April 6 2026
Wentao Manager
Registration of
Fu ownership of
Male 41 Director Incumbent June 28 2016 April 6 2026 7150 7150 14300
Zhiqian Class II
restricted shares
Dong Independent
Female 53 Incumbent June 3 2020 April 6 2026
Xiuqin director
Zhuo Independent
Female 44 Incumbent April 11 2020 April 6 2026
Shuyan director
Pang Independent January 12
Male 54 Incumbent April 6 2026
Chunlin director 2021
Employee
Representative
Jiang Supervisor
Female 42 Incumbent June 28 2016 April 6 2026
Wenna Chairman of the
Board of
Supervisors
Wang
Male 37 Supervisor Incumbent April 7 2023 April 6 2026
Huineng
107ZKTeco 2024 Annual Report
Yang
Male 41 Supervisor Incumbent April 7 2023 April 6 2026
Xianfeng
Li Deputy General
Male 52 Incumbent June 28 2016 April 6 2026
Zhinong Manager
Guo Secretary of the
Female 44 Incumbent April 15 2020 April 6 2026
Yanbo board
Guo Deputy General September 16
Female 44 Incumbent April 6 2026
Yanbo Manager 2022
Wang
Male 59 CFO Incumbent April 15 2020 April 6 2026
Youwu
Registration of
Mu Deputy General September 16 ownership of
Female 38 Incumbent April 6 2026 11700 11700 23400
Wenting Manager 2022 Class II
restricted shares
Total -- -- -- -- -- -- 34048950 0 0 26650 34075600 --
Any resignation of directors or supervisors and dismissals of senior managers during their term of office during the reporting period
□ Yes□ No
Changes of directors supervisors and senior managers of the Company
□ Applicable□ Not applicable
108ZKTeco 2024 Annual Report
2. Positions and Incumbency
The professional background main work experience and current responsibilities of the Company's current directors supervisors and
senior managers
(1) Directors
Mr. Che Quanhong born in August 1968 Chinese nationality without permanent residency abroad holds a bachelor's degree. He
graduated from Lanzhou University with a major in Semiconductor Physics in July 1991 and currently serves as the Chairman of the
Company. Mr. Che Quanhong served as the Chairman and General Manager of the Company from December 2007 to January 2019
and has been serving as the Chairman of the Company since January 2019.Mr. Jin Hairong born in July 1981 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as the Legal Representative Director and General Manager of the Company. Mr. Jin Hairong served as the Sales
Manager and General Manager Assistant of the Company from February 2008 to February 2014. From February 2014 to January 2019
he served as the General Manager of the Card Business Unit of the Global Marketing Center of the Company. From February 2019 to
March 2020 he served as the General Manager and Legal Representative of the Company. From April 2020 to present he has served
as a Director General Manager and Legal Representative of the Company.Mr. Ma Wentao born in August 1982 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as the Director and Deputy General Manager of the Company. Mr. Ma Wentao served as the European Regional Head
of the Global Marketing Center and the Sales Director of the International Business Group from December 2007 to June 2016. From
June 2016 to February 2020 he served as a Director and Deputy General Manager of the Company. From February 2020 to present
he has served as a Director Deputy General Manager and Head of the R&D Center.Mr. Fu Zhiqian born in February 1984 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as a Director of the Company. Mr. Fu Zhiqian served as the Marketing Manager of the Global Marketing Center
President Assistant General Manager of the Security Division of the Global Marketing Center in China and Head of the Global
Marketing Center in China from January 2008 to December 2024. Since January 2025 he has served as the General Manager of the
Global Market and Product Sharing Center of the Company. Since June 2016 he has been a Director of the Company.Ms. Zhuo Shuyan born in November 1980 Chinese nationality without permanent residency abroad holds a bachelor's degree
and currently serves as an independent director of the Company. Ms. Zhuo Shuyan served as a legal assistant/lawyer at China
Commercial Law Firm from June 2004 to March 2009 and as a lawyer at Guangdong Gaorui Law Firm from March 2009 to July 2015.From November 2017 to October 2020 she served as a Supervisor of Shenzhen Landa Investment Development Co. Ltd. She currently
serves as an independent director of the Company a partner of Shanghai GF Law Firm (Shenzhen Branch) a Supervisor of Guangzhou
Aiji Food Co. Ltd. and a Supervisor of Zizi Zhongxing Health Culture (Shenzhen) Co. Ltd.Ms. Dong Xiuqin born in October 1971 Chinese nationality without permanent residency abroad holds a doctoral degree is a
CPA and currently serves as an independent director of the Company. Ms. Dong Xiuqin has been a teacher at the School of Economics
at Shenzhen University since August 1996. From November 2014 to October 2019 she served as an independent director of Shenzhen
Tempus Global Business Service Group Holding Ltd. From February 2015 to August 2020 she served as an independent director of
Shenzhen Invt Electric Co. Ltd. From October 2020 to April 2021 she served as an independent director of Shenzhen Soocas
Technology Co. Ltd. From October 2018 to March 2024 she has served as an independent director of Shenzhen Longood Intelligent
Electric Co. Ltd. From January 2019 to January 1 2025 she has served as an independent director of Shenzhen Jingquanhua
Technology Co. Ltd. From February 2021 to January 2024 she has served as an independent director of Colorlight Cloud Tech Ltd.From July 2021 to present she has served as an independent director of Shenzhen Riland Industry Co. Ltd.Mr. Pang Chunlin born in 1971 Chinese nationality without permanent residency abroad holds a doctor's degree and currently
serves as an independent director of the Company. Mr. Pang Chunlin served as an engineer at Oriental STAR Machine Manufacture
Co. Ltd. from 1993 to 1996. From 1997 to 2000 he served as the Technical Manager of Murakami Shanghai Office. From 2000 to
2006 he served as the Deputy General Manager of Shenzhen Qingyi Photomask Limited. From 2007 to December 2017 he served as
109ZKTeco 2024 Annual Report
the Executive Director and Deputy Secretary General of the China Electronics Standardization Association. From November 2014 to
March 2018 he served as an independent director of Zhuhai TOPSUN Electronic Technology Co. Ltd. From 2015 to December 2018
he served as the Deputy Secretary General of the Chinese Association of Automation. From September 2016 to June 2019 he served
as the Director of Unicom Intelligent Network Technology Co. Ltd. From January 2015 to May 2021 he served as the independent
director of Shenzhen Qingyi Photomask Limited. From February 2015 to present he has served as the General Manager Legal
Representative and Executive Director of Chelian Innovation (Beijing) Science and Technology Center. From December 2016 to
present he has served as the Secretary General of the Zhongguancun Telematics Industry Application Alliance. From June 2018 to
present he has been serving as the Legal Representative and the Executive Director of Open Unmanned Farm Engineering Technology
(Jiangsu) Co. Ltd. From November 2021 to present he has been serving as the Legal Representative and Executive Director of the
Whole Process Unmanned Operation Technology Promotion (Jiangsu) Co. Ltd. From December 2021 to present he has served as an
independent non-executive director of Shanghai Pateo Electronic Equipment Manufacturing Co. Ltd. From May 2022 to April 2023
he has served as a Director of Shenzhen Qingyi Photomask Limited. From February 2023 to present he has served as an Executive
Director of Qiaosuan Information Technology (Beijing) Co. Ltd. From June 2023 to present he has served as the General Manager
Legal Representative and Executive Director of Onman Intelligent Machinery (Beijing) Co. Ltd. From August 2023 to present he
has served as the General Manager Legal Representative and Executive Director of Onman International Trade (Beijing) Co. Ltd.From October 2022 to present he has served as an independent director of Beijing Zhixingzhe Technology Co. Ltd. From April 2023
to present he has served as an independent non-executive director of BOE Varitronix Limited.
(2) Supervisors
Ms. Jiang Wenna born in February 1983 Chinese nationality without permanent residency abroad holds a bachelor's degree
and currently serves as the Chairman of the Company's Board of Supervisors. Ms. Jiang Wenna served as Assistant Manager Marketing
Specialist Manager of International Comprehensive Department Manager of International Human Resources Department and
Manager of Group Human Resources Center in Shenzhen ZKTeco Overseas Department from September 2007 to May 2016. From
June 2016 to April 2018 he served as the Manager of the Company's Human Resources Center and since April 2018 he has been the
Head of the Company's Business and Tourism Department. Since June 2016 he has served as the Chairman of the Company's Board
of Supervisors.Mr. Yang Xianfeng born in December 1984 Chinese nationality without permanent residency abroad holds a bachelor's degree
and currently serves as a Supervisor of the Company. Mr. Yang Xianfeng has held various positions such as Technical Supporter
Department Manager Product Manager and Product Director of the Global Marketing Center Armatura and the Global Market Product
Sharing Center of the ZKTeco International Business Group in the Company since May 2010. Since January 2025 he has served as
the Deputy General Manager of the Global Market and Product Sharing Center of the Company. Since April 7 2023 he has served as
a Supervisor of the Company.Mr. Wang Huineng born in June 1987 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as the Manager of Company. Mr. Wang Huineng served as the Hardware Assistant Engineer Testing Team Leader of
the Pre-research Department Software Testing Department Manager and Testing Department Manager in Shenzhen ZKTeco from
March 2010 to November 2013. From December 2013 to November 2017 he served as the Operations Director General Manager of
the Management Department and Operations Director of the Biometric Card Business Unit of Xiamen Zkteco Biometric Identification
Technology Co. Ltd. From December 2017 to November 2019 he served as the Operations Director and General Manager of Guizhou
Zhongjiang Intelligent Technology Co. Ltd. From February 2019 to January 2021 he served as the Head of the International Security
and Project Services Department of the International Business Group of the Company's Global Marketing Center. From February 2021
to September 2024 he has served as the Manager of the Armatura Global Marketing Center and Project and Ecological Cooperation
Department of ZKTeco International Business Group. Since September 2024 he has served as the Operations Director of the NGTECO
Business Unit of the Company. Since April 7 2023 he has served as a Supervisor of the Company.
(3) Senior managers
110ZKTeco 2024 Annual Report
Mr. Jin Hairong is the Director and General Manager of the Company and his resume can be found in "(1) Appointment of
directors" in this section.Mr. Ma Wentao is the Director and Deputy General Manager of the Company and his resume can be found in "(1) Appointment
of directors" in this section.Mr. Li Zhinong born in July 1972 Chinese nationality without permanent residency abroad holds a master's degree. Mr. Li
Zhinong served as the Technical Director of Shenzhen ZKTeco from May 2006 to December 2007 the Technical Director of the
Company from December 2007 to May 2016 and the Deputy General Manager and Technical Director of the Company from June
2016 to present.
Mr. Wang Youwu born in December 1965 Chinese nationality without permanent residency abroad holds a bachelor's degree.Mr. Wang Youwu served as the Investment Banking Headquarters Manager of Dongxing Securities Co. Ltd. from October 2007 to
December 2009. From January 2010 to December 2015 he served as the Executive General Manager of the Enterprise Financing
Department of Changjiang Securities Consignment Inward & Sponsoring Broker Co. Ltd. He joined the Company in January 2016
and served as a Director and Deputy General Manager from June 2016 to April 2020. Since April 2020 he has been serving as the
Company's CFO and has also served as the Chairman Assistant of the Company since January 2022.Ms. Guo Yanbo born in January 1981 Chinese nationality without permanent residency abroad holds a bachelor's degree is
Certified Management Accountant (CMA) and currently serves as the Secretary of the Board of Directors Head of the Investment and
Financing Department and Deputy General Manager of the Company. Ms. Guo Yanbo served as the Head of the Company's Overseas
Department CFO and the Head of Human Resources Department from December 2007 to December 2015. From January 2016 to
October 2017 she served as the Head of Audit Department. From October 2017 to March 2020 she served as the Head of the Audit
and Investment and Financing Department. From April 2020 to September 2022 she served as the Secretary of the Company's Board
of Directors and the Head of the Investment and Financing Department. From September 2022 to present she has served as the Deputy
General Manager Board Secretary and the Head of the Investment and Financing Department. From February 2018 to October 2022
she served as a Supervisor of Xinhuaxin (Xi'an) Information Technology Co. Ltd. (formerly known as "Xi'an Huaxin Smart Digital
Technology Co. Ltd.").Ms. Mu Wenting born in December 1986 Chinese nationality without permanent residency abroad holds a bachelor's degree.From August 2010 to January 2017 Ms. Mu Wenting served as the Sales Representative for the Latin American Business Group of
the International Sales Department Project Management Specialist for the AFIS Project Group of the R&D Business Group Marketing
Specialist and Department Manager for the International Market and Brand Strategy Department and Manager for the Company's
Brand Strategy Department. From February 2017 to February 2018 she served as the Director of the Chairman's Office and Chairman
Assistant. From February 2018 to February 2022 she served as the General Manager of the Management Department of the
Manufacturing Center. From February 2022 to September 2022 she served as the Director of the General Manager's Office and
Chairman Assistant. From September 2022 to July 2024 she has served as the Deputy General Manager Director of the General
Manager's Office and Chairman Assistant of the Company. Since July 2024 she has served as the Deputy General Manager of the
Company as well as the Head of the Human Resources Center and the IT Information Center.Employment in shareholder units
□ Applicable □Not applicable
Positions held in other entities
□Applicable □ Not applicable
Compensation
Positions held in Commencement of Termination of the and allowance
Name Name of other entities
other entities the term term from the other
entities
Che Fujian Zhongkong Mining
Supervisor March 26 2008 December 10 2024 No
Quanhong Co. Ltd.
111ZKTeco 2024 Annual Report
School of Economics
Teacher August 1 1996 Yes
Shenzhen University
Shenzhen Jingquanhua Independent
January 10 2019 January 20 2025 Yes
Technology Co. Ltd. director
Shenzhen Longood
Dong Independent
Intelligent Electric Co. October 12 2018 March 27 2024 Yes
Xiuqin director
Ltd.Independent
Colorlight Cloud Tech Ltd. February 3 2021 January 19 2024 Yes
director
Shenzhen Riland Industry Independent
July 13 2021 Yes
Co. Ltd. director
Shanghai GF Law Firm
Partner Lawyer July 1 2015 Yes
(Shenzhen Branch)
Guangzhou Aiji Food Co.Zhuo Supervisor October 1 2013 No
Ltd.Shuyan
Zizi Zhongxing Health
Culture (Shenzhen) Co. Supervisor May 1 2019 No
Ltd.Legal
Chelian Innovation Representative
(Beijing) Science and General Manager February 1 2015 No
Technology Center and Executive
Director
Zhongguancun Telematics
Industry Application Secretary General December 9 2016 Yes
Alliance
Open Unmanned Farm Legal
Engineering Technology representative and June 1 2018 No
(Jiangsu) Co. Ltd. executive director
Whole Process Unmanned
Legal
Operation Technology
representative and November 5 2021 No
Promotion (Jiangsu) Co.executive director
Ltd.Shanghai Pateo Electronic
Independent non-
Pang Equipment Manufacturing December 2 2021 No
executive director
Chunlin Co. Ltd.Qiaosuan Information
Technology (Beijing) Co. Executive Director February 15 2023 No
Ltd.Legal
Onman Intelligent Representative
Machinery (Beijing) Co. General Manager June 9 2023 No
Ltd. and Executive
Director
Legal
Representative
Onman International Trade
General Manager August 7 2023 No
(Beijing) Co. Ltd.
and Executive
Director
Beijing Zhixingzhe Independent
October 17 2022 Yes
Technology Co. Ltd. director
Independent non-
BOE Varitronix Limited April 7 2023 Yes
executive director
Penalties imposed by securities regulatory authorities on current and resignation directors supervisors and senior managers of the
Company in the past three years during the reporting period
□ Applicable Not applicable□
112ZKTeco 2024 Annual Report
3. Remuneration of directors supervisors and senior managers
Decision making process determination basis and actual payment situation of remuneration for directors supervisors and senior
managers
The decision-making procedure for the remuneration of directors supervisors and senior managers: In accordance with relevant
provisions such as the "Articles of Association" the remuneration of directors and supervisors of the Company shall be determined by
the board of shareholders of the Company after being deliberated and approved by the Board of Directors and the remuneration of
senior managers shall be determined by the Board of Directors of the Company.The basis for determining the remuneration of directors supervisors and senior managers: Independent directors of the Company
only receive allowances with each person receiving RMB 150000 per year. Mr. Che Quanhong as the Full-time Chairman of the
Company receives the Chairman's salary which is based on the salary standards of senior managers. Non-independent directors who
hold other positions within the Company shall not receive additional director allowances in addition to their own position salary.Directors supervisors and senior managers serving in the Company shall receive compensation in accordance with the Company's
relevant salary and performance evaluation management system based on their specific management positions in the Company. Salary
is divided into basic salary and performance related pay. The basic salary is paid monthly based on fixed salary while performance
related pay is assessed based on annual business goals and is determined and paid based on the annual achievement of benefits and
personal work performance completion.The actual payment of compensation for directors supervisors and senior managers: During the reporting period the total
compensation for directors supervisors and senior managers of the Company was RMB 6.723 million.Remuneration of directors supervisors and senior managers during the reporting period of the Company
Unit: RMB '0000
Whether to
Total pre-tax obtain
compensation remuneration
Name Gender Age Position Tenure status
received from from related
the Company parties of the
Company
Che Quanhong Male 56 Chairman Incumbent 143.78 No
Director and
Jin Hairong Male 43 General Incumbent 45.00 No
Manager
Director and
Ma Wentao Male 42 Deputy General Incumbent 43.45 No
Manager
Fu Zhiqian Male 41 Director Incumbent 30.00 No
Independent
Dong Xiuqin Female 53 Incumbent 15.00 No
director
Independent
Zhuo Shuyan Female 44 Incumbent 15.00 No
director
Independent
Pang Chunlin Male 54 Incumbent 15.00 No
director
Employee
Representative
Supervisor
Jiang Wenna Female 42 Incumbent 24.25 No
Chairman of
the Board of
Supervisors
Wang Huineng Male 37 Supervisor Incumbent 23.28 No
Yang Xianfeng Male 41 Supervisor Incumbent 39.72 No
Li Zhinong Male 52 Technical Incumbent 140.21 No
113ZKTeco 2024 Annual Report
Director and
Deputy General
Manager
Secretary of the
Board of
Guo Yanbo Female 44 Directors and Incumbent 44.35 No
Deputy General
Manager
Wang Youwu Male 59 CFO Incumbent 50.18 No
Deputy General
Mu Wenting Female 38 Incumbent 43.08 No
Manager
Total -- -- -- -- 672.30 --
Other explanations
□ Applicable □Not applicable
VIII. Performance of Duties by Directors during the Reporting Period
1. The Board of Directors during this reporting period
Session Convening Date Disclosure Date Resolution of the Meeting
See CNINFO "Announcement on the Resolutions
The 9th Session of the Third
April 22 2024 April 24 2024 of the 9th Session of the Third Board Meeting"
Board Meeting
(Announcement No. 2024-009)
The 10th Session of the Third "Proposal on the 2024 Q1 Report of ZKTECO
April 25 2024
Board Meeting CO. LTD."
See CNINFO "Announcement on the Resolutions
The 11th Session of the Third
August 28 2024 August 30 2024 of the 11th Session of the Third Board Meeting"
Board Meeting
(Announcement No. 2024-035)
See CNINFO "Announcement on the Resolutions
The 12th Session of the Third
October 28 2024 October 30 2024 of the 12th Session of the Third Board Meeting"
Board Meeting
(Announcement No. 2024-045)
See CNINFO "Announcement on the Resolutions
The 13th Session of the Third
November 21 2024 November 21 2024 of the 13th Session of the Third Board Meeting"
Board Meeting
(Announcement No. 2024-051)
See CNINFO "Announcement on the Resolutions
The 14th Session of the Third
December 31 2024 January 2 2025 of the 14th Session of the Third Board Meeting"
Board Meeting
(Announcement No. 2025-001)
2. Attendance of directors in Board Meetings and General Meetings
Attendance of directors in board meetings and general meetings
Board Board
Board
meeting Board meeting not
Board meeting Board Presence at
presence meeting attending in
Name of meeting presence by meeting shareholders'
required in presence person for
director presence on telecom- absence meetings
the reporting through a two
site (times) communicati (times) (times)
period proxy (times) consecutive
on (times)
(times) times
Che
6 1 5 0 0 N 2
Quanhong
Jin Hairong 6 5 1 0 0 N 3
Ma Wentao 6 6 0 0 0 N 3
Fu Zhiqian 6 4 1 1 0 N 3
114ZKTeco 2024 Annual Report
Dong Xiuqin 6 2 4 0 0 N 3
Zhuo Shuyan 6 0 6 0 0 N 3
Pang Chunlin 6 0 6 0 0 N 3
Explanations on not attending the board meeting in person for two consecutive times
Not applicable
3. Objections from Directors on Related Issues of the Company
Do directors raise objections to relevant matters of the Company
□ Yes □No
During the reporting period the directors did not raise any objections to the relevant matters of the Company.
4. Other descriptions for directors performing their duties
Whether the directors' suggestions regarding the Company have been adopted
□Yes □ No
Directors' explanation on whether the Company's relevant suggestions have been adopted or not
During the reporting period the directors of the Company were diligent and responsible in accordance with relevant laws and
regulations attended relevant meetings on time carefully reviewed various proposals objectively expressed their opinions and ideas
and the Company adopted all reasonable suggestions put forward by the directors.
115ZKTeco 2024 Annual Report
IX. The Special Committees under the Board of Directors during the Reporting Period
Number Specifics
Other
Committee of Convening Important Opinions and Suggestions of
Members Meeting Content Performance of
Name Meetings Date Proposed Objection
Duties
Held (if any)
Deliberation and approval of the "Proposal on the
2023 Annual Report and Its Summary" the "Proposal
on the 2023 Annual Financial Settlement Report" the
"Proposal on the 2023 Profit Distribution Plan" the The Audit Committee carries out work in
"Proposal on the 2023 Internal Audit Work Summary strict accordance with the "Company
and the 2024 Internal Audit Work Plan" the Law" the regulatory rules of the CSRC
"Proposal on the Self-evaluation Report on Internal the "Articles of Association" the "Rules
Control in 2023" the "Proposal on Applying for of Procedure of the Board of Directors"
April 11
Comprehensive Credit Line from Banks and and the "Implementation Rules of the None None
2024
Handling Bank Loans and Providing Guarantee Audit Committee of the Board of
Limit for Holding Subsidiaries" the "Proposal on Directors". It is diligent and responsible
Using Idle Self-owned Funds to Purchase Financial and after sufficient communication and
Products" the "Proposal on Conducting Foreign discussion unanimously adopts relevant
Zhuo
Exchange Derivative Trading Business" and the proposals
Audit Shuyan
"Report on the Evaluation of the Performance of the
Committee Dong
4 Accounting Firm in 2023 and the Fulfillment of the
of the Board Xiuqin
Supervisory Duties by the Audit Committee"
of Directors and Fu
The Audit Committee carries out work in
Zhiqian
strict accordance with the "Company
Law" the regulatory rules of the CSRC
the "Articles of Association" the "Rules
of Procedure of the Board of Directors"
April 23 Deliberation and approval of the "Proposal on the
and the "Implementation Rules of the None None
2024 2024 Q1 Report of ZKTECO CO. LTD."
Audit Committee of the Board of
Directors". It is diligent and responsible
and after sufficient communication and
discussion unanimously adopts relevant
proposals
The Audit Committee carries out work in
August 17 Deliberation and approval of the "Proposal on the
strict accordance with the "Company None None
2024 2024 Half Year Report and Abstract"
Law" the regulatory rules of the CSRC
116ZKTeco 2024 Annual Report
the "Articles of Association" the "Rules
of Procedure of the Board of Directors"
and the "Implementation Rules of the
Audit Committee of the Board of
Directors". It is diligent and responsible
and after sufficient communication and
discussion unanimously adopts relevant
proposals
The Audit Committee carries out work in
strict accordance with the "Company
Law" the regulatory rules of the CSRC
the "Articles of Association" the "Rules
Deliberation and approval of the "Proposal on the of Procedure of the Board of Directors"
October 24
2024 Q3 Report" and the "Proposal on Proposed and the "Implementation Rules of the None None
2024
Change of Accounting Firm" Audit Committee of the Board of
Directors". It is diligent and responsible
and after sufficient communication and
discussion unanimously adopts relevant
proposals
The Salary and Assessment Committee
carries out work in strict accordance with
the "Company Law" the regulatory rules
of the CSRC the "Articles of
Association" the "Rules of Procedure of
Jin the Board of Directors" and the
Hairong Deliberation and approval of the "Proposal on the "Implementation Rules of the Salary and
Salary and
Pang April 11 2024 Compensation Plan for Directors" and the Assessment Committee of the Board of
Assessment 3 None None
Chunlin 2024 "Proposal on the 2024 Compensation Plan for Senior Directors". It is diligent and responsible.Committee
and Zhuo Management" Based on the actual situation of the
Shuyan Company after thorough communication
and discussion the related committee
members abstained from voting on the
relevant proposals while the non-related
committee members all voted in favor of
the relevant proposals.Salary and Jin Deliberation and approval of the "Proposal on The Salary and Assessment Committee
November
Assessment Hairong 3 Adjusting the Granting Price of 2022 Restricted carries out work in strict accordance with None None
152024
Committee Pang Share Incentive Plan" the "Proposal on Cancelling the "Company Law" the regulatory rules
117ZKTeco 2024 Annual Report
Chunlin Some Granted but Not Affiliated Restricted Shares" of the CSRC the "Articles of
and Zhuo and the "Proposal on the Achievement of the Association" the "Rules of Procedure of
Shuyan Attribution Conditions for the Second Attribution the Board of Directors" and the
Period of the 2022 Restricted Share Incentive Plan" "Implementation Rules of the Salary and
Assessment Committee of the Board of
Directors". It is diligent and responsible.Based on the actual situation of the
Company after thorough communication
and discussion the related committee
members abstained from voting on the
relevant proposals while the non-related
committee members all voted in favor of
the relevant proposals.The Salary and Assessment Committee
carries out work in strict accordance with
Deliberation and approval of the "Proposal on the "Company Law" the regulatory rules
Adjusting the Names of the Incentive Objects for the of the CSRC the "Articles of
Reserved Grant Portion of the 2022 Restricted Share Association" the "Rules of Procedure of
Jin Incentive Plan" the "Proposal on Cancelling Some the Board of Directors" and the
Hairong Granted but Not Affiliated Restricted Shares" the "Implementation Rules of the Salary and
Salary and
Pang December "Proposal on the Achievement of the Attribution Assessment Committee of the Board of
Assessment 3 None None
Chunlin 27 2024 Conditions for the First Attribution Period of the Directors". It is diligent and responsible.Committee
and Zhuo Reserved Grant in the 2022 Restricted Share Based on the actual situation of the
Shuyan Incentive Plan" and the "Proposal on Revising the Company after thorough communication
"Management Measures for Employee Housing and discussion the related committee
Borrowings" and Continuing to Provide Loans to members abstained from voting on the
Employees" relevant proposals while the non-related
committee members all voted in favor of
the relevant proposals.
118ZKTeco 2024 Annual Report
X. Performance of Duties by the Board of Supervisors
Were there any risks to the Company identified by Board of Supervisors when performing its duties during the reporting period
□ Yes □No
The Board of Supervisors has no objection to the supervision matters during the reporting period.XI. Employee of the Company
1. Number Professional Structure and Educational Background of Employee
Number of in-service employees of the parent company at the
1077
end of the reporting period
Number of in-service employees of the major subsidiaries at
2481
the end of the reporting period
Total number of in-service employees at the end of the
3558
reporting period
Total number of employees receiving salaries in current period 3558
Number of retired employees requiring the parent Company
17
and its subsidiaries to bear costs
Professional structure
Type of professions Number of employees
Production personnel 805
Sales personnel 1363
Technical personnel 1118
Financial personnel 78
Administrative personnel 194
Total 3558
Education background
Education background Number of employees
PhD candidate 1
Master's degree 119
Bachelor degree 1736
Other 1702
Total 3558
2. Remuneration policy
In 2024 the Company continues to deepen the digital management of human resources providing more comprehensive and
systematic support for management decisions. By frequently organizing internal performance review meetings it strengthened the
closed-loop mechanism of organizational performance management to ensure alignment of goals at all levels. At the same time it
gradually refined the standardized processes for performance management of middle and lower-level teams optimized the fixed and
floating salary structure and mechanism and continuously improved the salary management system to ensure the scientific and healthy
development of remuneration policies.
119ZKTeco 2024 Annual Report
3. Training plan
In 2024 the Company organized a total of 966 specialized training sessions. Training management and business empowerment
were mutually reinforcing. Targeted training sessions such as information system training AI empowerment training lean training
and advanced office software usage skills training were organized. At the same time the content and form of training were continuously
optimized to further strengthen the internal learning and development mechanism. The Company actively promoted the certification
of trainers and organized and planned TTT specialized training to enhance the teaching skills of internal trainers providing a strong
guarantee for the high-quality development of training and continuously building an efficient empowerment system.
4. Labor outsourcing
□Applicable □ Not applicable
Sum of working hours of labor outsourcing (hour) 28169.22
Remuneration sum paid for labor outsourcing (RMB) 1013123.48
XII. Profit Distribution and Conversion of Capital Reserve to Share Capital of the
Company
Formulation implementation or adjustment of profit distribution policies of ordinary shares especially the cash dividend plan during
the reporting period
□Applicable □ Not applicable
During the reporting period the Company reviewed and implemented the profit distribution plan in strict accordance with the
profit distribution policy stipulated in the Company's "Articles of Association". The relevant decision-making procedures and
mechanisms were complete and the profit distribution plan was implemented within the specified time after being reviewed and
approved ensuring the interests of all shareholders. During the reporting period the Company did not make any changes to its profit
distribution policy.On April 22 2024 and May 15 2024 the Company's 9th Session of the Third Board Meeting and the 2023 Annual General
Meeting respectively deliberated and approved the "Proposal on the 2023 Profit Distribution Plan". The Company's total share capital
was 194679508 shares. After deducting the 2230000 shares held in the Company's dedicated securities account for repurchase the
share capital was 192449508 shares. Based on this the Company distributed a cash dividend of RMB 4.5 per 10 shares (including
tax) to all shareholders totaling RMB 86602278.60. On May 28 2024 the Company implemented the above profit distribution
implementation plan. This profit distribution plan complies with the provisions of the Company's "Articles of Association" and the
requirements of the resolution on the General Meetings.Special explanation of cash dividend policy
Whether it complies with the provisions of the Company's
Articles of Association or the requirements of the shareholders' Yes
meeting resolution:
Whether dividend standards and ratio are definite and clear: Yes
Whether the relevant decision-making procedures and
Yes
mechanisms are complete:
Whether independent directors performed their duties and
Yes
played their due role:
If the Company does not distribute cash dividends specific
reasons as well as the measures to be taken next to enhance Not applicable
investor returns should be disclosed:
Whether minority shareholders have the opportunity to fully Yes
120ZKTeco 2024 Annual Report
express their opinions and demands and whether their
legitimate rights and interests have been fully protected:
If the cash dividend policy is adjusted or changed whether the
Not applicable
conditions and procedures are compliant and transparent:
The profit distribution plan and the plan for converting capital reserve into share capital during the reporting period of the Company
are consistent with the relevant provisions of the Company's Articles of Association and dividend management measures
□Yes □ No □ Not applicable
The profit distribution plan and the plan for converting capital reserve into share capital during the reporting period of the Company
comply with relevant regulations such as the Company's Articles of Association.Profit distribution and conversion of capital reserve into share capital for the current year
Bonus issue per 10 shares (share) 0
Cash dividend per 10 shares (RMB) (tax inclusive) 5
Additional shares converted from capital reserves per 10 shares
2
(share)
Total capital shares as the basis for the distribution plan (share) 194082325
Cash dividend amount (RMB) (tax inclusive) 97041162.50
Cash dividend amount in other ways (such as repurchase of
58898543.10
shares) (RMB)
Total cash dividends (including other ways) (RMB) 155939705.6
Distributable profit (RMB) 429659664.62
Proportion of total cash dividends (including other ways) to
100.00%
total profit distribution
Cash dividend of the reporting period
If the Company is in a growth stage of development and there are significant capital expenditure arrangements the minimum
proportion of cash dividends in this profit distribution shall reach 20%
Details of profit distribution or plan for converting capital reserve into share capital
After comprehensively considering the current share capital situation operating conditions profitability financial positions
and long-term development the Board of Directors proposed a profit distribution plan for 2024 that benefits all shareholders in
sharing the Company's operating results. On April 21 2025 the Company held the 17th Session of the Third Board Meeting
which reviewed and approved the "Proposal on the 2024 Profit Distribution Plan". The Board of Directors proposed the following
profit distribution plan for 2024:
The Company plans to distribute cash dividends of RMB 5 (including tax) per 10 shares to all shareholders based on the total
share capital deducted from the repurchased shares in the Company's repurchase special account on the registration date of equity
distribution. At the same time capital reserve will be used to increase share capital with a bonus of 2 shares for every 10 shares to
all shareholders and no bonus shares will be distributed. As of April 23 2025 the total share capital of the Company is
196312325 shares. After deducting 2230000 shares that have been repurchased in the Company's repurchase account the total
amount of cash dividends planned to be distributed for 2024 is RMB 97041162.50 (including tax). The share capital increased by
38816465 shares.
If there is any change in the total share capital of the Company or the number of shares in the repurchase account from the
date of approval of this profit distribution plan to the date of equity registration for the implementation of the rights distribution
the Company will adjust the total amount of distribution and the total amount of capital increase based on the total share capital on
the equity registration date for the implementation of the distribution plan excluding the shares already repurchased in the
repurchase account while maintaining the principle that the cash dividend per share and the ratio of capital increase remain
unchanged.This proposal still needs to be submitted to the Company's 2024 annual general meeting for deliberation.The Company's profit distribution plan for 2024 was proposed by the Board of Directors after comprehensively considering
factors such as the current share capital situation operating conditions profitability financial position and the Company's long-
term development. It is beneficial to all shareholders sharing the Company's operating results. It complies with the Company's
Articles of Association and relevant deliberation procedures. This profit distribution plan was approved by the third special
meeting of the independent directors of the Company's third board of directors effectively protecting the legitimate rights and
interests of small and medium-sized investors.
121ZKTeco 2024 Annual Report
During the reporting period the Company made profits and the parent company had a positive profit available for shareholder
distribution but no cash dividend distribution plan was proposed
□ Applicable □Not applicable
XIII. Implementation of the Company's Equity Incentive Plans Employee Stock
Ownership Plans or Other Employee Incentive Plans
□Applicable □ Not applicable
1. Equity incentives
The progress of the 2022 Restricted Share Incentive Plan during the reporting period is as follows:
On November 21 2024 the Company held the 13th Session of the Third Board Meeting and the 12th Session of the Third
Supervisory Board Meeting and deliberated and approved the "Proposal on Adjusting the Granting Price of 2022 Restricted Share
Incentive Plan" the "Proposal on Cancelling Some Granted but Not Affiliated Restricted Shares" and the "Proposal on the
Achievement of the Attribution Conditions for the Second Attribution Period of the 2022 Restricted Share Incentive Plan". Due to the
circumstances of some incentive objects including resignation failure to meet the individual performance assessment requirements
for 2023 and voluntary renunciation the relevant restricted shares that have not be attributed need to be invalidated. A total of 99970
restricted shares will be invalidated. In light of the Company's announcement of the implementation of the 2023 annual equity
distribution the Board of Directors has agreed to make corresponding adjustments to the grant price of restricted shares under the 2022
Restricted Share Incentive Plan. The initial and reserved grant prices were adjusted from RMB 14.12 per share to RMB 13.67 per share.As the attribution conditions for the second attribution period of the first grand in the Company's 2022 Restricted Share Incentive Plan
have been met the Board of Directors has agreed to attribute a total of 1557855 shares to 436 incentive objects. Please refer to the
"Announcement on Cancelling Some Granted but Not Affiliated Restricted Shares" (Announcement No. 2024-054) the "Proposal on
Adjusting the Granting Price of 2022 Restricted Share Incentive Plan" (Announcement No. 2024-053) and the "Announcement on the
Achievement of Attribution Conditions for the Second Attribution Period of the 2022 Restricted Share Incentive Plan" (Announcement
No. 2024-055) disclosed by the Company on the website of CNINFO (http://www.cninfo.com.cn) on November 21 2024.The Company has completed the registration of the second attribution period of the 2022 Restricted Share Incentive Plan in
accordance with relevant regulations and the relevant shares were listed and circulated on November 29 2024. Please refer to the
"Announcement on the Attribution Results of the Second Attribution Period of the 2022 Restricted Share Incentive Plan and the Listing
of Shares" (Announcement No. 2024-057) disclosed by the Company on the website of CNINFO (http://www.cninfo.com.cn) on
November 27 2024.On December 31 2024 the Company held the 14th Session of the Third Board Meeting and the 13th Session of the Third
Supervisory Board Meeting and deliberated and approved the "Proposal on Adjusting the Names of the Incentive Objects for the
Reserved Grant Portion of the 2022 Restricted Share Incentive Plan" the "Proposal on Cancelling Some Granted but Not Affiliated
Restricted Shares" and the "Proposal on the Achievement of the Attribution Conditions for the First Attribution Period of the Reserved
Grant in the 2022 Restricted Share Incentive Plan". In the "List of Incentive Objects Reserved for Grant under the 2022 Restricted
Share Incentive Plan" disclosed by the Company on the website of CNINFO on June 21 2023 as some foreign employees followed
the writing conventions of their home countries resulting in the order of their names being reversed when submitting their personal
information the names disclosed in the "List of Incentive Objects Reserved for Grant under the 2022 Restricted Share Incentive Plan"
were inconsistent with those recorded in their passports. Considering the requirements for opening securities and bank accounts the
Company has uniformly updated the names to those registered in their passports. Due to the circumstances of some incentive objects
such as resignation failure to meet the individual performance assessment requirements for 2023 and voluntary renunciation the
relevant granted but unvested shares need to be invalidated. A total of 68704 restricted shares were invalidated this time. As the
122ZKTeco 2024 Annual Report
attribution conditions for the first attribution period of the reserved grant in the Company's 2022 Restricted Share Incentive Plan have
been met the Board of Directors has agreed to attribute a total of 74962 shares to 26 incentive objects. Please refer to the
"Announcement on Adjusting the Names of the Incentive Objects for the Reserved Grant Portion of the 2022 Restricted Share Incentive
Plan" (Announcement No. 2025-003) the "Announcement on Cancelling Some Granted but Not Affiliated Restricted Shares"
(Announcement No. 2025-004) and the "Announcement on the Achievement of the Attribution Conditions for the First Attribution
Period of the Reserved Grant in the 2022 Restricted Share Incentive Plan" (Announcement No. 2025-005) disclosed by the Company
on the website of CNINFO (http://www.cninfo.com.cn) on January 2 2025.Equity incentives obtained by the directors and senior managers
□Applicable □ Not applicable
Unit: share
Number of
Number of Number of Number of Grant Number of
new stock Exercise price of Number of Market price Number of
stock Exercisable exercised Number of newly granted price of restricted
options exercised shares stock options at the end of restricted
options shares during shares unlocked restricted restricted shares held
Name Position granted during the held at the the reporting shares held at
held at the the reporting during the shares in shares in the shares at the end
during the reporting period end of the period the beginning
beginning period reporting this period reporting (RMB/ of the
reporting (RMB/share) period (RMB/share) of the period
of the year period period share) period
period
Director
Jin and
000000078007800013.670
Hairong General
Manager
Fu
Director 0 0 0 0 0 0 0 7150 7150 0 13.67 0
Zhiqian
Deputy
Mu
General 0 0 0 0 0 0 0 11700 11700 0 13.67 0
Wenting
Manager
Total -- 0 0 0 0 -- 0 -- 26650 26650 0 -- 0
The restricted shares held by the above personnel are classified as Class II restricted shares. Due to the implementation of the 2023 annual equity distribution by the Company the above "grant price of restricted
Remarks (if any) shares" is the adjusted grant price of shares based on the equity distribution situation. The "number of restricted shares held at the beginning of the period" refers to the number of shares granted but not yet
attributed while "number of unlocked shares in this period" refers to the number of shares attributed to individuals in this period.Assessment and incentive mechanism of the senior managers
The Board of Directors of the Company formulated the "Salary and Assessment Management System for Directors Supervisors
and senior managers" on September 28 2020 and established a relatively complete performance evaluation system for senior managers.The salary of senior managers in the Company consists of basic salary and year-end bonus. The calculation formula is: annual salary
= basic salary + year-end bonus. The basic salary is mainly determined based on factors such as position responsibility ability and
market salary level while the year-end bonus is determined based on the Company's annual business performance job performance
evaluation and other comprehensive factors. The assessment is annual assessment and the final payment will be calculated based on
the assessment results of the current year. During the reporting period the Company strictly implemented the "Salary and Assessment
Management System for Directors Supervisors and Senior Managers".
2. Implementation of employee stock ownership plan
□ Applicable □Not applicable
3. Other employee incentive plans
□ Applicable □Not applicable
123ZKTeco 2024 Annual Report
XIV. Construction and Implementation of Internal Control System during the Reporting
Period
1. Construction and Implementation of Internal Control
The Company has formed a relatively complete internal control system in accordance with the "Basic Norms for the Internal
Control of Enterprises" and its supporting guidelines as well as other regulatory requirements and combined with the actual situation
of the Company and continuously optimized to adapt to the constantly changing external environment and internal management
requirements. With the joint efforts of the Board of Directors management and all employees the Company has established a relatively
complete and effective internal control management system. From the company level to the business process level a systematic internal
control system and necessary internal supervision mechanisms have been established to provide reasonable guarantees for the legality
and compliance of the Company's business management asset safety truthfulness and completeness of financial reports and related
information improvement of operational efficiency and effectiveness and the implementation of development strategies.During the reporting period the Company organized an internal control evaluation for 2024 and there were no significant or
important deficiencies in internal control related to financial and non-financial reporting.
2. Particulars of material internal control defects detected during the reporting period
□ Yes □No
XV. Management and Control of Subsidiaries During the Reporting Period of the
Company
Company Integration Problems in Resolution Subsequent
Integration Plan Solutions Taken
Name Progress Integration Progress Resolution Plan
Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
XVI. Evaluation Report on Internal Control or Internal Control Audit Report
1. Evaluation report on internal control
Disclosure date of the full text of the
April 23 2025
internal control evaluation report
Disclosure index of the full text of the
CNINFO (http://www.cninfo.com.cn)
internal control evaluation report
The proportion of the total assets of the
unit included in the evaluation scope to
100.00%
the total assets of the Company in the
consolidated financial statements
The proportion of operating revenue of
the unit included in the evaluation scope
100.00%
to the operating revenue of the Company
in the consolidated financial statements
Deficiency Identification Criteria
Category Financial Reports Non-financial Reports
Significant deficiencies: Control Significant deficiencies: Violation
Qualitative Criteria
environment is ineffective; the against national laws regulations or
124ZKTeco 2024 Annual Report
supervision of internal control by the normative documents; lack of decision-
Company's Audit Committee and internal making procedures or unscientific
audit institutions is ineffective; decision-making procedures leading to
discovering fraud by directors significant errors; lack of institutional
supervisors and senior managers; the control or systematic failure of important
Company has made significant businesses; the results of internal control
corrections to the published financial evaluation especially significant or
statements; significant deficiencies that important deficiencies have not been
have been identified and reported to rectified; other situations that have a
management have not been corrected significant impact on the Company.within a reasonable time frame; other Important deficiencies: Deficiencies in
deficiencies that may affect the correct important business institutions or
judgment of report users. systems; important deficiencies in the
Important deficiencies: Failure to select results of internal control evaluation are
and apply accounting policies in not promptly rectified; other situations
accordance with generally accepted that have a significant negative impact
accounting standards; invalid anti-fraud on the Company with a severity lower
procedures and control measures; one or than significant deficiencies but may
more deficiencies in the control of the still lead to the Company deviating from
final financial reporting process. its control objectives.Although the significant deficiency General deficiencies: refer to internal
criteria have not been met there is no control deficiencies that do not constitute
reasonable guarantee that the financial significant or important deficiencies.statements prepared will achieve true and
accurate objectives.General deficiencies: refer to other
control deficiencies besides the
significant and important deficiencies
mentioned above.Significant deficiencies: Misstated
amount ≥ 1% of total assets; misstated
amount ≥ 2% of main business income;
misstated amount ≥ 5% of total profits
Important deficiencies: 0.5% of total
Significant deficiencies: Loss amount >
assets ≤ misstated amount < 1% of total
RMB 10 million; important deficiencies:
assets; 1% of main business income ≤
Quantitative Criteria RMB 1 million＜ loss amount ≤ RMB
misstated amount < 2% of total main
10 million; general deficiencies: loss
business income; 2% of total profits ≤
amount ≤ RMB 1 million
misstated amount < 5% of total profits
General deficiencies: Misstated amount
< 0.5% of total assets; misstated amount
< 1% of total main business income;
misstated amount < 2% of total profits
Number of significant deficiencies in
0
financial reports
Number of significant deficiencies in
0
non-financial reports
Number of important deficiencies in
0
financial reports
Number of important deficiencies in non-
0
financial reports
2. Internal control audit report
□Applicable □ Not applicable
125ZKTeco 2024 Annual Report
Opinions on the internal control audit report
On December 31 2024 ZKTeco maintained effective internal control over financial reports in all material respects in accordance
with the "Basic Norms for the Internal Control of Enterprises" and relevant regulations.Disclosure of the internal control audit report Disclosed
Disclosure date of the full text of the internal control audit
April 23 2025
report
Disclosure index of the full text of the internal control audit
CNINFO (http://www.cninfo.com.cn)
report
Type of the opinions on the internal control audit report Standard unqualified opinions
Are there any material deficiencies in the non-financial reports No
Has the accounting firm issued an internal control audit report with non-standard opinions
□ Yes □No
Is the internal control audit report issued by the accounting firm is consistent with the self-evaluation report of the Board of
Directors
□Yes □ No
XVII. Special Rectification Actions for Self-inspected Problems of Listed Companies
Not applicable.
126ZKTeco 2024 Annual Report
Section V Environmental and Social Responsibility
I. Significant Environmental Issues
Whether the Company or any of its subsidiaries should be categorized as a critical pollutant enterprise published by the environmental
protection department
□ Yes □No
Administrative penalties for environmental problems during the reporting period
The impact on the
Rectification
Name of company production and
Reason for penalty Violations Penalty results measures of the
or subsidiary operation of listed
Company
companies
Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable
Refer to other environmental information disclosed by key pollutant discharge units
The Company and its subsidiaries are not listed as key pollutant discharge units by the environmental protection department. The
Company and its subsidiaries conscientiously implement environmental protection laws and regulations such as the "Environmental
Protection Law of the People's Republic of China" the "Law of the People's Republic of China on Prevention and Control of Water
Pollution" the "Law of the People's Republic of China on the Prevention and Control of Atmospheric Pollution" the "Law of the
People's Republic of China on Prevention and Control of Environmental Noise Pollution" and the "Law of the People's Republic of
China on Prevention and Control of Environmental Pollution by Solid Waste" in their daily production and operation. The production
and operating activities of the Company and its subsidiaries comply with the relevant national environmental protection requirements
and there are no cases of being punished for violations of laws and regulations.The Company has passed the ISO14001:2015 environmental management system certification and has developed and
implemented systems such as the "Environmental Factor Identification and Evaluation Procedure" the "Environmental Monitoring and
Control Procedure" and the "Waste Management Specification".Measures taken to reduce carbon emissions during the reporting period and their effects
□ Applicable □Not applicable
Reasons for not disclosing other environmental information
Not applicable
II. Social Responsibilities
For specific information please refer to the "2024 Sustainable Development Report of ZKTECO CO. LTD." disclosed by the
Company on April 23 2025 on CNINFO (http://www.cninfo.com.cn).III. Efforts of Poverty Alleviation and Rural Revitalization
For progress in consolidating and expanding poverty alleviation achievements and rural revitalization related work during the
reporting period please refer to the "2024 Sustainable Development Report of ZKTECO CO. LTD." disclosed by the Company on
April 23 2025 on CNINFO (http://www.cninfo.com.cn).
127ZKTeco 2024 Annual Report
Section VI Significant Events
I. Performance of Commitments
1. Commitments completed by actual controllers shareholders related parties purchasers or the Company within the reporting period and
commitments not fulfilled by the end of the reporting period
□Applicable □ Not applicable
Causes of Undertaking Commitment Date of Term of
Commitment Content Performance
Commitment Party Type commitments commitments
1. Within 36 months from the date of ZKTeco's initial public offering and listing I
will not transfer or entrust others to manage the previously issued shares of ZKTeco
that the Company holds before the public offering nor will ZKTeco repurchase such
shares.
2. Within six months after ZKTeco's initial public offering and listing if the closing
price of ZKTeco's shares is lower than the issuance price of ZKTeco's initial public
offering for twenty consecutive trading days (if ex-right or ex-dividend is carried out
due to reasons such as cash dividend distribution stock dividend conversion to
share capital or issuance of new shares corresponding adjustments must be made in
accordance with the relevant regulations of the CSRC and the Shenzhen Stock
Exchange) or the closing price is lower than the issuance price of ZKTeco's initial
IPO-related February 16 Strict
ZKTeco Times Stock lockup public offering of stocks at the end of the six-month period after listing (if that day is August 17 2022
commitments 2026 performance
not a trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock dividends
conversion to share capital or issuance of new shares corresponding adjustments
must be made in accordance with the relevant regulations of the CSRC and the
Shenzhen Stock Exchange) the lockup period for ZKTeco stocks the Company
holds is automatically extended by six months.
3. The Company will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
responsibilities conferred by this commitment the company will bear any losses
suffered by ZKTeco other shareholders or stakeholders of ZKTeco. The profits from
illegal reduction of stocks will belong to ZKTeco.
128ZKTeco 2024 Annual Report
4. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that the company should bear
due to violating the above commitments the company will voluntarily and
unconditionally comply with these provisions.
1. Within 36 months from the date of ZKTeco's initial public offering and listing I
will not transfer or entrust others to manage the previously issued shares of ZKTeco
that I directly or indirectly hold before the public offering nor will ZKTeco
repurchase such shares.
2. Within six months after ZKTeco's initial public offering and listing if the closing
price of ZKTeco's shares is lower than the issuance price of ZKTeco's initial public
offering for twenty consecutive trading days (if ex-right or ex-dividend is carried out
due to reasons such as cash dividend distribution stock dividend conversion to
share capital or issuance of new shares corresponding adjustments must be made in
accordance with the relevant regulations of the CSRC and the Shenzhen Stock
Exchange) or the closing price is lower than the issuance price of ZKTeco's initial
public offering of stocks at the end of the six-month period after listing (if that day is
not a trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock dividends
conversion to share capital or issuance of new shares corresponding adjustments
must be made in accordance with the relevant regulations of the CSRC and the
IPO-related February 16 Strict
Che Quanhong Stock lockup Shenzhen Stock Exchange) the lockup period for ZKTeco stocks I hold directly or August 17 2022
commitments 2026 performance
indirectly is automatically extended by six months.
3. After the expiration of the aforementioned stock lockup period during my tenure
as a director and senior managers of ZKTeco I will not directly or indirectly transfer
more than 25% of the total number of ZKTeco shares held by me each year. Within
six months of resignation I will not transfer or entrust others to manage ZKTeco
shares I directly and indirectly hold.
4. I will faithfully fulfill the above commitments and bear corresponding legal
responsibilities. If I fail to fulfill the obligations and responsibilities conferred by
this commitment I will bear any losses suffered by ZKTeco other shareholders or
stakeholders of ZKTeco. The profits from illegal reduction of company stocks will
belong to ZKTeco.
5. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that I should bear due to
violating the above commitments I voluntarily and unconditionally comply with
these provisions.
129ZKTeco 2024 Annual Report
1. Within 36 months from the date of ZKTeco's initial public offering and listing I
will not transfer or entrust others to manage the previously issued shares of ZKTeco
that the enterprise holds before the public offering nor will ZKTeco repurchase such
shares.
2. The enterprise will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
IPO-related responsibilities conferred by this commitment the enterprise will bear any losses August 16 Strict
LX Investment Stock lockup August 17 2022
commitments suffered by ZKTeco other shareholders or stakeholders of ZKTeco. The profits from 2025 performance
illegal reduction of stocks will belong to ZKTeco.
3. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that the enterprise should
bear due to violating the above commitments the enterprise will voluntarily and
unconditionally comply with these provisions.
1. The enterprise promises to lock in the shares of ZKTeco held in accordance with
the following principles:
(1) The shares held by the enterprise in ZKTeco are unlocked in four batches with
each batch unlocking one fourth of the shares held by the enterprise. The unlocking
period is one year two years three years and four years from the date of ZKTeco's
initial public offering and listing. For the shares involved in the aforementioned
lockup period arrangement that have not been unlocked the enterprise will not
transfer or entrust others to manage the shares already issued by ZKTeco before its
public offering nor will ZKTeco repurchase such shares.
(2) For the newly added shares subscribed by the enterprise by participating in the
capital increase of ZKTeco within 6 months prior to the completion of the initial
IPO-related public offering of shares by ZKTeco the enterprise will not transfer or entrust others February 17 Strict
JYSJ and JYHY Stock lockup August 17 2022
commitments to manage the newly added shares held by the enterprise nor will ZKTeco 2027 performance
repurchase such shares within three years from the date of completing the industrial
and commercial registration procedures for the aforementioned capital increase. If a
portion of the shares held by a Japanese enterprise whose lockup period expires
earlier than the expiration date of the lockup period promised in the first item of this
article the corresponding lockup period for that portion of the shares shall be subject
to the first item of this article.
2. The enterprise will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
responsibilities conferred by this commitment the enterprise will bear any losses
suffered by ZKTeco other shareholders or stakeholders of ZKTeco. The profits from
illegal reduction of stocks will belong to ZKTeco.
130ZKTeco 2024 Annual Report
3. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that the enterprise should
bear due to violating the above commitments the enterprise will voluntarily and
unconditionally comply with these provisions.
1. The enterprise promises to lock in the shares of ZKTeco held in accordance with
the following principles:
(1) The shares held by the enterprise in ZKTeco are unlocked in four batches with
each batch unlocking one fourth of the shares held by the enterprise. The unlocking
period is one year two years three years and four years from the date of ZKTeco's
initial public offering and listing. For the shares involved in the aforementioned
lockup period arrangement that have not been unlocked the enterprise will not
transfer or entrust others to manage the shares already issued by ZKTeco before its
public offering nor will ZKTeco repurchase such shares.
(2) For the newly added shares subscribed by the enterprise by participating in the
capital increase of ZKTeco within 6 months prior to the completion of the initial
public offering of shares by ZKTeco the enterprise will not transfer or entrust others
IPO-related JYLX and to manage the newly added shares held by the enterprise nor will ZKTeco February 17 Strict
Stock lockup August 17 2022
commitments JYQL repurchase such shares within three years from the date of completing the industrial 2027 performance
and commercial registration procedures for the aforementioned capital increase. If a
portion of the shares held by a Japanese enterprise whose lockup period expires
earlier than the expiration date of the lockup period promised in the first item of this
article the corresponding lockup period for that portion of the shares shall be subject
to the first item of this article.
2. The enterprise is willing to bear legal responsibilities arising from violating the
above commitments.
3. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that the enterprise should
bear due to violating the above commitments the enterprise will voluntarily and
unconditionally comply with these provisions.Jin Hairong Ma 1. Strictly abide by the stock lockup commitments made by myself and my
Wentao Fu shareholding platform and during the stock lockup period I will not transfer or
Zhiqian Jiang entrust others to manage the previously issued shares of ZKTeco that I directly or
IPO-related Strict
Wenna Wu Stock lockup indirectly hold before the public offering nor will ZKTeco repurchase such shares; August 17 2022 Long term
commitments performance
Xinke Liu 2. During my tenure as a director/supervisor and/or senior managers of ZKTeco I
Jiajia Wang will not transfer more than 25% of the total number of shares of ZKTeco I directly or
Youwu Li indirectly hold each year. Within six months after my resignation I will not transfer
131ZKTeco 2024 Annual Report
Zhinong and any of these shares. If I resign within six months from the date of the initial public
Guo Yanbo offering and listing of shares of ZKTeco I will not transfer these shares within 18
months from the date of resignation. If I resign on a date between the seventh and
twelfth months after the initial public offering and listing of its shares I will not
transfer these shares within 12 months from the date of declaration of resignation.
3. If I reduce my holdings of ZKTeco stocks within two years after the expiration of
the lockup period the reduction price shall not be lower than the issuance price of
ZKTeco's initial public offering (if an ex-right or ex-dividend is made due to the
distribution of cash dividends stock dividends conversion into capital stock or
issuance of new shares after this issuance corresponding adjustments shall be made
in accordance with the relevant regulations of the CSRC and the Shenzhen Stock
Exchange).
4. Within six months after ZKTeco's initial public offering and listing if the closing
price of ZKTeco's shares is lower than the issuance price of ZKTeco's initial public
offering for twenty consecutive trading days (if ex-right or ex-dividend is carried out
due to reasons such as cash dividend distribution stock dividend conversion to
share capital or issuance of new shares corresponding adjustments must be made in
accordance with the relevant regulations of the CSRC and the Shenzhen Stock
Exchange) or the closing price is lower than the issuance price of ZKTeco's initial
public offering of stocks at the end of the six-month period after listing (if that day is
not a trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock dividends
conversion to share capital or issuance of new shares corresponding adjustments
must be made in accordance with the relevant regulations of the CSRC and the
Shenzhen Stock Exchange) the lockup period for ZKTeco stocks I hold is
automatically extended by six months. The commitment shall not be terminated due
to job change or resignation.
5. I will faithfully fulfill the above commitments and bear corresponding legal
responsibilities. If I fail to fulfill the obligations and responsibilities conferred by
this commitment I will bear any losses suffered by ZKTeco other shareholders or
stakeholders of ZKTeco. The profits from illegal reduction of stocks will belong to
ZKTeco.
6. If I resign or change my position it will not affect the validity of this commitment
letter and I will continue to fulfill the above commitments.
7. If there are different provisions in laws regulations normative documents as well
as the CSRC or Shenzhen Stock Exchange regarding the lockup period of the
aforementioned shares and the relevant responsibilities that I should bear due to
violating the above commitments I voluntarily and unconditionally comply with
132ZKTeco 2024 Annual Report
these provisions.
1. The Company and/or any enterprise controlled by the Company jointly controlled
with others or with significant influence currently does not engage in any business
or activity that constitutes or may constitute horizontal competition with ZKTeco and
enterprises controlled by ZKTeco. The Company and/or enterprises controlled by the
Company jointly controlled with others and with significant influence will not
engage in any business or activities that constitute or may constitute horizontal
competition with ZKTeco and enterprises controlled by ZKTeco in the future.
2. If due to changes in national laws policies or other unavoidable reasons the
Company and/or enterprises controlled by the Company jointly controlled with
others or with significant influence constitute or may constitute horizontal
Commitment to competition with ZKTeco the Company will cease the business and activities that
IPO-related avoid exist in horizontal competition or the entrusted management contracted operation Strict
ZKTeco Times August 17 2022 Long term
commitments horizontal or acquisition of such business that constitutes horizontal competition and ZKTeco performance
competition will enjoy priority under equal conditions.
3. If ZKTeco expands into new business areas in the future ZKTeco enjoys priority.
The Company and other enterprises or economic organizations controlled by the
Company jointly controlled with others and with significant influence (excluding
ZKTeco and its subsidiaries) will no longer develop similar businesses.The aforementioned commitment shall come into effect from the date of signing and
shall continue to be valid and irrevocable during the period when the Company
serves as the controlling shareholder of ZKTeco. If the Company and other
companies controlled by the Company violate the aforementioned commitments the
Company will bear the relevant losses suffered by ZKTeco ZKTeco's other
shareholders or stakeholders as a result.
1. I and/or the enterprise controlled by me jointly controlled with others or with
significant influence currently does not engage in any business or activity that
constitutes or may constitute horizontal competition with ZKTeco and enterprises
controlled by ZKTeco. I and/or enterprises controlled by me jointly controlled with
others and with significant influence will not engage in any business or activities
Commitment to
that constitute or may constitute horizontal competition with ZKTeco and enterprises
IPO-related avoid Strict
Che Quanhong controlled by ZKTeco in the future. August 17 2022 Long term
commitments horizontal performance
2. If due to changes in national laws policies or other unavoidable reasons I and/or
competition
enterprises controlled by me jointly controlled with others or with significant
influence constitute or may constitute horizontal competition with ZKTeco I will
cease the business and activities that exist in horizontal competition or the entrusted
management contracted operation or acquisition of such business that constitutes
horizontal competition and ZKTeco will enjoy priority under equal conditions.
133ZKTeco 2024 Annual Report
3. If ZKTeco expands into new business areas in the future ZKTeco enjoys priority.
I and other enterprises or economic organizations controlled by me jointly
controlled with others and with significant influence (excluding ZKTeco and its
subsidiaries) will no longer develop similar businesses.The aforementioned commitment shall come into effect from the date of signing and
shall continue to be valid and irrevocable during the period when I serve as the
actual controller of ZKTeco. If I and other companies controlled by me violate the
aforementioned commitments I will bear the relevant losses suffered by ZKTeco
ZKTecos other shareholders or stakeholders as a result.
1. The Company and/or enterprises controlled by the Company jointly controlled
with others and with significant influence will make every effort to reduce related
party transactions with ZKTeco and other enterprises under its control.
2. For necessary and unavoidable related party transactions the Company guarantees
that the related party transactions will be conducted under normal commercial
conditions and does not require ZKTeco and enterprises under its control to provide
any conditions superior to those given to third parties in fair market transactions. The
Commitment to related party transactions involved will comply with relevant laws and regulations
standardize and the "Articles of Association" and the "Related Party Transaction Management
IPO-related Strict
ZKTeco Times reduce related System" and other relevant provisions of the relevant documents. The Company will August 17 2022 Long term
commitments performance
party timely disclose information to ensure that the legitimate rights and interests of
transactions ZKTeco and other shareholders are not harmed through related party transactions;
3. During the period when the Company serves as the controlling shareholder of
ZKTeco the Company will faithfully fulfill the above commitments and assume
corresponding legal responsibilities. If the violation of the above commitments by
the Company and other enterprises controlled by the Company results in damage to
the interests of ZKTeco or the legitimate interests of other shareholders the
Company will bear corresponding compensation responsibilities in accordance with
the law.
1. U and/or enterprises controlled by me jointly controlled with others and with
significant influence will make every effort to reduce related party transactions with
ZKTeco and other enterprises under its control.Commitment to
2. For necessary and unavoidable related party transactions I guarantee that the
standardize and
IPO-related related party transactions will be conducted under normal commercial conditions Strict
Che Quanhong reduce related August 17 2022 Long term
commitments and do not require ZKTeco and enterprises under its control to provide any performance
party
conditions superior to those given to third parties in fair market transactions. The
transactions
related party transactions involved will comply with relevant laws and regulations
the "Articles of Association" and the "Related Party Transaction Management
System" and other relevant provisions of the relevant documents. The Company will
134ZKTeco 2024 Annual Report
timely disclose information to ensure that the legitimate rights and interests of
ZKTeco and other shareholders are not harmed through related party transactions;
3. During the period when I serve as the actual controller of ZKTeco the Company
will faithfully fulfill the above commitments and assume corresponding legal
responsibilities. If the violation of the above commitments by me and other
enterprises controlled by me results in damage to the interests of ZKTeco or the
legitimate interests of other shareholders I will bear corresponding compensation
responsibilities in accordance with the law.
1. I and my immediate family members/other enterprises controlled by me and my
immediate family members will make every effort to reduce related party
Che Quanhong transactions with ZKTeco and other enterprises under its control.Jin Hairong Ma 2. For necessary and unavoidable related party transactions I guarantee that the
Wentao Fu related party transactions will be conducted under normal commercial conditions
Zhiqian Dong and do not require ZKTeco and enterprises under its control to provide any
Xiuqin Pang Commitment to conditions superior to those given to third parties in fair market transactions. The
Chunlin Zhuo standardize and related party transactions involved will comply with relevant laws and regulations
IPO-related Strict
Shuyan Jiang reduce related the "Articles of Association" and the "Related Party Transaction Management August 17 2022 Long term
commitments performance
Wenna Wu party System" and other relevant provisions of the relevant documents. The Company will
Xinke Liu transactions timely disclose information to ensure that the legitimate rights and interests of
Jiajia Wang ZKTeco and other shareholders are not harmed through related party transactions;
Youwu Li 3. I will faithfully fulfill the above commitments and bear corresponding legal
Zhinong and responsibilities. If the violation of the above commitments by me and other
Guo Yanbo enterprises controlled by me results in damage to the interests of ZKTeco or the
legitimate interests of other shareholders I will bear corresponding compensation
responsibilities in accordance with the law.
1. The Company/I will strictly abide by the restrictions on the circulation of ZKTeco
shares and the commitment to voluntary lockup issued by the Company/me and
strictly comply with the relevant provisions of laws regulations and normative
documents. The Company/I will not reduce our holdings of ZKTeco shares during
the lockup period.ZKTeco Times Shareholding 2. Within two years after the expiration of the lockup period promised by the
IPO-related Strict
and Che and intention to Company/me if the Company/I plan(s) to reduce our holdings of ZKTeco shares the August 17 2022 Long term
commitments performance
Quanhong reduce holdings reduction price will not be lower than the issuance price at the time of the initial
public offering of the shares (If ZKTeco pays dividends issues bonus shares or
converts capital reserve into share capital during this period the issuance price shall
be adjusted accordingly.).
3. After the expiration of the lockup period promised by the Company/me the
Company/I will reduce our holdings of ZKTeco stocks in strict accordance with the
135ZKTeco 2024 Annual Report
relevant provisions of the "Company Law" "Securities Law" CSRC and stock
exchange.
4. If the Company/I obtain(s) (excess) income due to failure to fulfill the above
commitments the (excess) income shall belong to ZKTeco and shall be paid to the
designated account of ZKTeco within five days of receiving the income. If the
Company/I fail(s) to fulfill the above commitments and cause(s) losses to ZKTeco or
other investors the Company/I will bear compensation liability to ZKTeco or other
investors in accordance with the law.
1. The enterprise will not reduce its holdings of ZKTeco stocks during the lockup
period in strict accordance with the commitments issued by the enterprise regarding
the circulation restrictions and voluntary lockup of its holdings of ZKTeco shares
and with the relevant provisions of laws regulations and normative documents.Shareholding 2. After the expiration of the lockup period promised by the enterprise if the
IPO-related JYSJ JYHY and Strict
and intention to enterprise plans to reduce its holdings it will notify ZKTeco of the reduction in August 17 2022 Long term
commitments LX Investment performance
reduce holdings accordance with the regulations of the CSRC and the Shenzhen Stock Exchange and
after the reduction is announced it will reduce its holdings in accordance with the
relevant regulations of the CSRC and the Shenzhen Stock Exchange.If the enterprise fails to fulfill the above commitments it will agree to bear the legal
liability arising from the violation of the above commitments.Within three years from the date of the official listing of the Company's stocks if
there is a situation where the closing price of the stocks for 20 consecutive trading
days is lower than the latest audited net assets per share of the Company it will meet
the starting conditions of the stable stock price plan.When the closing price of the Company's stock for 20 consecutive trading days is
lower than the latest audited net assets per share of the Company it reaches the
starting condition of the stable stock price plan. The Company shall convene a board
meeting within 10 trading days to review specific plans for stabilizing the
Commitment to
IPO-related Company's stock price clarify the implementation period of such specific plans and August 16 Strict
ZKTeco stabilizing August 17 2022
commitments initiate the implementation of specific plans for stabilizing the stock price within 5 2025 performance
stock prices
trading days after the approval of such plans by the shareholders' meeting.When the Company meets the starting conditions for the stable stock price plan the
Company controlling shareholders directors (excluding independent directors) and
senior managers will carry out the implementation in the following order:
* Company repurchase;
* Increase in holdings by controlling shareholders;
* Directors (excluding independent directors) and senior managers increase their
holdings. Until the stopping conditions of the stable stock price plan are met.IPO-related ZKTeco Times Commitment to When the Company initiates a stock price stablizing plan in accordance with the August 17 2022 August 16 Strict
136ZKTeco 2024 Annual Report
commitments Che Quanhong stabilizing "Plan for Stabilizing the Stock Price within Three Years after Listing" it will fulfill 2025 performance
Jin Hairong Ma stock prices corresponding obligations in accordance with the law in strict accordance with the
Wentao Fu requirements of the stock price stablizing plan.Zhiqian Wang
Youwu Li
Zhinong and
Guo Yanbo
When the Company initiates a stock price stablizing plan in accordance with the
Commitment to
IPO-related "Plan for Stabilizing the Stock Price within Three Years after Listing" it will fulfill September 16 August 16 Strict
Mu Wenting stabilizing
commitments corresponding obligations in accordance with the law in strict accordance with the 2022 2025 performance
stock prices
requirements of the stock price stablizing plan.There are no false records misleading statements or significant omissions in the
prospectus and other information disclosure materials of the Company's initial public
offering of stocks and listing on the ChiNext.If it is determined by the CSRC Shenzhen Stock Exchange or other competent
departments that there are false records misleading statements or significant
Commitment
omissions in the prospectus and other information disclosure materials of the
letter regarding
Company's initial public offering of stocks and listing on the ChiNext which
the absence of
constitutes a significant and substantial impact on determining whether the Company
false records
meets the issuance conditions stipulated by law: Within 10 trading days from the
misleading
date when the Shenzhen Stock Exchange or other competent departments determine
statements or
IPO-related that the Company has the aforementioned situation the Company will convene a Strict
ZKTeco significant August 17 2022 Long term
commitments board meeting and propose to convene a shareholders' meeting to review the performance
omissions in
proposal to repurchase all shares issued for the initial public offering. The repurchase
the prospectus
price will be determined based on the issuance price and with reference to relevant
and other
market factors.information
If it is determined by the CSRC Shenzhen Stock Exchange or other competent
disclosure
departments that there are false records misleading statements or significant
materials
omissions in the prospectus and other information disclosure materials of the
Company's initial public offering of stocks and listing on the ChiNext resulting in
losses to investors in securities trading the Company will compensate investors for
losses in accordance with the law according to the relevant decisions of the CSRC
Shenzhen Stock Exchange or other competent departments.Commitment The prospectus and other information disclosure materials of ZKTeco's initial public
ZKTeco Times letter regarding offering of stocks and listing on the ChiNext are true accurate and complete
IPO-related Strict
and Che the absence of without any false records misleading statements or significant omissions. August 17 2022 Long term
commitments performance
Quanhong false records If it is determined by the CSRC Shenzhen Stock Exchange or other competent
misleading departments that ZKTeco has false records misleading statements or significant
137ZKTeco 2024 Annual Report
statements or omissions in the prospectus and other information disclosure materials of its initial
significant public offering of stocks and listing on the ChiNext resulting in losses to investors
omissions in in securities issuance and trading the Company/I will compensate investors for
the prospectus losses in accordance with the law according to the provisions of the relevant
and other decisions of the CSRC Shenzhen Stock Exchange or other authorized departments.information If it is determined by the CSRC Shenzhen Stock Exchange or other competent
disclosure departments that there are false records misleading statements or significant
materials omissions in the prospectus and other information disclosure materials of ZKTeco's
initial public offering of stocks and its listing on the ChiNext which constitutes a
significant and substantial impact on determining whether ZKTeco meets the
issuance conditions stipulated by law the Company/I will urge ZKTeco to
repurchase all new shares issued in the initial public offering in accordance with the
law and at the same time the Company/I will repurchase the original restricted
shares that have been transferred at the price in the secondary market in accordance
with the law. When the Company/I repurchase(s) stocks we will comply with the
relevant provisions of the "Company Law" "Securities Law" CSRC and Shenzhen
Stock Exchange as well as the "Articles of Association".There are no false records misleading statements or significant omissions in the
Che Quanhong Commitment prospectus and other information disclosure materials of the Company's initial public
Jin Hairong Ma letter regarding offering of stocks and listing on the ChiNext.Wentao Fu the absence of If there are false records misleading statements or significant omissions in the
Zhiqian Dong false records Company's prospectus and other information disclosure materials resulting in losses
Xiuqin Pang misleading to investors in securities issuance and trading I will compensate the investors for the
Chunlin Zhuo statements or losses in accordance with the law.IPO-related Strict
Shuyan Jiang significant If I fail to fulfill the above commitments I will publicly explain the specific reasons August 17 2022 Long term
commitments performance
Wenna Wu omissions in for my failure in the Company's shareholders' meeting and newspapers and
Xinke Liu the prospectus magazines designated by the CSRC apologize to the Company's shareholders and
Jiajia Wang and other public investors and cease receiving salary allowances and shareholder dividends
Youwu Li information from the Company from the date of violating the above commitments. Meanwhile
Zhinong and disclosure my shares directly or indirectly held in the Company will not be transferred until I
Guo Yanbo materials take corresponding compensation measures according to the above commitments
and implement them completely.
(1) Do not interfere with the Company's management activities beyond my authority
Commitment to and do not encroach on the Company's interests.ZKTeco Times
IPO-related fill in diluted (2) From the date of issuance of this commitment letter to the completion of the Strict
and Che August 17 2022 Long term
commitments immediate Company's public offering of stocks if the CSRC makes other new regulatory performance
Quanhong
returns provisions on filling in return measures and commitments and the above
commitments cannot meet the requirements of the CSRC the commitment will be
138ZKTeco 2024 Annual Report
issued in accordance with the latest regulations of the CSRC.I promise to effectively fulfill relevant measures for filling in returns in the
Company's system and any commitments made regarding these measures. If I violate
these commitments and cause losses to the Company or investors I will be liable for
compensation for the Company or investors in accordance with the law."In order to ensure the effective implementation of the Company's compensation
measures the Company directors and senior managers make the following
commitments:
(1) They will not transfer benefits to other units or individuals free of charge or
under unfair conditions nor will they damage the interests of the Company in other
ways;
(2) They will constrain duty consumption behavior;
(3) They will not use company assets to engage in investment or consumption
ZKTeco Che
activities unrelated to their performance of duties;
Quanhong Jin
(4) They will actively promote the further improvement of the Company's
Hairong Ma Commitment
compensation system and fully support the linkage between the compensation
Wentao Fu on guarantee
system formulated by the Company's Board of Directors or compensation committee
Zhiqian Dong measures for
IPO-related and the implementation of the Company's compensation measures; Strict
Xiuqin Pang filling in the August 17 2022 Long term
commitments (5) If the Company launches an equity incentive plan in the future I promise to performance
Chunlin Zhuo diluted
make every effort within my own responsibilities and authority to link the exercise
Shuyan Wang immediate
conditions of the equity incentive that the Company intends to announce with the
Youwu Li return
implementation of the Company's compensation and return measures;
Zhinong and
(6) From the date of issuance of this commitment letter to the completion of the
Guo Yanbo
Company's public offering of stocks if the CSRC makes other new regulatory
provisions on filling in return measures and commitments and the above
commitments cannot meet the requirements of the CSRC the commitment will be
issued in accordance with the latest regulations of the CSRC.I promise to effectively fulfill relevant measures for filling in returns in the
Company's system and any commitments made regarding these measures. If I violate
these commitments and cause losses to the Company or investors I will be liable for
compensation for the Company or investors in accordance with the law."
Commitment If the Company fails to fulfill the commitments disclosed in the prospectus the
on relevant specific reasons for the failure will be disclosed through the Company's shareholders'
binding meeting securities regulatory authority or designated channels of the Shenzhen
IPO-related Strict
ZKTeco measures in Stock Exchange as appropriate and supplementary or alternative commitments will August 17 2022 Long term
commitments performance
case of failure be proposed to the Company's investors to protect their rights and interests as much
to fulfill as possible.commitments If investors suffer losses in securities trading due to the Company's failure to fulfill
139ZKTeco 2024 Annual Report
relevant commitments the Company will compensate the investors for the relevant
losses in accordance with the law. Within 10 days after the securities regulatory
authority or other competent departments determine that the Company has the
aforementioned situation the Company will initiate relevant work to compensate
investors for losses. Investor losses are determined based on the amount determined
through consultation with investors or based on methods or amounts recognized by
securities regulatory authorities or judicial authorities.
1. If the Company fails to fulfill the commitments disclosed in the prospectus the
specific reasons for the failure will be disclosed through ZKTeco's shareholders'
meeting securities regulatory authority or designated channels of the Stock
Exchange as appropriate and supplementary or alternative commitments will be
proposed to ZKTeco's investors to protect their rights and interests as much as
possible.Commitment
2. If investors suffer losses in securities trading due to the Company's failure to
on relevant
fulfill relevant commitments the Company will compensate the investors for the
binding
IPO-related relevant losses in accordance with the law. Strict
ZKTeco Times measures in August 17 2022 Long term
commitments 3. If the Company fails to bear the aforementioned compensation liability the shares performance
case of failure
of ZKTeco held by the Company shall not be transferred until the Company has
to fulfill
fulfilled the aforementioned compensation liability and ZKTeco has the right to
commitments
deduct the cash dividends distributed to the Company for bearing the
aforementioned compensation liability.
4. During the period when the Company serves as the controlling shareholder of
ZKTeco if ZKTeco fails to fulfill the commitments disclosed in the prospectus and
causes losses to investors the Company promises to bear compensation liability in
accordance with the law.
1. If I fail to fulfill the commitments disclosed in the prospectus the specific reasons
for the failure will be disclosed through ZKTeco's shareholders' meeting securities
regulatory authority or designated channels of the Stock Exchange as appropriate
Commitment and supplementary or alternative commitments will be proposed to ZKTeco's
on relevant investors to protect their rights and interests as much as possible.binding 2. If investors suffer losses in securities trading due to my failure to fulfill relevant
IPO-related Strict
Che Quanhong measures in commitments I will compensate the investors for the relevant losses in accordance August 17 2022 Long term
commitments performance
case of failure with the law.to fulfill 3. If I fail to bear the aforementioned compensation liability the shares of ZKTeco
commitments held by me shall not be transferred until I have fulfilled the aforementioned
compensation liability and ZKTeco has the right to deduct the cash dividends
distributed to me for bearing the aforementioned compensation liability.
4. During the period when I serve as the actual controller of ZKTeco if ZKTeco fails
140ZKTeco 2024 Annual Report
to fulfill the commitments disclosed in the prospectus and causes losses to investors
I promise to bear compensation liability in accordance with the law.Che Quanhong
Jin Hairong Ma
1. If I fail to fulfill the public commitments made by myself in the prospectus of
Wentao Fu
ZKTeco's initial public offering and listing on the ChiNext:
Zhiqian Dong Commitment
(1) I will publicly explain the specific reasons for not fulfilling my commitments in
Xiuqin Pang on relevant
the Company's shareholders' meeting and newspapers and magazines designated by
Chunlin Zhuo binding
IPO-related the CSRC and apologize to the Company's shareholders and public investors. Strict
Shuyan Jiang measures in August 17 2022 Long term
commitments (2) I will stop receiving my salary within 10 trading days from the date of the performance
Wenna Wu case of failure
aforementioned event and my shares directly or indirectly held in the Company (if
Xinke Liu to fulfill
any) shall not be transferred until I fulfill the relevant commitments.Jiajia Wang commitments
2. If I fail to fulfill the relevant commitments I will be liable for compensation to the
Youwu Li
Company or investors in accordance with the law.Zhinong and
Guo Yanbo
(1) The Company guarantees that there will be no fraudulent issuance of shares in
this public offering and listing on the ChiNext.Commitment to (2) If the securities regulatory authorities stock exchanges or judicial authorities
repurchase determine that the Company has engaged in fraudulent issuance behavior which has
IPO-related shares for a significant substantive impact on determining whether the Company meets the Strict
ZKTeco August 17 2022 Long term
commitments fraudulent issuance conditions stipulated by law the Company will initiate the share repurchase performance
issuance and procedure in accordance with relevant laws and regulations and the Company's
listing Articles of Association within 5 working days after final determination by the
securities regulatory authorities stock exchanges or judicial authorities to
repurchase all new shares issued by the Company in this public offering.
(1) Guarantee that there will be no fraudulent issuance of shares in ZKTeco's public
Commitment to
offering and listing on the ChiNext.repurchase
ZKTeco Times (2) If the securities regulatory authorities stock exchanges or judicial authorities
IPO-related shares for Strict
and Che determine that ZKTeco has engaged in fraudulent issuance the Company/I will August 17 2022 Long term
commitments fraudulent performance
Quanhong initiate a share repurchase procedure within 5 working days after confirmation by the
issuance and
securities regulatory authorities stock exchanges or judicial authorities to
listing
repurchase all original restricted shares transferred by the Company/me.Che Quanhong Commitment to (1) I guarantee that there is no fraudulent issuance of ZKTeco's initial public offering
Jin Hairong Ma repurchase and listing on the ChiNext.IPO-related Wentao Fu shares for (2) If the securities regulatory authorities stock exchanges or judicial authorities Strict
August 17 2022 Long term
commitments Zhiqian Dong fraudulent determine that ZKTeco has engaged in fraudulent issuance behavior causing performance
Xiuqin Pang issuance and investors to suffer losses in securities issuance and trading I will compensate
Chunlin Zhuo listing investors for their losses in accordance with the law after the securities regulatory
141ZKTeco 2024 Annual Report
Shuyan Jiang authorities stock exchanges or judicial authorities determine the compensation
Wenna Wu liability.Xinke Liu (3) If I violate the above commitments I will publicly explain the specific reasons
Jiajia Wang for my failure to fulfill them in the shareholders' meeting of ZKTeco and newspapers
Youwu Li and magazines designated by the CSRC and apologize to shareholders and public
Zhinong and investors. Within 5 working days from the date of the violation of the above
Guo Yanbo commitments I will stop receiving salary or allowances and shareholder dividends
from ZKTeco and my shares in ZKTeco will not be transferred until I take
corresponding compensation measures according to the above commitments and
implement them completely.The Company's shareholders include ZKTeco Times Che Quanhong LX
Investment JYSJ JYHY JYLX JYQL Shenzhen Fuhai Junyong No.1 Venture
Capital Enterprise (Limited Partnership) Yiwu Huaxin Vision Venture Capital
Center (Limited Partnership) and Qingdao Walden Zhongxiang Investment Center
(Limited Partnership). Among them Che Quanhong is the actual controller of the
Company ZKTeco Times is a limited liability company jointly held by Che
Quanhong and his brother Che Quanzhong LX Investment is a limited partnership
jointly held by Che Quanhong and his father Che Jun and natural person De Wang
and JYSJ JYHY JYLX and JYQL are the employee stock holding platform of the
Company and Shenzhen Fuhai Junyong No.1 Venture Capital Enterprise (Limited
Partnership) Yiwu Huaxin Vision Venture Capital Center (Limited Partnership) and
Qingdao Walden Zhongxiang Investment Center (Limited Partnership) are investors
Special
introduced by the Company. Shenzhen Fuhai Junyong No.1 Venture Capital
commitment on
IPO-related Enterprise (Limited Partnership) Yiwu Huaxin Vision Venture Capital Center Strict
ZKTeco shareholder August 17 2022 Long term
commitments (Limited Partnership) and Qingdao Walden Zhongxiang Investment Center (Limited performance
information
Partnership) are private investment funds registered with the Asset Management
disclosure
Association of China (AMAC). The aforementioned entities all have the
qualification to hold shares in the Company and there is no situation where entities
prohibited by laws and regulations from holding shares directly or indirectly hold
shares in the Company. The intermediary or its responsible persons senior
managers or handlers involved in this issuance do not directly or indirectly hold any
shares or other interests of the Company. There is no situation where shareholders of
the Company engage in improper transfer of benefits through the Company's equity.The Company and its shareholders have promptly provided truthful accurate and
complete information to the intermediary involved in this issuance actively and
comprehensively cooperated with the intermediary involved in this issuance to
conduct due diligence and truthfully accurately and completely disclosed
shareholder information in the application documents for this issuance in accordance
142ZKTeco 2024 Annual Report
with the law fulfilling the obligation of information disclosure.If a lawsuit arbitration dispute or administrative penalty occurs due to the
ZKTeco Times
IPO-related Other Company's involvement in the installation and use of unauthorized software we Strict
and Che August 17 2022 Long term
commitments commitments voluntarily and jointly bear all economic consequences and losses for the Company performance
Quanhong
and will not seek compensation from the Company under any conditions or methods.
1. If ZKTeco (including its predecessor) and its controlling subsidiaries fail to pay
social insurance premiums and/or housing provident fund for employees in
accordance with the law or in full causing ZKTeco and/or its controlling subsidiaries
to have a supplementary payment obligation or suffer any fines or losses the
Company/I will unconditionally and voluntarily bear such supplementary payment
obligation fines or losses to ensure that ZKTeco and its holding subsidiaries do not
ZKTeco Times suffer any economic losses due to such matters.IPO-related Other Strict
and Che 2. If ZKTeco (including its predecessor) and its controlling subsidiaries use labor August 17 2022 Long term
commitments commitments performance
Quanhong employment methods in certain positions causing ZKTeco and/or its controlling
subsidiaries to suffer any fines or losses the Company/I will unconditionally and
voluntarily bear such fines or losses to ensure that ZKTeco and its controlling
subsidiaries do not suffer any economic losses due to such matters.The aforementioned commitments are unconditional and irrevocable.The Company/I will bear any losses suffered by stakeholders as a result of violating
the aforementioned commitments.If the Company is unable to continue using the defective property due to defects or
ZKTeco Times
IPO-related Other if the relevant government authorities require the demolition of the relevant property Strict
and Che August 17 2022 Long term
commitments commitments or impose penalties on the Company in the future they will unconditionally bear all performance
Quanhong
losses costs and expenses incurred by the Company arising therefrom.Whether the
commitment is Yes
fulfilled on time
If the commitment is
not fulfilled within
the promised period
a detailed
explanation of the
Not applicable
specific reasons for
the incomplete
fulfillment and the
next work plan
should be provided.
143ZKTeco 2024 Annual Report
2. If there are assets or projects of the Company which have profit forecast while the reporting period is
still in the profit forecast period the Company shall state whether the assets or projects meet the original
profit forecast and the reasons
□ Applicable □Not applicable
II. Non Operating Occupation of Funds by Controlling Shareholders and Other Related
Parties of Listed Company
□ Applicable □Not applicable
During the reporting period there was no non-operating occupation of funds by controlling shareholders or other related parties of the
listed company.III. Illegal Provision of Guarantees for External Parties
□ Applicable □Not applicable
There were no illegal external guarantees during the reporting period of the Company.IV. Explanation Given by the Board of Directors regarding the Latest "Non-standard
Audit Report"
□ Applicable □Not applicable
V. Explanation Given by the Board of Directors Board of Supervisors and Independent
Directors (if any) on the "Non-standard Audit Report" Issued by the CPA Firm for the Current
Reporting Period
□ Applicable □Not applicable
VI. Explanation Given by the Board of Directors on Changes in Accounting Policies
Accounting Estimates or Correction of Major Accounting Errors during the Reporting Period
□Applicable □ Not applicable
Please refer to "Section X Financial Report V. Important Accounting Policies and Estimates 41. Changes in Important Accounting
Policies and Estimates
VII. Explanations on Changes in the Scope of Consolidated Financial Statements
Compared to the Financial Report for the Previous Year
□Applicable □ Not applicable
During the reporting period the Company established seven subsidiaries within the consolidation as shown below::
Establishment Percentage of Reason for
S/N Company Name Registered Capital
Date shares (%) Change
144ZKTeco 2024 Annual Report
ZKTeco Huayun (Xiamen)
1 2017/7/5 RMB 3.69388 million 51 Cancellation
Integrated Circuit Co. Ltd.Taken over by
Shenzhen Zhongjiang Intelligent
2 2017/4/26 RMB 10 million 51 the liquidation
Technology Co. Ltd.group
ZKTeco Cloud Brain-Computer
3 2024/10/29 RMB 20 million 100 Establishment
(Hangzhou) Technology Co. Ltd.ZKTECO BUSINESS
4 2024/5/15 SAR 1 million 100 Establishment
SOLUTIONS COMPANY
5 ZKTeco Polska Sp. z o.o. 2024/8/2 PLN 400000 75.69 Establishment
6 ZKTeco Egypt LLC 2024/1/4 USD 120000 100 Establishment
7 ZKTeco Latam R＆D S.A. 2018/8/27 ARS 2.926 million 98.088 Assignment
VIII. Appointment and Dismissal of Accounting Firms
Accounting firm currently employed
Zhonghui Certified Public Accountants (Special General
Name of domestic accounting firms
Partnership)
Remuneration of domestic accounting firms (RMB '0000) 158
Continuous years of audit services of domestic accounting
firms
Name of certified public accountant (CPA) of domestic
Li Li and Yuan Zongzhi
accounting firms
Continuous years of audit services provided by certified public
1
accountant (CPA) of domestic accounting firms
Whether the accounting firm was changed in the reporting period
□Yes □ No
Whether to hire a new accounting firm during the audit period
□ Yes □No
Whether the replacement of the accounting firm follows the approval procedure
□Yes □ No
Explanations on the appointment and dismissal of accounting firms
Given that the original audit institution Dahua Certified Public Accountants (Special General Partnership) has been suspended
from providing securities services for six months starting from May 10 2024 based on the principle of prudence and considering the
Company's business development and audit needs in accordance with the relevant provisions of the "Management Measures for the
Selection of Accounting Firms for State-owned Enterprises and Listed Companies" and the Company's "Selection System for
Accounting Firms" the Company held the 12th Session of the Third Board Meeting on October 28 2024 and the Second Extraordinary
General Meeting of 2024 on November 15 2024 and reviewed and approved the "Proposal on Proposed Change of Accounting Firm"
agreeing to engage Zhonghui Certified Public Accountants (Special General Partnership) as the audit institution for the Company's
2024 financial reports and internal control audit reports.
145ZKTeco 2024 Annual Report
Appointment of audit accounting firms financial advisors or sponsors for internal control
□Applicable □ Not applicable
The Company held the 12th Session of the Third Board Meeting on October 28 2024 and the Second Extraordinary General
Meeting of 2024 on November 15 2024 and reviewed and approved the "Proposal on Proposed Change of Accounting Firm"
agreeing to appoint Zhonghui Certified Public Accountants (Special General Partnership) as the internal control audit institution for
the Company in 2024. The Company paid a total of RMB 1.58 million to the accounting firm for the 2024 report of which RMB
280000 was for the internal control audit.
IX. Delisting after the Disclosure of the Annual Report
□ Applicable □Not applicable
X. Matters Related to Bankruptcy Reorganization
□ Applicable □Not applicable
There were no bankruptcy or restructuring related matters during the reporting period of the Company.XI. Material Litigation and Arbitration
□Applicable □ Not applicable
Amount Is there an Litigation
Basic information of Progress of
involved estimated (arbitration) Execution of litigation Disclosure Disclosure
litigation litigation
(RMB liability trial results (arbitration) judgments Date Index
(arbitration) (arbitration)
'0000) formed and effects
As Zokon Industry has
no sufficient assets
available for execution
and is unable to repay
The second
its due debts the
instance
Company submitted a CNINFO
court ruled
"Bankruptcy (http://www.that Zokon
Liquidation cninfo.com.c
Industry
Application" to the n) "2024
Unfair competition compensate
Shenzhen Intermediate Half Year
dispute filed by the Implementat the August 30
200 No People's Court on Report of
Company against ion stage Company 2024
January 6 2025 ZKTECO
Zokon Industry and
requesting the court to CO. LTD."
Shenzhen
conduct a bankruptcy (Announcem
ZKTeco for
liquidation of Zokon ent No.a loss of
Industry. The Shenzhen 2024-037)
RMB 2
Intermediate People's
million
Court filed the case on
January 16 2025 with
the case number (2025)
Y 03 PS No. 131.Other The CNINFO
lawsuits/arbitrations Company (http://www.No The Company strictly
where the Company strictly August 30 cninfo.com.c
1963.26 No significant follows the progress of
(including subsidiary follows the 2024 n) "2024 Half
impact each case
companies in the progress of Year Report
consolidated each case of ZKTECO
146ZKTeco 2024 Annual Report
financial statements) CO. LTD."
as the plaintiff fails (Announcem
to meet the ent No. 2024-
disclosure standards 037)
for major lawsuits
Other
CNINFO
lawsuits/arbitrations
(http://www.where the Company
The cninfo.com.c
(including subsidiary
Company n) "2024 Half
companies in the No The Company strictly
strictly August 30 Year Report
consolidated 265.52 No significant follows the progress of
follows the 2024 of ZKTECO
financial statements) impact each case
progress of CO. LTD."
as the defendant fails
each case (Announcem
to meet the
ent No. 2024-
disclosure standards
037)
for major lawsuits
XII. Punishment and Rectification
□ Applicable □Not applicable
There were no penalties or rectifications during the reporting period of the Company.XIII. The Integrity of the Company Its Controlling Shareholders and Actual Controllers
□Applicable □ Not applicable
During the reporting period the Company its controlling shareholders and actual controllers were in good faith and there were no
instances of failure to fulfill effective court judgments or outstanding debts of significant amounts.XIV. Significant Related-Party Transactions
1. Related-party transactions related to daily operations
□ Applicable □Not applicable
There were no related party transactions related to daily operations during the reporting period of the Company.
2. Related-party transactions arising from the acquisition and sale of assets or equity
□ Applicable □Not applicable
There were no related party transactions related to asset or equity acquisitions or sales during the reporting period of the Company.
3. Related-party transactions arising from joint investments on external parties
□ Applicable □Not applicable
During the reporting period the Company did not engage in any related party transactions related to joint foreign investment.
4. Related Credit and Debt Transactions
□ Applicable □Not applicable
There were no current associated rights of credit and liabilities during the reporting period of the Company.
147ZKTeco 2024 Annual Report
5. Transactions with Related Financial Companies
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the Company and its affiliated financial companies and related
parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the financial company controlled by the Company and its
affiliated parties.
7. Other significant related party transactions
□ Applicable □Not applicable
There were no other major related party transactions during the reporting period of the Company.XV. Significant Contracts and Their Performance
1. Custody contracting and leasing matters
(1) Custody
□ Applicable □Not applicable
There was no custody during the reporting period of the Company.
(2) Contracting
□ Applicable □Not applicable
There was no contracting during the reporting period of the Company.
(3) Leasing
□Applicable □ Not applicable
Explanations on leasing
During the reporting period the Company and its subsidiaries rented offices at relevant locations for business use due to operational
needs and both parties have signed housing rental contracts.Projects that bring profits and losses to the Company that exceed 10% of the total profit during the reporting period
□ Applicable □Not applicable
There are no leasing projects that bring profits or losses to the Company during the reporting period that exceed 10% of the total profits
of the Company during the reporting period.
2. Significant guarantee
□Applicable □ Not applicable
Unit: RMB '0000
148ZKTeco 2024 Annual Report
External guarantees provided by the Company and its subsidiaries (excluding guarantees provided to subsidiaries)
Disclosure
date of Whether
Name of guarantee Actual Actual Counter Whether it to
Guarantee Type of Collateral Guarantee
guarantee limit occurrence guarantee guarantee has been guarantee
amount guarantee (if any) period
object related date amount (if any) fulfilled for related
announce parties
ments
Guarantee of the Company to its subsidiaries
Disclosure
date of Whether
Name of guarantee Actual Actual Counter Whether it to
Guarantee Type of Collateral Guarantee
guarantee limit occurrence guarantee guarantee has been guarantee
amount guarantee (if any) period
object related date amount (if any) fulfilled for related
announce parties
ments
ZKTECO Joint and
(GUANG April 24 December several
25000 0 15 years Yes No
DONG) 2024 16 2019 liability
CO. LTD guarantee
Total approved guarantee Total actual amount of
amount for subsidiaries guarantee for
1000000
during the reporting subsidiaries during the
period (B1) reporting period (B2)
Total approved guarantee Total actual guarantee
amount for subsidiaries balance for subsidiaries
00
at the end of the at the end of the
reporting period (B3) reporting period (B4)
Guarantee provided by subsidiaries to subsidiaries
Disclosure
date of Whether
Name of guarantee Actual Actual Counter Whether it to
Guarantee Type of Collateral Guarantee
guarantee limit occurrence guarantee guarantee has been guarantee
amount guarantee (if any) period
object related date amount (if any) fulfilled for related
announce parties
ments
Total amount of company guarantee (i.e. the total of the first three major items)
Total approved guarantee Total actual amount of
amount during the guarantees incurred
1000000
reporting period during the reporting
(A1+B1+C1) period (A2+B2+C2)
Total approved guarantee Total actual guarantee
amount at the end of the balance at the end of the
00
reporting period reporting period
(A3+B3+C3) (A4+B4+C4)
Proportion of actual total guarantee amount (i.e.
0.00%
A4+B4+C4) to the Company's net assets
Including:
Balance of guarantees provided to shareholders actual
0
controllers and their related parties (D)
Balance of debt guarantee provided directly or
0
indirectly for guaranteed objects with an asset liability
149ZKTeco 2024 Annual Report
ratio exceeding 70% (E)
Amount of the total guarantee exceeding 50% of net
0
assets (F)
Total amount of the above three guarantees (D+E+F) 0
Explanations on situations where there is a guarantee
liability or evidence indicating the possibility of
Not applicable
assuming joint and several liability for the unexpired
guarantee contract during the reporting period (if any)
Explanations on providing external guarantees in
Not applicable
violation of prescribed procedures (if any)
Explanations on the specific situation of using composite guarantee
Not applicable
3. Entrustment of others to manage cash assets
(1) Entrustment of financial management
□Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: RMB '0000
Provision for
Source of funds
Amount of Overdue impairment
for entrusted Outstanding
Specific types entrusted financial uncollected amount of overdue
financial balance
management amount uncollected
management
financial assets
Bank financial
Own funds 5228.98 3234.20 0 0
products
Bank financial
Own funds 1931.52 1931.52 0 0
products
Bank financial
Own funds 375.98 375.98 0 0
products
Bank financial
Own funds 424.31 39.05 0 0
products
Bank financial
Own funds 80.20 80.20 0 0
products
Bank financial
Own funds 3000.00 3000.00 0 0
products
Bank financial
Own funds 174.63 95.01 0 0
products
Bank financial
Own funds 49009.26 5000.00 0 0
products
Bank financial
Fundraising 29590.00 11209.00 0 0
products
Bank financial
Fundraising 76500.00 42000.00 0 0
products
Bank financial
Own funds 719.11 719.11 0 0
products
Total 167033.99 67684.07 0 0
Specific situation of high-risk entrusted financial management with significant individual amounts low safety and poor liquidity
□ Applicable □Not applicable
150ZKTeco 2024 Annual Report
Expected inability to recover principal or other situations that may lead to impairment in entrusted financial management
□ Applicable □Not applicable
(2) Entrusted loan
□ Applicable □Not applicable
There were no entrusted loans during the reporting period of the Company.
4. Other significant contracts
□ Applicable □Not applicable
There were no other significant contracts during the reporting period of the Company.XVI. Other Significant Events
□ Applicable □Not applicable
There are no other significant matters that need to be explained during the reporting period of the Company.XVII. Significant Events of the Company's Subsidiaries
□ Applicable □Not applicable
151ZKTeco 2024 Annual Report
Section VII Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
Before the change Increase or decrease in this change (+ -) After this change
Share transferred
Quantity Proportion Issue new shares Bonus from capital Others Subtotal Quantity Proportion
reserve
I. Restricted
12832715965.92%19987-8634958-861497111971218861.00%
shares
1. Shares held
by State
2. Shares held
by state-owned
legal persons
3. Shares held
by other
12832715965.92%19987-8634958-861497111971218861.00%
domestic
enterprises
Including:
shares held by
9428487248.43%-8634958-86349588564991443.65%
domestic legal
persons
Shares held
by domestic 34042287 17.49% 19987 19987 34062274 17.36%
natural persons
4. Foreign
shareholding
152ZKTeco 2024 Annual Report
Including:
shares held by
overseas legal
persons
Shares held
by overseas
natural persons
II. Shares not
subject to
6635234934.08%15378688634958101728267652517539.00%
trading
restrictions
1. RMB
denominated 66352349 34.08% 1537868 8634958 10172826 76525175 39.00%
ordinary shares
2. Domestic
listed foreign
shares
3. Overseas
listed foreign
shares
4. Others
III. Total shares 194679508 100.00% 1557855 0 1557855 196237363 100.00%
153ZKTeco 2024 Annual Report
Reasons for changes in shares
□Applicable □ Not applicable
1. On August 19 2024 the lockup period of the shares issued by the Company before the initial public offering expired and the
shares went public. The number of shareholders with the restrictions lifted was 4 with 8634958 shares accounting for 4.4355% of
the Company's total share capital at the time of lifting the restrictions;
2. On November 27 2024 the Company disclosed the "Announcement on the Attribution Results of the Second Attribution Period
of the 2022 Restricted Share Incentive Plan and the Listing of Shares". After deliberation and approval by the 13th Session of the Third
Board Meeting the attribution condition for the second attribution period of the first grant in the Company's 2022 Restricted Share
Incentive Plan was met and the number of attributed shares was 1557855 shares which were listed for circulation on November 29
2024. After the completion of the attribution the total share capital of the Company increased from 194679508 shares to 196237363
shares.Some directors and senior managers are incentive objects under the 2022 Restricted Share Incentive Plan. 75% of the shares they
received this time were locked thus increasing the executive lockup shares by 19987.Approval of changes in shares
□Applicable □ Not applicable
The attribution condition for the second attribution period of the first grant in the Company's 2022 Restricted Share Incentive Plan
has been met and it has been approved by the 13th Session of the Third Board Meeting and the 12th Session of the Third Supervisory
Board Meeting held on November 21 2024. In addition the "Announcement on the Achievement of Attribution Conditions for the
Second Attribution Period of the 2022 Restricted Share Incentive Plan" (Announcement No. 2024-055) was disclosed on November
21 2024 on CNINFO (http://www.cninfo.com.cn).
Transfer of changes in shares
□Applicable □ Not applicable
The attribution condition for the second attribution period of the first grant in the Company's 2022 Restricted Share Incentive Plan
has been met and the number of attributed shares was 1557855 shares. The shares attributed this time were registered in the relevant
incentive object's securities account on November 29 2024.The impact of share changes on financial indicators such as basic EPS and diluted EPS for the most recent year and period and net
assets per share attributable to common shareholders of the Company
□Applicable □ Not applicable
During the reporting period due to the Company's 2022 Restricted Share Incentive Plan granting the second attribution period of
shares for the first time the total share capital increased from 194679508 shares to 196237363 shares resulting in corresponding
dilution of earnings per share (EPS) and net assets per share. The relevant data can be found in "V. Main Accounting Data and Financial
Indicators" of "Section II Company Profile and Key Financial Indicators" of the report.Other contents deemed necessary by the Company or required to be disclosed by the securities regulatory authority
□ Applicable □Not applicable
2. Changes in restricted shares
□Applicable □ Not applicable
Unit: share
Number of Increase in Number of Number of Date of
Name of Reason for
restricted restricted shares released restricted releasing from
shareholder restrictions
shares at the shares during from trading shares at the trading
154ZKTeco 2024 Annual Report
beginning of the period restrictions in end of the restrictions
the period this period period
Shenzhen
Restricted
ZKTeco Times February 17
58500000 58500000 shares before
Investment Co. 2026
IPO
Ltd.Restricted
February 17
Che Quanhong 34022300 34022300 shares before
2026
IPO
One quarter of
the shares will
Shenzhen JYSJ be unlocked
Investment Restricted from August
Enterprise 10580700 3526900 7053800 shares before 17 2023 until
(Limited IPO all shares are
Partnership) unlocked on
August 17
2026
One quarter of
the shares will
Shenzhen
be unlocked
JYHY
Restricted from August
Investment
10440787 3480263 6960524 shares before 17 2023 until
Enterprise
IPO all shares are
(Limited
unlocked on
Partnership)
August 17
2026
Dongguan LX
Investment
Restricted
Partnership August 17
9880000 9880000 shares before
Enterprise 2025
IPO
(Limited
Partnership)
One quarter of
the shares will
Shenzhen
be unlocked
JYLX
Restricted from August
Consulting
3561285 1187095 2374190 shares before 17 2023 until
Enterprise
IPO all shares are
(Limited
unlocked on
Partnership)
August 17
2026
One quarter of
Shenzhen the shares will
JYQL be unlocked
Investment Restricted from August
Consulting 1322100 440700 881400 shares before 17 2023 until
Enterprise IPO all shares are
(Limited unlocked on
Partnership) August 17
2026
During the
tenure of
Executive supervisors
Fu Zhiqian 5362 5362 10724
lockup shares directors and
senior
executives
155ZKTeco 2024 Annual Report
25% of the total
number of
shares held will
be unlocked
annually while
the remaining
75% will be
automatically
locked
During the
tenure of
supervisors
directors and
senior
executives
25% of the total
Executive
Jin Hairong 5850 5850 11700 number of
lockup shares
shares held will
be unlocked
annually while
the remaining
75% will be
automatically
locked
During the
tenure of
supervisors
directors and
senior
executives
25% of the total
Executive
Mu Wenting 8775 8775 17550 number of
lockup shares
shares held will
be unlocked
annually while
the remaining
75% will be
automatically
locked
Total 128327159 19987 8634958 119712188 -- --
II. Issuance and Listing of Securities
1. Securities issuance (excluding preferred shares) during the reporting period
□Applicable □ Not applicable
Type of Issue Listing
Number Transaction
stocks and Price (or Listing approved Disclosure
Issue Date of Termination Disclosure Index
derivative Interest Date amount Date
Issues Date
securities Rate) (share)
Stock Category
"Announcement
Restricted November 155785 November on the Attribution November
13.671557855
share 29 2024 5 29 2024 Results of the 27 2024
Second
156ZKTeco 2024 Annual Report
Attribution Period
of the 2022
Restricted Share
Incentive Plan and
the Listing of
Shares of
ZKTECO CO.LTD."
(Announcement
No. 2024-057) on
the website of
CNINFO
Convertible corporate bonds convertible corporate bonds with separate transactions and
other derivative securities of corporate bonds
Explanations on securities issuance (excluding preferred shares) during the reporting period
Explanations on the Attribution Results of the Second Attribution Period of the 2022 Restricted Share Incentive Plan and the
Listing of Shares:
On November 21 2024 the Company held the 13th Session of the Third Board Meeting and the 12th Session of the Third
Supervisory Board Meeting respectively and deliberated and approved the "Proposal on the Achievement of the Attribution
Conditions for the Second Attribution Period of the 2022 Restricted Share Incentive Plan". The attribution condition for the second
attribution period of the first grant in the Company's 2022 Restricted Share Incentive Plan has been met. After being reviewed and
approved by the Shenzhen Stock Exchange and China Securities Depository and Clearing Co. Ltd. Shenzhen Branch the number of
shares attributed this time was 1557855 shares with an attributable price of RMB 13.67 per share. The listing and circulation date
was November 29 2024.
2. Explanations on Changes in Total Share Capital the Structure of Shareholders and the Structure of
Assets and Liabilities of the Company
□Applicable □ Not applicable
During the reporting period the Company's total share capital increased from 194679508 shares to 196237363 shares due to
the fulfillment of the attribution conditions for the second attribution period of the first grant under the 2022 Restricted Share Incentive
Plan.As of the end of 2024 the total assets of the Companywere RMB 4.0146235 billion an increase of increase of 2.31% compared
to RMB 3.9239007 billion at the end of 2023; the total liabilities were RMB 636.6231 million an increase of 0.55% compared to RMB
633.1114 million at the end of 2023 and the asset liability ratio was 15.86% maintaininging within a reasonable range.
3. Internal employee shares
□ Applicable □Not applicable
157ZKTeco 2024 Annual Report
III. Shareholders and Actual Controllers
1. Number of shareholders of the Company and shareholding
Unit: share
Total number
of preferred
Total number
shareholders
Total number of preferred
whose voting
of common shareholders
rights have Total number
Total number of shareholders whose voting
been of
common at the end of rights have
recovered at shareholders
shareholders at the 17701 the previous 17648 been 0 0 0
the end of last holding
end of the month before recoveredat
month before special voting
reporting period the disclosure the end of the
the disclosure shares (if any)
date of the reporting
date of the
annual report period (if any)
annual report
(see Note 9)
(if any) (see
Note 9)
Particulars about shareholders holding more than 5% or the top 10 shareholders (excluding shares lent through refinancing)
Changes in Pledge marking or frozen
Total shares Number of
increase and Number of
held at the end shares not
Name of Nature of Percentage of decrease shares with
of the subject to
shareholder shareholder shares during the trading
reporting trading Share status Amount
reporting restrictions
period restrictions
period
Shenzhen ZKTeco Domestic non
Times Investment state-owned 29.81% 58500000 0 58500000 0 Not applicable 0
Co. Ltd. corporation
Domestic
Che Quanhong 17.34% 34022300 0 34022300 0 Not applicable 0
individual
Shenzhen JYSJ
Domestic non
Investment
state-owned 7.15% 14038400 -69200 7053800 6984600 Not applicable 0
Enterprise
corporation
(Limited
158ZKTeco 2024 Annual Report
Partnership)
Shenzhen JYHY
Investment Domestic non
Enterprise state-owned 7.07% 13874950 -46100 6960524 6914426 Not applicable 0
(Limited corporation
Partnership)
Dongguan LX
Investment
Domestic non
Partnership
state-owned 5.03% 9880000 0 9880000 0 Not applicable 0
Enterprise
corporation
(Limited
Partnership)
Shenzhen JYLX
Consulting Domestic non
Enterprise state-owned 1.84% 3607894 -1110016 2374190 1233704 Not applicable 0
(Limited corporation
Partnership)
Shenzhen JYQL
Investment
Domestic non
Consulting
state-owned 0.59% 1151750 -579550 881400 270350 Not applicable 0
Enterprise
corporation
(Limited
Partnership)
Shenzhen
Gohedge Fund
Management Co.Others 0.35% 688580 -21000 0 688580 Not applicable 0
Ltd. - Gohedge
Pearl No.1 Private
Equity Fund
Domestic Not
Gu Meijuan 0.31% 614900 0 614900 Not applicable 0
individual applicable1
Hong Kong
Securities Overseas
0.25% 489063 -768367 0 489063 Not applicable 0
Clearing corporation
Company Limited
Strategic investors or general
Not applicable
corporations become the top 10
159ZKTeco 2024 Annual Report
shareholders due to the placement
of new shares (if any) (see Note 4)
Shareholder Che Quanhong is elder brother of shareholder Che Quanzhong from ZKTeco Times are brothers and son of Che Jun partner of LX Investment.The shareholder Che Quanhong holds 76.02% of the equity of ZKTeco Times being the controlling shareholder of ZKTeco Times. Meanwhile Che
Explanations on the above
Quanhong holds 1.18% of the property share of shareholder LX Investment and 8.65% of the property share of shareholder JYLX.shareholder's association or
Che Quanzhong the younger brother of shareholder Che Quanhong holds a 23.98% stake in ZKTeco Times.concerted action
Che Jun the father of shareholder Che Quanhong holds 98.68% of the property share of LX Investment.In addition there is no affiliated relationship between the other shareholders of the Company.Explanations on the above
shareholders' involvement in
Not involved
entrusting/entrusted voting rights
and waiver of voting rights
Special explanations on the
existence of repurchased accounts As of December 31 2024 the Company's repurchase special securities account holds 2230000 ordinary A shares accounting for 1.14% of the current total
among the top 10 shareholders (if share capital of the Company. As required it is not included in the list of the top 10 shareholders of the Company.any) (see Note 10)
Particulars about the top 10 shareholders not subject to trading restrictions (excluding shares lent through refinancing and executive lockup shares)
Number of shares not subject to trading restrictions held at the end of the reporting Types of shares
Name of shareholder
period Types Amount
Shenzhen JYSJ Investment RMB denominated ordinary
69846006984600
Enterprise (Limited Partnership) shares
Shenzhen JYHY Investment RMB denominated ordinary
69144266914426
Enterprise (Limited Partnership) shares
Shenzhen JYLX Consulting RMB denominated ordinary
12337041233704
Enterprise (Limited Partnership) shares
Shenzhen Gohedge Fund
RMB denominated ordinary
Management Co. Ltd. - Gohedge 688580 688580
shares
Pearl No.1 Private Equity Fund
RMB denominated ordinary
Gu Meijuan 614900 614900
shares
Hong Kong Securities Clearing RMB denominated ordinary
489063489063
Company Limited shares
Changjiang Wealth Asset
Management - Bank of Nanjing - RMB denominated ordinary
363592363592
Changjiang Wealth - ZKTeco shares
Employee Strategic Placement No.1
160ZKTeco 2024 Annual Report
Collective Asset Management Plan
GF Securities Co. Ltd. - Bodao
RMB denominated ordinary
Chengzhang Zhihang Stock 324102 324102
shares
Securities Investment Fund
Shenzhen JYQL Investment
RMB denominated ordinary
Consulting Enterprise (Limited 270350 270350
shares
Partnership)
RMB denominated ordinary
Liu Lianxiang 202665 202665
shares
Explanations on the association or
concerted action between the top 10
shareholders of outstanding shares
Shareholder Che Quanhong holds 8.65% of the property shares of shareholder JYLX. In addition the Company does not know whether there is a related
not subject to trading restrictions as
relationship between the top 10 other shareholders of shares not subject to trading restrictions as well as between the top 10 shareholders of outstanding
well as between the top 10
shares not subject to trading restrictions and the top 10 shareholders or whether they belong to Concerted Parties.shareholders of outstanding shares
not subject to trading restrictions
and the top 10 shareholders
Among the top 10 shareholders not subject to trading restrictions Shenzhen Gohedge Fund Management Co. Ltd. - Gohedge Pearl No.1 Private Equity
Explanations on shareholders Fund held a total of 688580 A shares of the Company at the end of the reporting period including 563520 A shares held through a margin account and
participating in margin trading (if 125060 A shares held through a margin account of CITIC Securities Co. Ltd. At the end of the reporting period Liu Lianxiang held a total of 202665
any) (see Note 5) shares of the Company's A shares. Among them he held 200 shares of the Company's A shares through a margin account and 202465 shares through the
client credit transaction guaranty securities accounts of CITIC Securities (Shandong) Co. Ltd.Note: 1 According to the shareholder register issued by the Shenzhen Branch of China Securities Depository and Clearing Co. Ltd. the Company only has information on the top 200
shareholders at the beginning and end of the reporting period. The shareholder Gu Meijuan who ranked 9th at the end of the reporting period was not among the top 200 shareholders at the
beginning of the period. Therefore the Company is unable to accurately obtain her shareholding data at the beginning of the reporting period and thus the "Changes in increase and decrease
during the reporting period" for her is "Not applicable".
161ZKTeco 2024 Annual Report
Participation of shareholders holding more than 5% of the shares the top 10 shareholders and the top 10 shareholders of outstanding
shares not subject to trading restrictions in the lending of shares through refinancing
□ Applicable □Not applicable
Changes to the top 10 shareholders and the top 10 shareholders of outstanding shares not subject to trading restrictions compared to
the previous period due to reasons related to lending/repayment through refinancing
□ Applicable □Not applicable
Does the Company have voting right difference arrangements
□ Applicable □Not applicable
Did the top 10 common shareholders and the top 10 shareholders of ordinary shares not subject to trading restrictions engage in agreed
repurchase transactions during the reporting period
□ Yes □No
The top 10 common shareholders and the top 10 shareholders of ordinary shares not subject to trading restrictions did not engage in
any agreed repurchase transactions during the reporting period.
2. Controlling shareholders of the Company
Nature of controlling shareholder: controlled by individual
Type of controlling shareholder: corporation
Name of controlling
Legal representative Date of establishment Organizational code Main business
shareholder
Shenzhen ZKTeco
Times Investment Co. Wang Haitao July 13 2015 91440300335415347N Investment
Ltd.Equity of other
domestic and foreign
listed companies
controlled and The controlling shareholders of the Company did not hold or participate in other domestic and foreign
participated in by listed companies.controlling
shareholders during the
reporting period
Changes in controlling shareholders during the reporting period
□ Applicable □Not applicable
There was no change in the controlling shareholder of the Company during the reporting period.
3. Particulars about the Company’s Actual Controller & Concerted Parties
Nature of actual controller: domestic individual
Type of actual controller: individual
Relationship with actual Have you obtained residency
Name of actual controller Nationality
controller in other countries or regions
Che Quanhong Oneself China No
Che Quanhong is the Chairman of the Company. Please refer to "2. Appointment" in "II.Main occupation and position Information on Directors Supervisors and Senior Managers" in "Section IV Corporate
Governance" of this annual report for details.Domestic and foreign listed
companies that have None
controlled in the past 10 years
Changes in actual controller during the reporting period
162ZKTeco 2024 Annual Report
□ Applicable □Not applicable
There has been no change in the actual controller of the Company during the reporting period.Block diagram of property rights and control relationship between the Company and actual controller
Che Quanhong
Shenzhen
ZKTeco
Times
Investmen
t Co. Ltd.ZKTECO CO. LTD.The actual controller controls the Company through trust or other asset management methods
□ Applicable □Not applicable
4. The Company's Controlling Shareholder or the Largest Shareholder and its Concerted Action
Person's Cumulative Pledged Shares Account for 80% of the Company's Shares Held by Them
□ Applicable □Not applicable
5. Particulars about Other Corporate Shareholders with Shareholding Proportion over 10%
□ Applicable □Not applicable
6. Restricted reduction of shares held by controlling shareholders actual controllers restructuring
parties and other committed entities
□ Applicable □Not applicable
IV. Specific Implementation of Share Repurchase During the Reporting Period
Implementation progress of share repurchase
□Applicable □ Not applicable
Proportion of
repurchased
quantity to the
Proposed Number
Plan Number of shares to Proportion to Proposed underlying
repurchase Repurchase of
disclosure be repurchased total share repurchase shares
amount (RMB purpose repurchas
time (shares) capital period involved in
'0000) ed shares
the equity
incentive plan
(if any)
163ZKTeco 2024 Annual Report
Based on the upper The proportion
limit of the of 193039666
Implement
repurchase price of shares of the Not less than
employee
RMB 48.07 per total share RMB 30 million
November 10 stock
November share (inclusive) capital of the (inclusive) and
2023-November ownership 2230000
11 2023 the expected Company as of not more than
9 2024 plans or
number of the disclosure RMB 60 million
equity
repurchased shares date of the (inclusive)
incentives
is 624090 to repurchase plan
1248180 shares is 0.32% -0.65%
The Company held the 7th Session of the Third Board Meeting on November 10 2023 and deliberated and approved the "Proposal
on Repurchasing Company Shares through Centralized Bidding Trading": it plans to use its own funds to repurchase some of the
Company's shares through centralized bidding trading for the implementation of employee stock ownership plans or equity incentives.The total amount of repurchase funds is not less than RMB 30 million and not more than RMB 60 million. As of February 1 2024 the
share repurchase plan has been completed. The Company has repurchased a total of 2230000 shares of the Company through a
dedicated securities account for share repurchases. The cumulative number of repurchased shares accounts for 1.1455% of the total
share capital of the Company at that time with a maximum transaction price of RMB 31.40 per share and a minimum transaction price
of RMB 23.20 per share. The total transaction amount is RMB 59683228.10 (excluding transaction costs).Progress in implementing centralized bidding trading to reduce holdings and repurchase shares
□ Applicable □Not applicable
164ZKTeco 2024 Annual Report
Section VIII Information of Preferred Shares
□ Applicable □Not applicable
There is no preferred share in the Company during the reporting period.
165ZKTeco 2024 Annual Report
Section IX Bonds
□ Applicable □Not applicable
166ZKTeco 2024 Annual Report
Section X Financial Report
I. Audit Report
Audit opinion Standard unqualified opinions
Audit report signing date April 21 2025
Zhonghui Certified Public Accountants (Special General
Audit institution name
Partnership)
Audit Report No. ZHKS [2025] No. 3301
Name of CPA Li Li Yuan Zongzhi
Audit Report Text
All shareholders of ZKTECO CO. LTD.:
I. Audit Opinion
We have audited the financial statements of ZKTECO CO. LTD. (hereinafter referred to as "ZKTeco") including the consolidated
and parent company's balance sheet as of December 31 2024 the consolidated and parent company's profit statement the consolidated
and parent company's cash flow statement the consolidated statements and parent company’s Statement of Changes in Equity and notes
to financial statements as of 2024.In our opinion the accompanying financial statements have been prepared in accordance with the provisions of the Accounting
Standards for Enterprises in all material aspects and fairly reflect the ZKTeco's consolidated and parent company's financial position as
of December 31 2024 as well as the consolidated and parent company's operating results and cash flows as of 2024.II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing ("CSAs"). The "CPA's Responsibility for the Audit of
Financial Statements" section of the Audit Report further elaborates our responsibilities under these standards. We are independent of
ZKTeco in accordance with the China Code of Ethics for Certified Public Accountants and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.III. Key Audit Matters
Key audit matters are the most important matters we believe to audit the current financial statements according to our professional
judgment. The response to these matters is based on the audit of the financial statements as a whole and the formation of an audit
opinion and we do not express an opinion on these matters separately. We have identified the following key audit matters that need to
be communicated in the audit report.(I) Revenue recognition
1. Description of matters
As stated in Note VII 42 of Chapter X the operating revenue of ZKTeco in 2024 was RMB 1.9912004 billion. As operating
revenue is one of the key performance indicators of ZKTeco there is an inherent risk that the management may inappropriately
recognize revenue to achieve specific targets or expectations. Therefore we consider the recognition of operating revenue of ZKTeco
as a key audit matter.
2. Audit response
Our significant audit procedures for revenue recognition include:
(1) Understand the key internal controls related to revenue recognition evaluate whether their design is effective determine
whether they are implemented and test the effectiveness of the operation of relevant internal controls;
167ZKTeco 2024 Annual Report
(2) Understand the revenue recognition policies through interviews with management examine the terms of major customer
contracts and analyze whether the conditions methods and timing of the Company's revenue recognition comply with the requirements
of Accounting Standards for Business Enterprises;
(3) Perform analytical procedures on operating revenue analyze the changes in sales of major products and major customers
compare with the changes in the same period of the previous year and review the rationality of sales changes;
(4) Confirm the sales revenue of major customers combined with the audit of accounts receivable and perform substitution tests
on customers who have not responded to the letter;
(5) Check the major customer contracts sales outbound orders acceptance certificates logistics documents customs declarations
and invoices to verify the authenticity of ZKTeco's revenue confirmation;
(6) Conduct cut-off tests on sales transactions before and after the balance sheet date to evaluate whether the revenue is recorded
in the appropriate accounting period.IV. Other Information
The management of ZKTeco (hereinafter referred to as the management) is responsible for other information. The other
information comprises the information included in the annual report for 2024 but does not include the financial statements and our
audit report thereon.Our audit opinions published in the financial statements do not cover other information and we do not publish any form of assured
conclusion on other information.In combination with our audit of the financial statements our responsibility is to read other information. In the process we consider
whether there is significant inconsistency in other information with the financial statements or what we have learned during the audit
process or other material misstatement existed.Based on the work we have performed if we determine that there is a material misstatement of other information we should report
that fact. In this regard we have nothing to report.V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The management of ZKTeco is responsible for the preparation of financial statements that give a fair view in accordance with the
Accounting Standards for Enterprises and for such internal control as management determines is necessary to enable the preparation
of financial statements that are free from material misstatement whether due to fraud or error.In preparing the statements management of ZKTeco is responsible for assessing ZKTeco's ability to continue as a going concern
disclosing as applicable matters related to going concern and using the going concern assumption unless the management either
intends to liquidate ZKTeco or to cease operations or has no realistic alternative but to do so.Those charged with governance are responsible for overseeing ZKTeco's financial reporting process.VI. CPA's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement whether due to fraud or error and to issue an audit report that includes our opinion. Reasonable assurance is a high level
of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if individually or in aggregate they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
(I) Identify and assess the risks of material misstatement in the financial statements whether due to fraud or error design and
perform the audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as
fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.(II) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances.
168ZKTeco 2024 Annual Report
(III) Evaluate the appropriateness of accounting policies selected by the Management Layer and the reasonableness of accounting
estimates and related disclosures.(IV) Conclude on the appropriateness of Management’s use of the going concern basis of accounting and based on the audit
evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on ZKTeco's
ability to continue as a going concern. If we conclude that there is a material uncertainty we are required to draw attention in our
Audit Report to the related disclosures in the financial statements or if such disclosures are inadequate to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our Audit Report. However future events or conditions may
cause ZKTeco to cease to continue as a going concern.(V) Evaluate the overall presentation structure and content of the financial statements and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient appropriate audit evidence on the financial information of the entities or business activities within ZKTeco
to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the audit on the
Company and we remain solely responsible for our audit opinion.We communicate with those charged with governance on among other matters the planned scope and timing of the audit and
significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide a statement to those charged with governance that we have complied with ethical requirements related to
independence and communicate with those charged with governance all relationships and other matters that may reasonably be
considered to affect our independence as well as related precautions if applicable.From the matters communicated with those charged with governance we determine which matters are most important to the audit
of the current financial statements thus constituting key audit matters. We describe these matters in the audit report unless laws and
regulations prohibit public disclosure of these matters or in rare cases if the negative consequences of communicating a matter in the
audit report are reasonably expected to exceed the benefits in the public interest we determine that the matter should not be
communicated in the audit report.II. Financial Statements
The unit of the financial statements in the financial notes is: RMB
1. Consolidated Balance Sheet
Prepared by: ZKTECO CO. LTD.December 31 2024
Unit: RMB
Item December 31 2024 January 1 2024
Current assets:
Monetary funds 1473334905.97 1990924954.78
Deposit reservation for balance
Lendings to banks and other financial
institutions
Trading financial assets 491331815.79 80980203.63
Derivative financial assets
Notes receivable 165450.00
Accounts receivable 519014337.89 479803313.66
Receivable financing
Prepayments 26561472.98 23457907.24
169ZKTeco 2024 Annual Report
Premiums receivable
Reinsurance accounts receivable
Reserves for reinsurance contract
receivable
Other receivables 41144121.16 32744574.20
Including: interest receivable
Dividends receivable
Buying back the sale of financial
assets
Inventories 335306397.14 372714784.31
Including: Data resources
Contract assets 212795.14 282186.31
Held-for-sale assets
Non-current assets due within one year 20383238.35 17257614.74
Other current assets 33070816.00 25865809.28
Total current assets 2940525350.42 3024031348.15
Non-current assets:
Loans and advances to customers
Debt investment 15775806.16 42284596.90
Other debt investment
Long-term receivables 5479301.55 2447228.23
Long-term equity investment 28982092.23 29781888.62
Other equity instrument investments
Other non-current financial assets
Investment real estate 21504316.77 23145488.85
Fixed assets 535337384.82 470121791.29
Construction in progress 226445932.02 138986483.73
Productive biological assets
Oil and gas assets
Right-of-use assets 48352214.14 38669718.86
Intangible assets 99844396.80 66016371.68
Including: data resources
Development expenditures
Including: data resources
Goodwill 512337.25 504803.72
Long-term deferred expenses 5555537.61 3768847.81
Deferred income tax assets 81688798.50 67257559.01
Other non-current assets 4620055.22 16884605.85
Total non-current assets 1074098173.07 899869384.55
Total assets 4014623523.49 3923900732.70
Current liabilities:
Short-term loan
170ZKTeco 2024 Annual Report
Borrowings from the Central Bank
Borrowings from banks and other
financial institutions
Trading financial liabilities
Derivative financial liabilities
Notes payable 134784219.75 122573544.09
Accounts payable 225414642.83 245084182.32
Advances from customer
Contract liabilities 71168318.91 65331106.17
Financial assets sold for repurchase
Deposit from customers and interbank
Acting trading securities
Acting underwriting securities
Payroll payable 53990974.31 56630101.98
Taxes payable 20281098.96 28892229.44
Other payables 45821035.19 36735314.36
Including: interest payable
Dividends payable
Handling charges and commissions
payable
Reinsurance accounts receivable
Liabilities held for sale
Non-current liabilities due within one
22822648.8721094682.36
year
Other current liabilities 12060579.96 16463934.35
Total current liabilities 586343518.78 592805095.07
Non-current liabilities:
Reserves for insurance contracts
Long-term loan 7021328.89 7810405.04
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 29108076.76 19713286.21
Long-term payables
Long-term payroll payable
Estimated liabilities 0.00 600000.00
Deferred income 1420041.44 1853549.62
Deferred tax liabilities 12730094.50 10329053.48
Other non-current liabilities
Total non-current liabilities 50279541.59 40306294.35
Total liabilities 636623060.37 633111389.42
Owner's equity:
Share capital 196312325.00 194679508.00
171ZKTeco 2024 Annual Report
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2107323633.23 2075479375.13
Less: treasury stock 59683228.10 784700.00
Other comprehensive income 41914807.74 28000959.19
Special reserve
Surplus reserves 64002687.03 60455422.50
General risk reserves
Undistributed profits 1000479479.18 907583024.38
Total owner's equity attributable to the
3350349704.083265413589.20
parent company
Minority interests 27650759.04 25375754.08
Total owner's equity 3378000463.12 3290789343.28
Total liabilities and owner's equity 4014623523.49 3923900732.70
Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution: Xu
Ping
2. Balance Sheet of Parent Company
Unit: RMB
Item December 31 2024 January 1 2024
Current assets:
Monetary funds 824570527.22 997496318.79
Trading financial assets 71072880.32 888780.80
Derivative financial assets
Notes receivable
Accounts receivable 516437060.81 674768619.85
Receivable financing
Prepayments 10439376.39 16580313.51
Other receivables 28468054.40 59135419.22
Including: interest receivable 46922.03 192033.24
Dividends receivable
Inventories 105623350.08 220338772.92
Including: data resources
Contract assets 192777.03 274794.84
Held-for-sale assets
Non-current assets due within one year 339420.08 11261761.38
Other current assets 4922632.78 2221965.93
Total current assets 1562066079.11 1982966747.24
Non-current assets:
Debt investment 10260784.31
Other debt investment
Long-term receivables 2323586.07 1553576.04
Long-term equity investment 1360368042.33 1273046481.87
Other equity instrument investments
172ZKTeco 2024 Annual Report
Other non-current financial assets
Investment real estate
Fixed assets 46126552.33 62080079.28
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets 9186583.12 11281532.81
Intangible assets 31838535.17 8193258.13
Including: data resources
Development expenditures
Including: data resources
Goodwill
Long-term deferred expenses 3048841.86 1314622.72
Deferred income tax assets 49639639.95 39737047.18
Other non-current assets 589955.22 15725991.21
Total non-current assets 1513382520.36 1412932589.24
Total assets 3075448599.47 3395899336.48
Current liabilities:
Short-term loan
Trading financial liabilities
Derivative financial liabilities
Notes payable 102953171.16 114437751.98
Accounts payable 109367315.26 293594334.82
Advances from customer
Contract liabilities 27371907.92 51073453.29
Payroll payable 14888641.90 26129332.92
Taxes payable 2599023.91 4029704.54
Other payables 49256238.57 48521459.02
Including: interest payable
Dividends payable
Liabilities held for sale
Non-current liabilities due within one
5620355.316036995.12
year
Other current liabilities 9674292.24 17818576.02
Total current liabilities 321730946.27 561641607.71
Non-current liabilities:
Long-term loan
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 3377514.34 4932540.65
Long-term payables
173ZKTeco 2024 Annual Report
Long-term payroll payable
Estimated liabilities 600000.00
Deferred income 11365.24 400966.62
Deferred tax liabilities 3443841.43 4529736.45
Other non-current liabilities
Total non-current liabilities 6832721.01 10463243.72
Total liabilities 328563667.28 572104851.43
Owner's equity:
Share capital 196312325.00 194679508.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2116684780.13 2085198988.61
Less: treasury stock 59683228.10 784700.00
Other comprehensive income
Special reserve
Surplus reserves 63911390.54 60364126.01
Undistributed profits 429659664.62 484336562.43
Total owner's equity 2746884932.19 2823794485.05
Total liabilities and owner's equity 3075448599.47 3395899336.48
3. Consolidated Income Statement
Unit: RMB
Item 2024 2023
I. Total operating revenue 1991200391.75 1970183682.34
Including: operating revenue 1991200391.75 1970183682.34
Interest income
Premium earned
Revenue from handling
charges and commissions
II. Total operating cost 1782774757.20 1753903528.91
Including: operating cost 1008242645.99 1004744536.42
Interest expenses
Expenses from handling
charges and commissions
Surrender value
Net payments for insurance
claims
Net provisions for reserves in
insurance liability contracts
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges 29265779.72 25645229.28
Selling expenses 446509619.84 441537714.42
Administrative expenses 117559541.39 122693501.96
174ZKTeco 2024 Annual Report
R&D expenses 215470991.40 213613414.56
Financial expenses -34273821.14 -54330867.73
Including: interest expenses 3871915.67 4114078.22
Interest income 42321327.95 59489145.42
Plus: other income 18367589.83 13382751.13
Investment income (loss
4195000.74-599875.51
expressed with "-")
Including: income from
investment in associates and joint 3001156.73 2800122.30
ventures
Gains from
derecognition of financial assets
measured at amortized cost
Gains from foreign exchange
(loss expressed with "-")
Gains from net exposure hedging
(loss expressed with "-")
Gains from changes in fair value
14859953.45755429.17
(loss expressed with "-")
Losses from credit impairment
-21206975.03-6426264.03
(loss expressed with "-")
Losses from impairment of assets
-7654897.66-3163733.31
(loss expressed with "-")
Gains from disposal of assets
-653718.36-129852.62
(loss expressed with "-")
III. Operating profit (loss expressed with
216332587.52220098608.26
"-")
Plus: non-operating revenue 5545326.30 834759.26
Less: non-operating expenditure 6513782.84 5760416.86
IV. Total profit (loss expressed with "-") 215364130.98 215172950.66
Less: income tax expenses 14832125.82 18328946.09
V. Net profit (loss expressed with "-") 200532005.16 196844004.57
(I) Classification by business
continuity
1. Net profit from continuing
200532005.16196844004.57
operations (net loss expressed with "-")
2. Net profit from discontinued
operations (net loss expressed with "-")
(II) Classification by ownership
1. Net profits attributable to
183045997.93177263675.15
shareholders of parent company
2. Minority shareholders' profit and
17486007.2319580329.42
loss
VI. Other comprehensive income - after
15860099.6423345735.16
tax
Net of tax of other comprehensive
income attributable to the owner of the 13913848.55 22750068.83
parent company
(I)Other comprehensive income that
cannot be transferred to profit or loss
175ZKTeco 2024 Annual Report
1. Changes in re-measurement of
the defined benefit plan
2. Other comprehensive income
that cannot be transferred to profit or loss
under the equity method
3. Changes in fair value of other
equity instrument investments
4. Changes in the fair value of the
Company's own credit risk
5. Other
(II) Other comprehensive income
13913848.5522750068.83
that will be reclassified into profit or loss
1. Other comprehensive income
that can be transferred to profit or loss
under the equity method
2. Changes in fair value of other
debt investments
3. Amount of financial assets
reclassified into other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
6. Translation difference of
13913848.5522750068.83
foreign currency financial statements
7. Others
After-tax net amount of other
comprehensive income attributable to the 1946251.09 595666.33
minority shareholders
VII. Total comprehensive income 216392104.80 220189739.73
Total comprehensive income
attributable to owners of the parent 196959846.48 200013743.98
company
Total comprehensive income
19432258.3220175995.75
attributable to minority shareholders
VIII. EPS
(I) Basic EPS 0.9496 0.9176
(II) Diluted EPS 0.9496 0.9133
In the event of a merger of enterprise under the same control in the current period the net profit realized by the combined party before
the merger is RMB 0.00 and the net profit realized by the combined party in the previous period is RMB 0.00.Legal Representative: Jin Hairong Person in charge of accounting work: Wang Youwu Person in charge of accounting institution: Xu
Ping
4. Parent Company's Profit Statement
Unit: RMB
Item 2024 2023
I. Operating revenue 1343903884.64 1434036070.91
Less: operating cost 1031003266.22 1039693858.09
Taxes and surcharges 7076042.43 6684004.73
Selling expenses 151644243.44 172098704.26
Administrative expenses 56626647.98 67623578.42
R&D expenses 115374818.03 144342341.95
176ZKTeco 2024 Annual Report
Financial expenses -30884427.41 -38859429.21
Including: interest expenses 478491.92 586120.76
Interest income 20496636.74 34186238.20
Plus: other income 7448445.44 3629196.23
Investment income (loss
11170810.7316583880.30
expressed with "-")
Including: income from
investment in associates and joint -239422.08 0.00
ventures
Derecognition of
income for financial assets measured at
amortized cost (loss expressed with "-")
Gains from net exposure hedging
(loss expressed with "-")
Gains from changes in fair value
3218077.9192617.82
(loss expressed with "-")
Losses from credit impairment
-7650167.42-2211851.80
(loss expressed with "-")
Losses from impairment of assets
-3026826.74-409714.74
(loss expressed with "-")
Gains from disposal of assets
-67696.60-179099.95
(loss expressed with "-")
II. Operating profit (loss expressed with
24155937.2759958040.53
"-")
Plus: non-operating revenue 2499437.54 435721.28
Less: non-operating expenditure 2171217.28 3911338.96
III. Total profits (total losses expressed
24484157.5356482422.85
with "-")
Less: income tax expenses -10988487.79 -8291752.76
IV. Net profit (net loss expressed with "-
35472645.3264774175.61
")
(I) Net profit from continuing
35472645.3264774175.61
operations (net loss expressed with "-")
(II) Net profit from discontinued
operations (net loss expressed with "-")
V. Net of tax of other comprehensive
income
(I) Other comprehensive income
that cannot be transferred to profit or loss
1. Changes in re-measurement of
the defined benefit plan
2. Other comprehensive income
that cannot be transferred to profit or loss
under the equity method
3. Changes in fair value of other
equity instrument investments
4. Changes in the fair value of the
Company's own credit risk
5. Other
(II) Other comprehensive income
that will be reclassified into profit or loss
177ZKTeco 2024 Annual Report
1. Other comprehensive income
that can be transferred to profit or loss
under the equity method
2. Changes in fair value of other
debt investments
3. Amount of financial assets
reclassified into other comprehensive
income
4. Provision for credit impairment
of other debt investments
5. Cash flow hedging reserve
6. Translation difference of
foreign currency financial statements
7. Others
VI. Total comprehensive income 35472645.32 64774175.61
VII. EPS:
(I) Basic EPS
(II) Diluted EPS
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2024 2023
I. Cash flows from operating activities:
Cash received from sale of goods and
2058756161.462033852451.38
rendering of services
Net increase in deposits from
customers and deposits in banks and
other financial institutions
Net increase in borrowings from the
Central Bank
Net increase in borrowings from banks
and other financial institutions
Cash received from receiving
insurance premiums of original insurance
contracts
Net cash received from reinsurance
business
Net increase in deposits and
investments from policyholders
Cash received from interest handling
fees and commissions
Net increase in borrowings from banks
and other financial institutions
Net capital increase in repurchase
business
Net cash received from vicariously
traded securities
Refund of taxes and surcharges 65423445.28 60737638.17
Cash received from other operating
269869995.0771161426.98
activities
Subtotal of cash inflows from operating 2394049601.81 2165751516.53
178ZKTeco 2024 Annual Report
activities
Cash paid for purchase of goods and
1111062232.721044071616.08
rendering of services
Net increase in loans and advances to
customers
Net increase in deposits in Central
Bank and other banks and financial
institutions
Cash paid for original insurance
contract claims
Net increase in lendings to banks and
other financial institutions
Cash paid for interest handling fees
and commissions
Cash paid for policy dividends
Cash paid to and for employees 567299000.71 561085387.58
Payments of all types of taxes 104157253.19 82583436.99
Other cash payments relating to
383194532.14242010185.67
operating activities
Subtotal of cash outflows from operating
2165713018.761929750626.32
activities
Net cash flows from operating activities 228336583.05 236000890.21
II. Cash flows from investing activities:
Cash received from disinvestment 1651783573.66 783138035.71
Cash received from investment
10815578.514208115.07
income
Net cash received from disposal of
fixed assets intangible assets and other 638811.45 321201.59
long-term assets
Net cash received from disposal of
3.91
subsidiaries and other business units
Cash received from other investing
activities
Subtotal of cash inflows from investing
1663237967.53787667352.37
activities
Cash paid to acquire and construct
fixed assets intangible assets and other 197709114.77 182155154.01
long-term assets
Cash paid for investments 1631334606.67 528151496.90
Net increase in pledge loans
Net cash paid to acquire subsidiaries
and other business units
Cash paid for other investing activities 0.00 8690555.00
Subtotal of cash outflows from investing
1829043721.44718997205.91
activities
Net cash flows from investing activities -165805753.91 68670146.46
III. Cash flows from financing activities:
Cash received from investors 23810988.13 25584824.02
Including: cash received by
subsidiaries from the absorption of 1490379.74 2430254.98
minority shareholders' investments
Cash received from borrowings 0.00 7938955.96
Cash received from other financing 0.00 137765650.54
179ZKTeco 2024 Annual Report
activities
Subtotal of cash inflows from financing
23810988.13171289430.52
activities
Cash paid for debt repayments 1293275.15 10237295.27
Cash paid for distribution of dividends
107434308.7480004680.35
and profits or payment of interest
Including: dividends and profits paid
20665840.5327714601.96
to minority shareholders by subsidiaries
Cash paid for other financing activities 91169472.06 147698460.04
Subtotal of cash outflows from financing
199897055.95237940435.66
activities
Net cash flows from financing activities -176086067.82 -66651005.14
IV. Effect of exchange rate changes on
10879013.091392263.39
cash and cash equivalents
V. Net increase in cash and cash
-102676225.59239412294.92
equivalents
Plus: beginning balance of cash and
1317020553.021077608258.10
cash equivalents
VI. Closing balance of cash and cash
1214344327.431317020553.02
equivalents
6. Cash Flow Statement of Parent Company
Unit: RMB
Item 2024 2023
I. Cash flows from operating activities:
Cash received from sale of goods and
1290725515.801394253617.34
rendering of services
Refund of taxes and surcharges 31620174.65 55671157.48
Cash received from other operating
242896415.3159485236.93
activities
Subtotal of cash inflows from operating
1565242105.761509410011.75
activities
Cash paid for purchase of goods and
917089300.581006446805.25
rendering of services
Cash paid to and for employees 213562250.93 248840477.65
Payments of all types of taxes 7939135.57 8266181.82
Other cash payments relating to
326219255.91274001567.18
operating activities
Subtotal of cash outflows from operating
1464809942.991537555031.90
activities
Net cash flows from operating activities 100432162.77 -28145020.15
II. Cash flows from investing activities:
Cash received from disinvestment 687213327.52 677121784.42
Cash received from investment
20224512.3224931563.69
income
Net cash received from disposal of
fixed assets intangible assets and other 14749016.67 178820.17
long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
activities
Subtotal of cash inflows from investing 722186856.51 702232168.28
180ZKTeco 2024 Annual Report
activities
Cash paid to acquire and construct
fixed assets intangible assets and other 21022612.56 24779496.76
long-term assets
Cash paid for investments 864683970.26 479932157.86
Net cash paid to acquire subsidiaries
and other business units
Cash paid for other investing activities 8690555.00
Subtotal of cash outflows from investing
885706582.82513402209.62
activities
Net cash flows from investing activities -163519726.31 188829958.66
III. Cash flows from financing activities:
Cash received from investors 22320608.39 23154569.04
Cash received from borrowings
Cash received from other financing
131789487.54
activities
Subtotal of cash inflows from financing
22320608.39154944056.58
activities
Cash paid for debt repayments 0.00 0.00
Cash paid for distribution of dividends
86602278.6051972217.85
and profits or payment of interest
Cash paid for other financing activities 66555713.14 120453358.00
Subtotal of cash outflows from financing
153157991.74172425575.85
activities
Net cash flows from financing activities -130837383.35 -17481519.27
IV. Effect of exchange rate changes on
7439355.96710387.29
cash and cash equivalents
V. Net increase in cash and cash
-186485590.93143913806.53
equivalents
Plus: beginning balance of cash and
875420293.96731506487.43
cash equivalents
VI. Closing balance of cash and cash
688934703.03875420293.96
equivalents
181ZKTeco 2024 Annual Report
7. Consolidated Statement of Changes in Equity
Amount in current period
Unit: RMB
2024
Equity attributable to owners of the parent company
Item Total Other equity instruments Less: Other General Minority
Share Capital Special Surplus Undistributed owner's
treasury comprehensive risk Others Subtotal interests
capital Preferred Perpetual Others reserve reserve reserves profits
equity
stock bonds stock income reserves
I. Ending 20754
194679784700.604554907583024.332654125375753290789
balance of 79375. 28000959.19
508.000022.5083589.204.08343.28
previous year 13
Plus:
changes in
accounting
policies
Correctio
ns of prior
period errors
Others
II. Beginning 20754
194679784700.604554907583024.332654125375753290789
balance of this 79375. 28000959.19
508.000022.5083589.204.08343.28
year 13
III. Amount
increase/decrea
se of the
163281318445889853547268493612275004.8721111
current period 13913848.55 92896454.80
7.00258.1028.104.5314.88969.84
(decrease
expressed with
"-")
(I) Total
183045997.919695919432252163921
comprehensive 0.00 0.00 0.00 13913848.55 0.00
3846.488.3204.80
income
182ZKTeco 2024 Annual Report
(II) Capital
--
invested and 163281 31844 588985 1545215.
0.000.000.002542142387623
reduced by the 7.00 258.10 28.10 27
53.007.73
owners
1. Common
--
stock 163281 20687 588985 1490379.
0.000.000.003657793508753
contributed by 7.00 791.39 28.10 74
19.719.97
owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
1115641115641121130
payments 0.00 0.00 0.00 0.00 0.00 54835.53
66.7166.712.24
recognized in
equity
4. Others
---
(III) Profit 354726 -
86602220665841072681
distribution 4.53 90149543.13
78.600.5319.13
1. Surplus
354726
reserves 0.00 0.00 0.00 0.00 -3547264.53 0.00 0.00 0.00
4.53
withdrawal
2. Withdrawal
of general risk
preparation
3. Distribution - - -
-
to owners (or 0.00 0.00 0.00 0.00 0.00 866022 2066584 1072681
86602278.60
shareholders) 78.60 0.53 19.13
4. Others
(IV) Internal
carryover of
183ZKTeco 2024 Annual Report
owner's equity
1. Capital
surplus transfer
to capital (or
equity capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve
offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained
earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal
in this period
2. Use in the
current period
1963371.1963371.
(VI) Others 0.00
9090
184ZKTeco 2024 Annual Report
IV. Ending 21073
196312596832640026100047947933503427650753378000
balance of 23633. 41914807.74
325.0028.1087.03.189704.089.04463.12
current period 23
Amount of previous period
Unit: RMB
2023
Equity attributable to owners of the parent company
Item Total Other equity instruments Less: Other General Minority
Share Capital Special Surplus Undistributed owner's
treasury comprehensive risk Others Subtotal interests
capital Preferre Perpetual reserve reserve reserves profits equity Others
d stock bonds stock income reserves
30574
I. Ending balance 148492 206117 53975 788571917.9 4302512 3100492
0.005255222.6567189.
of previous year 051.00 2912.28 085.77 8 6.30 315.98
68
Plus:
changes in 2919.1 195653 228390.7
0.000.000.00-4332.29197066.6632737.17
accounting 7 .54 1
policies
Corrections
of prior period
errors
Others
II. Beginning 30576
14849220611753978788768984.643057863100720
balance of this 0.00 5250890.36 62843.
051.002912.28004.9443.47706.69
year 22
III. Amount
increase/decrease
-
of the current 46187 143064 784700 64774 118814039.7 207750 1900686
22750068.831768210
period (decrease 457.00 62.85 .00 17.56 4 745.98 36.59
9.39
expressed with "-
")
(I) Total 177263675.1 200013 2017599 2201897
22750068.83
comprehensive 5 743.98 5.75 39.73
185ZKTeco 2024 Annual Report
income
(II) Capital
-
invested and 16398 592770 784700 60132 4998864
0.000.000.001014350
reduced by the 42.00 05.39 .00 147.39 4.21
3.18
owners
1. Common -
16398215147784700223691187029
stock contributed 0.00 0.00 0.00 1049957
42.0027.04.00869.043.94
by owners 5.10
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
36929236929356071.93728535
payments 0.00 0.00 0.00 0.00 0.00
84.99284.9926.91
recognized in
equity
832993.832993832993.3
4. Others 0.00 0.00 0.00 0.00 0.00 0.00
36.366
---
(III) Profit 64774 -
0.000.000.000.005197227714607968681
distribution 17.56 58449635.41
217.851.969.81
1. Surplus
64774
reserves 0.00 0.00 0.00 0.00 -6477417.56 0.00 0.00 0.00
17.56
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to - - -
-
owners (or 0.00 0.00 0.00 0.00 0.00 51972 2771460 7968681
51972217.85
shareholders) 217.85 1.96 9.81
4. Others
(IV) Internal 44547 -
carryover of 615.00 445476
186ZKTeco 2024 Annual Report
owner's equity 15.00
1. Capital surplus
-
transfer to capital 44547
445476
(or equity 615.00
15.00
capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
---
(VI) Others 422927. 422927 0.00 422927.5
54.544
19467920754778470060455907583024.33265425375753290789
IV. Ending 28000959.19
508.009375.13.00422.50813589.4.08343.28
187ZKTeco 2024 Annual Report
balance of 20
current period
8. Statement of Changes in Equity of the Parent Company
Amount in current period
Unit: RMB
2024
Other equity instruments
Item Less: Other Share Capital Special Surplus Undistributed Total owner's
Preferred Perpetual treasury comprehensive Others capital Others reserve reserve reserves profits equity
stock bonds stock income
I. Ending balance 194679508 20851989 784700.0 60364126 484336562.4 2823794485
of previous year .00 88.61 0 .01 3 .05
Plus:
changes in
accounting
policies
Corrections
of prior period
errors
Others
II. Beginning
19467950820851989784700.060364126484336562.42823794485
balance of this.0088.610.013.05
year
III. Amount
increase/decrease
of the current 1632817.0 31485791. 5889852 3547264. - -
period (decrease 0 52 8.10 53 54676897.81 76909552.86
expressed with "-
")
(I) Total
comprehensive 35472645.32 35472645.32
income
188ZKTeco 2024 Annual Report
(II) Capital
invested and 1632817.0 31485791. 5889852 -
0.000.00
reduced by the 0 52 8.10 25779919.58
owners
1. Common stock
1632817.020274489.5889852-
contributed by
0288.1036991221.82
owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
11211302.
payments 11211302.24
24
recognized in
equity
4. Others
(III) Profit 3547264. - -
distribution 53 90149543.13 86602278.60
1. Surplus
3547264.
reserves -3547264.53 0.00
53
withdrawal
2. Distribution to
--
owners (or
86602278.6086602278.60
shareholders)
3. Others
(IV) Internal
carryover of
owner's equity
1. Capital surplus
transfer to capital
(or equity
capital)
189ZKTeco 2024 Annual Report
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
19631232521166847596832263911390429659664.62746884932
balance of.0080.138.10.542.19
current period
Amount of previous period
Unit: RMB
Item 2023
190ZKTeco 2024 Annual Report
Other equity instruments Less: Other
Capital Special Surplus Undistributed Total owner's
Share capital Preferred Perpetual treasury comprehensive Others
Others reserve reserve reserves profits equity
stock bonds stock income
I. Ending balance 148492051. 207326902 53883789. 478054153.6 2753699015
of previous year 00 1.41 28 2 .31
Plus: changes
in accounting 2919.17 -42131.39 -39212.22
policies
Corrections
of prior period
errors
Others
II. Beginning
148492051.20732690253886708.478012022.22753659803
balance of this
001.41453.09
year
III. Amount
increase/decrease
of the current 46187457.0 11929967.2 784700. 6477417.5
6324540.2070134681.96
period (decrease 0 0 00 6
expressed with "-
")
(I) Total
comprehensive 64774175.61 64774175.61
income
(II) Capital
invested and 56477582.2 784700.
1639842.0057332724.20
reduced by the 0 00
owners
1. Common stock
21514727.0784700.
contributed by 1639842.00 22369869.04
400
owners
2. Capital
invested by
holders of other
191ZKTeco 2024 Annual Report
equity
instruments
3. Amount of
share-based
34962855.1
payments 34962855.16
6
recognized in
equity
4. Others
(III) Profit 6477417.5 - -
distribution 6 58449635.41 51972217.85
1. Surplus
6477417.5
reserves -6477417.56
6
withdrawal
2. Distribution to
--
owners (or
51972217.8551972217.85
shareholders)
3. Others
(IV) Internal -
44547615.0
carryover of 44547615.0 0.00
0
owner's equity 0
1. Capital surplus
-
transfer to capital 44547615.0
44547615.00.00
(or equity 0
0
capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
192ZKTeco 2024 Annual Report
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
194679508.208519898784700.60364126.484336562.42823794485
balance of
008.6100013.05
current period
193ZKTeco 2024 Annual Report
III. Basic Information of the Company
ZKTECO CO. LTD. (hereinafter referred to as "the Company" or "Company") formerly known as Dongguan ZKTeco Electronic
Technology Co. Ltd. was established on December 14 2007 by Che Jun and Che Quanhong with registration number
441900000160222 and registered capital of RMB 5000000.00 at the time of establishment. Approved by the Dongguan
Administration for Market Regulation the Company obtained the "Business License" with a unified social credit code of
914419006698651618 on July 14 2016. The Company was listed on the Shenzhen Stock Exchange on August 17 2022 and currently
holds a business license with a unified social credit code of 914419006698651618.As of December 31 2024 the Company has issued a total of 196312325 shares of share capital after years of converting into
share capital and issuing new shares with a registered capital of RMB 196312325. The registered address is: No. 32 Pingshan
Industrial Road Tangxia Town Dongguan Guangdong China. The parent company is Shenzhen ZKTeco Times Investment Co. Ltd.and the actual controller is Che Quanhong.The Company belongs to the computer communication and other electronic equipment manufacturing industries mainly engaged
in the R&D design production sales and services of computer vision and biometric technology and related products.These financial statements and the notes thereto were approved for issue by the Company's Board of Directors on April 21
2025.
IV. Preparation Basis for Financial Statements
1. Basis of preparation
The Financial Statements of the Company are prepared on the basis of the going-concern assumption in accordance with actual
transactions and events and complying with the Accounting Standards for Enterprises - Basic Standards various specific accounting
standards application guides of accounting standards for business enterprises interpretation of accounting standards for business
enterprises and disclosure rules of other relevant provisions (hereinafter refer to "Accounting Standards for Enterprises") issued by the
Ministry of Finance as well as the disclosure rules of the "Preparation Rules for Information Disclosure by Companies Offering
Securities to the Public No. 15 - General Provisions on Financial Reports (revised in 2023)" issued by the China Securities Regulatory
Commission.
2. Going concern
The Company has no events or circumstances that cause material doubts about the going-concern assumption within 12 months
from the end of the reporting period.V. Important Accounting Policies and Estimates
Tips of specific accounting policies and estimates:
The Company and its subsidiaries have based on their actual production and operation characteristics and in accordance with the
relevant provisions of the Accounting Standards for Enterprises designated several specific accounting policies and accounting
estimates for transactions and events such as revenue recognition depreciation of fixed assets and amortization of intangible assets.For specific accounting policies please refer to the relevant explanations in Section V(34) Section V(23) Section V(26) etc. of this
chapter.
194ZKTeco 2024 Annual Report
1. Declaration of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for Enterprises and
authentically and completely reflect financial position business performance cash flow and other relative information on the Company
during the reporting period.
2. Accounting period
The accounting year is from January 1 to December 31 in calendar year.
3. Operating cycle
The normal operating cycle refers to the period from the time when the Company purchases the assets for processing to the time
when the cash or cash equivalents are realized. The Company takes 12 months as its operating cycle and adopts it as its liquidity
division criteria for assets and liabilities.
4. Recording currency
Renminbi is adopted as the recording currency of the Company and the domestic subsidiaries. Overseas subsidiaries of the
Company use the currency of the main economic environment in which they operate as the recording currency and convert it into RMB
when preparing financial statements.The Company's financial statements are prepared by using RMB as currency.
5. Method for recognizing significance criteria and selection basis
□Applicable □ Not applicable
Item Significance criteria
The amount of individual construction in progress exceeds 1%
Important construction in progress
of the total assets
The amount of individual receivables exceeds 1% of the total
Receivables with individual provision for significant items
assets
Other important payables with an aging of over one year Other individual payables exceeding 1% of total assets
The amount of individual accounts payable exceeds 1% of the
Important accounts payable with an aging of over one year
total assets
Important partly-owned subsidiaries The proportion of total revenue and total profit exceeds 10%
The amount of individual prepayments exceeds 1% of the total
Important prepayments with an aging of over one year
assets
The amount of individual contract liabilities exceeds 1% of the
Important contract liabilities with an aging of over one year
total assets
The carrying amount of long-term equity investment exceeds
Important joint ventures or associates
5% of the total assets
The amount of cash flows from individual investing activities
Significant cash flows from investing activities
exceeds 1% of the total assets
6. Accounting treatment methods of business merger under the common control and merger under
different control
Business combination refers to the transactions or events which merger two or more than two separate businesses into one
reporting entity. Business combination involves entities under common control and not under common control.
195ZKTeco 2024 Annual Report
(1) Accounting treatment methods for merger of enterprises under the same control
The enterprises involved in the combination are subject to the same party or ultimate parties before and after the merger
meanwhile the control is not temporary this business combination is under the same control.In a business combination the assets and liabilities of the combined party except for adjustments made due to differences in
accounting policies shall be measured at their book values as reflected in the consolidated financial statements of the ultimate controller
on the combination date. The difference between the share of the book value of the owner's equity of the combined party in the
consolidated financial statements of the ultimate controller and the book value of the consideration paid for the consolidation (or the
total par value of the shares issued) shall be adjusted to the capital reserve; if the capital reserve is insufficient to offset the retained
earnings shall be adjusted.When a business combination under common control is achieved through multiple transactions in steps the difference between
the sum of the book value of the investment held before the combination and the book value of the new consideration paid on the
combination date and the book value of the net assets acquired in the combination shall be adjusted to the capital reserve (share
premium). If the capital reserve is insufficient to offset the difference the retained earnings shall be adjusted. For the long-term equity
investment held by the combining party before obtaining control of the combined party the gains or losses other comprehensive
income and other changes in owners' equity are recognized from the later date of the date on which the original equity was obtained
and the date on which both the combining party and the combined party were under the ultimate control of the same party until the
combination date. The opening retained earnings or current income or loss of the comparative reporting period shall be offset
respectively except for other comprehensive income from the remeasurement of the net liability or net asset of the defined benefit plan
of the investee.
(2) Accounting treatment methods for merger under different control
The enterprises involved in the combination are not subject to the same party or ultimate parties before and after the merger this
business combination is not under the same control.The difference between the merger cost and the fair value of the identifiable net assets obtained from the acquiree on the date of
acquisition is recognized as goodwill by the Company. The acquirer shall treat the balance between the combination costs and the fair
values of the identifiable net assets it obtains from the acquiree: it shall firstly reexamine the measurement of the fair values of the
identifiable assets liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs; and if after the
reexamination the combination costs are still less than the fair values of the identifiable net assets it obtains from the acquiree it shall
record the difference into the current profits and losses.If on the date of acquisition or at the end of the consolidation period due to various factors it is impossible to reasonably
determine the fair value of each asset paid as the consolidation consideration or the fair value of each identifiable asset and liability
obtained from the acquiree in the consolidation the Company will account for the business combination based on temporarily
determined values at the end of the consolidation period. If further information is obtained within 12 months from the date of acquisition
indicating that the originally provisionally determined value needs to be adjusted it shall be treated as if it occurred on the date of
acquisition and retroactive adjustments shall be made. At the same time relevant adjustments shall be made to the comparative
statement information provided on the basis of the provisional value. Adjustments to the cost of the business combination or the value
of identifiable assets and liabilities acquired in the combination made after 12 months from the date of acquisition shall be handled in
accordance with the principles set forth in "Accounting Standards for Enterprises No. 28 - Explanation of Changes in Accounting
Policies Accounting Estimates and Corrections of Errors".The deductible temporary differences of the acquiree obtained by the Company in a business combination that do not meet the
recognition conditions for deferred income tax assets on the date of acquisition shall not be recognized. Within 12 months after the
date of acquisition if new or further information is obtained indicating that the relevant circumstances on the date of acquisition already
existed and it is expected that the economic benefits brought by the deductible temporary differences of the acquiree on the date of
acquisition can be realized the related deferred income tax assets shall be recognized and at the same time the goodwill shall be
196ZKTeco 2024 Annual Report
reduced. If the goodwill is insufficient to offset the difference shall be recognized as current income or loss. Except for above situations
the deferred income tax assets recognized to be related to the business combination shall be included in current profits and losses.For a merger under different control that is achieved through multiple transactions in steps it shall be determined in accordance
with the Accounting Standards for Enterprises whether such multiple transactions constitute a "package deal". The terms conditions
and economic impact of multiple transactions meet one or more of the following situations which typically indicate that the multiple
transaction matters should be accounted for as a package deal: (1) These transactions were entered into simultaneously or taking into
account mutual influence; (2) These transactions as a whole can achieve a complete business result; (3) The occurrence of a transaction
depends on the occurrence of at least one other transaction; (4) A transaction alone is not economical but it is economic when
considered with other transactions.If the transaction belongs to a "package deal" each transaction shall be treated as a transaction to obtain control for accounting
treatment. If the transaction is not a "package deal" the equity in the acquiree held before the date of acquisition in the consolidated
financial statements shall be remeasured at its fair value as of the date of acquisition and the difference between the fair value and the
book value shall be recognized in the current investment income or retained earnings. The portion of equity in the acquiree held before
the date of acquisition involving other comprehensive income and other changes in the owner' equity shall be converted into the current
income on the date of acquisition except for other comprehensive income from the remeasurement of the net liability or net asset of
the defined benefit plan of the investee.
(3) Treatment of transaction costs in business combinations
The agency fees and other related administrative expenses of the auditing legal services assessment consulting incurred for the
business combination shall be included in current profits and losses when incurred. The transaction costs of the equity securities or
debt securities as consideration for the merger shall be included in the initial recognition amount of the equity securities or debt
securities.
7. Judgment criteria for control and preparation methods for consolidated financial statements
(1) Judgment criteria for control and consolidation scope
The scope of consolidation of the consolidated financial statement is determined by whether the Company has the power to control
over other entities. Control refers to the control power of the Company over the investee. Through the control the Company can obtain
variable return by participating in relevant activities of the investee and can affect the return amount by using the control power over
the investee. The scope of consolidation includes the Company and its subsidiaries. A subsidiary refers to an entity (including
enterprises separable parts of an investee structured entities etc.) that is controlled by the Company.
(2) Preparation methods for consolidated statements
The Company prepares consolidated statements based on the financial statements of itself and its subsidiaries and other relevant
information. The Company prepares consolidated financial statements treating the entire enterprise group as one accounting entity. In
accordance with the recognition measurement and presentation requirements of relevant Accounting Standards for Enterprises and
in accordance with unified accounting policies we reflect the overall financial position operating results and cash flows of the
Company.When consolidating financial statements we offset the impact of internal transactions between the Company and its subsidiaries as
well as between subsidiaries on the consolidated balance sheet consolidated income statement consolidated cash flow statement
and the consolidated statement of changes in equity. If the recognition of the same transaction from the perspective of the
consolidated financial statements of the enterprise group is different from that of the accounting entity of the Company or its
subsidiaries the transaction shall be adjusted from the perspective of the enterprise group.During the reporting period subsidiaries and businesses added due to the merger of enterprises under the same control are treated
as having been included in the Company's consolidation scope since the date they were under the control of the ultimate controller.Their operating results and cash flows since that date are respectively incorporated into the consolidated income statement and
consolidated cash flow statement. During the reporting period the opening balances of the consolidated balance sheet are adjusted
197ZKTeco 2024 Annual Report
simultaneously and the relevant items of the comparative statements are also adjusted. This is treated as if the consolidated statement
entity had existed since the time when the ultimate controller began to exercise control.In the current period if a subsidiary is added due to a merger under different control the opening balance of the consolidated
balance sheet shall not be adjusted; Adjustments shall be made to the financial statements according to the fair values of the identifiable
assets on the date of acquisition. the income expenses and profits of subsidiaries from the date of acquisition to the end of the reporting
period are incorporated into the consolidated income statement; the cash flows of subsidiaries from the date of acquisition to the end
of the reporting period are included in the consolidated cash flow statement.The minority shareholders' equity profit or loss and current comprehensive income of subsidiaries shall be separately presented
under the owner's equity items in the consolidated balance sheet the net profit item in the consolidated income statement and the total
comprehensive income item respectively. If the current losses shared by a minority shareholder of a subsidiary exceed the balances
arising from the shares enjoyed by the minority shareholder in the owners' equity of the subsidiary at the beginning of the period
minority shareholders' equity will be offset accordingly.
(3) Partial disposal of subsidiary equity in the acquisition of minority shareholders' equity without loss of control
For the difference between the newly increased long-term equity investment from the acquisition of minority equity of the
Company and the share of net assets in subsidiaries calculated constantly from the date of acquisition or the combination date as per
the newly increased equity ratio as well as the difference between the disposal price obtained from the partial disposal of equity
investment in subsidiaries without lose of control and the share of net assets continuously calculated by subsidiaries from the date of
acquisition or the combination date corresponding to the disposal of long-term equity investment shall be adjusted for the share
premium in the capital reserve in the consolidated balance sheet. If the share premium in the capital reserve is insufficient to offset the
retained earnings shall be adjusted.
(4) Disposal of subsidiary equity with loss of control
In the current period if the Company disposed of a subsidiary the income expenses and profits of the subsidiary from the
beginning of the period to the disposal date were included in the consolidated income statement; the cash flow of the subsidiary from
the beginning of the period to the disposal date is included in the consolidated cash flow statement. In the event the Company loses the
right of control over the original subsidiary due to disposal of partial equity investment or other reasons the remaining equity
investment shall be re-measured at the fair value on the date of loss of control. The difference by using the sum of value received from
disposal of equity and fair value of the residual equity to deduct the difference between the share of net assets and the sum of goodwill
continually counted from the date of acquisition of the original subsidiary (calculated as per original share proportion) shall be recorded
into the investment income of the current period in which the control right is lost. While losing of the control right other comprehensive
income related to the equity investment of the original subsidiary shall be subject to the accounting treatment (i.e. except for the changes
caused by the original subsidiary remeasuring the net liabilities or net assets outside the defined benefit plan the rest shall be converted
to the current investment income together) by adopting the same basis used by acquiree for direct disposal of relevant assets or liabilities.Thereafter the follow-up measurement for the remaining equity in this portion shall be carried out according to the Accounting
Standards for Enterprises No. 2 - Long-term Equity Investments or Accounting Standards for Business Enterprises No. 22 -
Recognition and Measurement of Financial Instruments and other related provisions. Refer to "Important Accounting Policies and
Estimates - Long-term Equity Investments" or "Important Accounting Policies and Estimates - Financial Instruments" for details.
(5) Treatment of step-by-step disposal of equity investment in subsidiaries until control is lost
Where the Company disposes the equity of the subsidiaries through several transactions by steps until it loses the right of control
it is necessary to distinguish whether all transactions for disposal of the equity of the subsidiaries and losing the right of control are the
package deal.If all transactions involving the disposal of equity investment in subsidiaries until the loss of control right are treated as a package
deal the Company shall treat each transaction as the one involving the disposal of subsidiaries and the loss of control right for
accounting treatment. However the difference between each disposal price and the share of the subsidiary's net assets corresponding
198ZKTeco 2024 Annual Report
to the investment disposal before the loss of control right shall be recognized as other comprehensive income in the consolidated
financial statements and shall be transferred into the current profits and losses when the control right is lost.For these transactions not belonging to package deal the accounting treatment for each transaction shall be conducted in
accordance with the applicable principles of "Disposal of Partial Long-Term Equity Investment to Subsidiary under the Condition of
Not Losing Control Right" and "Losing Control Right over the Original Subsidiary due to Disposal of Partial Equity Investment or
Other Reasons" (see previous paragraph for details). That is before losing control the difference between each disposal price and the
share of the book value of the net asset of the subsidiary continuously calculated from the date of acquisition corresponding to the
disposed investment shall be treated as an equity transaction and recorded in capital reserve (share premium). It shall not be transferred
to the profit or loss of the period when control is lost.
8. Classification of joint venture arrangement and accountant treatment method of joint operation
A joint venture arrangement is an arrangement jointly controlled by two or more participants. The Company classifies joint venture
arrangements as joint operations or joint ventures based on the rights and obligations it enjoys and assumes in the joint venture
arrangements.A joint venture refers to a joint venture arrangement in which the Company has rights only to the net assets of the arrangement.The Company accounts for its investment in the joint venture using the equity method in accordance with the accounting policies for
"Long-term equity investment calculated by using the equity method" as described in the section "Important Accounting Policies and
Estimates - Long-term Equity Investments".Joint operation refers to the joint venture arrangement in which the Company enjoys the assets related to the arrangement and
undertakes the liabilities related to the arrangement. The Company confirms the following items related to the share of interests in joint
operations and conducts accounting treatment in accordance with the relevant Accounting Standards for Enterprises:
(1) The Company shall recognize the assets held alone and the jointly held assets according to the Company's share;
(2) The Company shall recognize the liabilities borne alone and the jointly borne assets according to the Company's share;
(3) Recognize the income generated by the sale of the Company's share of joint operating output;
(4) Recognize the income generated by the sale of output in the joint operation according to the Company's share;
(5) Recognize the expenses incurred separately and the expenses incurred in joint operation according to the Company's share.
When the Company as a joint venture contributes or sells assets to a joint operation (such assets do not constitute a business the
same below) or purchases assets from a joint operation before such assets are sold to a third party the Company only recognizes the
portion of the gains or losses arising from such transactions that belong to the other participating parties of the joint operation. In the
event that such assets suffer impairment losses in accordance with the provisions of "Accounting Standards for Enterprises No. 8 -
Asset Impairment" and other relevant regulations for the situation where the Company invests or sells assets to a joint operation the
Company shall fully recognize the loss. For the situation where the Company purchases assets from the joint operation the Company
recognizes the loss based on its share of the undertaking.
9. Recognition criteria of cash and cash equivalents
When preparing the cash flow statement the Company recognizes the cash on hand and deposits that can be used for payment at
any time as cash. Cash equivalents refer to investments held by enterprises with short term (generally due within 3 months from the
date of acquisition) strong liquidity easy conversion to a known amount of cash and small risk of value change.
199ZKTeco 2024 Annual Report
10. Foreign currency transactions and foreign currency statement translation
(1) Foreign currency transaction
For foreign currency transactions that occur the spot exchange rate on the transaction date (usually referring to the middle rate of
the foreign exchange rate announced by the People's Bank of China on that day the same below) is used to convert them into the
recording currency for accounting purposes. However for foreign currency exchange transactions or transactions involving foreign
currency exchange that occur within the Company they should be converted into the amount of the recording currency based on the
actual exchange rate adopted.
(2) Translation methods of foreign currency monetary items and non-monetary items
The foreign currency monetary items on the balance sheet date are translated at the spot exchange rate on the balance sheet date;
the resulting exchange differences are included in current profits and losses except for: 1) The exchange differences arising from
special foreign currency borrowings related to the acquisition and construction of assets eligible for capitalization which are treated in
accordance with the principle of capitalization of borrowing costs; 2) The exchange differences of hedging instruments used for
effective hedging of net investments in foreign operations (such differences are included in other comprehensive income and are
recognized in profit or loss only when the net investment is disposed of); and 3) The exchange differences arising from the changes in
the book balances other than the amortized cost of foreign currency monetary items measured at fair value with changes recognized in
other comprehensive income which shall be included in current profits and losses.Non-monetary items denominated in foreign currencies and translated at the balance sheet date are still measured at historical
costs using the spot exchange rates at the date of the transactions. Foreign currency non-monetary items measured at fair value shall
be translated at the spot exchange rate on the date when the fair value is determined. After conversion the difference between the
amount of recording currency and the amount of the original recording currency shall be included in current profits and losses or other
comprehensive income.
(3) Foreign currency statement translation
The asset items and liability items in the balance sheet shall be translated at the exchange rate of the balance sheet date; the owner's
equity items except for "undistributed profits" shall be translated at the spot rate when incurred; the income and expense items in the
income statement are translated at the average spot exchange rate; the undistributed profits at the beginning of the year are the
undistributed profits at the end of the previous year after conversion. the undistributed profits at the end of the year are calculated and
presented based on the converted profit distribution items. The translation differences of foreign currency financial statements from
conversion with the method mentioned above are reflected in "Other comprehensive income" under the shareholders' equity item on
the balance sheet. When disposing of overseas operation and losing the control it is required to transfer the differences in foreign
currency statement translation listed under the shareholders' equity in the balance sheet and related to the overseas operation completely
or as per the proportion of disposal of such overseas operation into the current profits and losses. If the reduction of the proportion of
interests held overseas but not losing control over overseas operations is resulted from the disposing of partial equity investment or
other reasons the translation balance of foreign currency financial statements related to such overseas operations shall be vested in
minority equity and will not be transferred to current profits and losses.The cash flow statement is translated at the average exchange rate of the period in which the cash flows occur. The impact of
exchange rate changes on cash is taken as a reconciliation item and the item "impact of exchange rate changes on cash and cash
equivalents" is separately presented in the Statement of Cash Flows.
11. Financial instruments
Financial instruments refer to contracts that create a financial asset for one party and a financial liability or an equity instrument
for another party. Financial instruments include financial assets financial liabilities and equity instruments.
(1) Classification recognition basis and measurement method of financial instruments
Recognition and initial measurement of financial assets and financial liabilities
200ZKTeco 2024 Annual Report
A financial asset or financial liability is recognized when the Company becomes a party to a financial instrument contract. For the
purchase of financial assets in the conventional way the Company recognizes the assets to be received and the liabilities to be assumed
on the trading day.Financial assets and financial liabilities are measured at fair value at initial recognition. For financial assets measured at fair value and
whose changes are included in the current profits and losses transaction costs shall be directly included in current profits and losses.For financial assets and financial liabilities classified into other categories transaction costs shall be included into the initial recognized
amounts. For accounts receivable that do not have a significant financing component at initial recognition they are initially measured
at the transaction price determined in accordance with the revenue recognition method described in the "Important Accounting Policies
and Estimates - Revenue".
2) Classification and subsequent measurement of financial assets
According to the business model of the financial assets under management and the contractual cash flow characteristics of the financial
assets the Company divides the financial assets into three categories: financial assets measured at the amortized cost financial assets
measured at fair value and whose changes are included in other comprehensive income and financial assets measured at fair value and
whose changes are included in the current profits and losses.* Financial assets measured at the amortized cost
Financial assets measured at the amortized cost refer to financial assets that simultaneously meet the following conditions: The
business model of the Company in managing such financial assets is aimed at collecting contractual cash flows; the contract terms of
the financial asset provide that the only cash flows generated on a particular date are payments of principal and interest based on the
principal amount outstanding.This type of financial asset is measured at the amortized cost using the effective interest rate method after initial recognition. Any
gains or losses arising therefrom are included in current profits and losses upon derecognition amortization in accordance with the
effective interest rate method or impairment recognition.The amortized cost of a financial asset shall be determined by adjusting the initial recognition amount of the financial asset as
follows: deducting the principal repaid; plus or minus the accumulated amortization amount formed by amortizing the difference
between the initial recognition amount and the maturity amount using the effective interest rate method; deducting the accumulated
loss provisions.The effective interest rate method refers to the method of calculating the amortized cost of financial assets or financial liabilities
and allocating interest income or interest expenses to each accounting period. Actual interest rate refers to the interest rate used to
discount the estimated future cash flows of a financial asset or financial liability over its expected lifespan into the book balance of the
financial asset or the amortized cost of the financial liability. When determining the actual interest rate the Company estimates the
expected cash flow based on all contract terms of financial assets or liabilities (such as early repayment extension call options or
other similar options) but does not consider expected credit losses.The interest income is calculated and determined by multiplying the book balance of the financial asset by the effective interest
rate by the Company except for the following circumstances: For the purchased or originated financial asset with credit impairment
the interest income is calculated and determined according to the amortized cost of the financial asset and the effective interest rate
after credit adjustment from the initial recognition. For the financial asset purchased or originated without credit impairment but with
credit impairment in the subsequent period the interest income shall be calculated and determined according to the amortized cost and
the effective interest rate of the financial asset. If the credit risk of the financial instrument improves in subsequent periods and no
longer has credit impairment and this improvement can be objectively linked to an event that occurs after the application of the above
provisions interest income shall be determined by multiplying the actual interest rate by the book balance of the financial asset.* Financial assets measured at fair value and whose changes are included in other comprehensive income
Financial assets measured at fair value and whose changes are included in other comprehensive income refer to the financial assets
that simultaneously meet the following conditions: * The financial asset is managed by the Company within a business model whose
objective is both to collect the contractual cash flows and to sell the financial asset. * The contractual terms of the financial asset
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provide that the only cash flows generated on a particular date are payments of principal and interest based on the principal amount
outstanding.This type of financial asset is subsequently measured at fair value after initial recognition. Interest impairment losses or gains and
exchange gains and losses calculated using the effective interest rate method are included in current profits and losses while other
gains or losses are included in other comprehensive income. At the derecognition the accumulated gains or losses previously included
in other comprehensive incomes are transferred and included in current profits and losses.For non-trading equity instrument investments the Company may irrevocably designate them as financial assets measured at fair
value and whose changes are included in other comprehensive income at initial recognition. This designation is made on the basis of a
single non-trading equity instrument investment and the relevant investment conforms to the definition of an equity instrument from
the perspective of the issuer of the instrument. Such investments after their initial designation have all gains or losses (including
exchange gains and losses) other than dividends received that are included in current profits and losses (except for the portion that
represents the recovery of the investment cost) included in other comprehensive income. At the derecognition the accumulated profits
and losses previously included in other comprehensive incomes are transferred from there to the retained earnings.* Financial assets measured at fair value and whose changes are included in the current profits and losses
Financial assets other than above * and * are classified by the Company as financial assets measured at fair value and whose
changes are included in the current profits and losses. At the time of initial recognition the Company may irrevocably designate certain
financial assets as financial assets measured at fair value and whose changes are included in the current profits and losses in order to
eliminate or significantly reduce accounting mismatch. Where the contingent consideration recognized by the Company in a business
combination not under the same control constitutes a financial asset the financial asset shall be classified as a financial asset measured
at fair value and whose changes are included in the current profits and losses.This type of financial asset is subsequently measured at fair value after initial recognition and the gains or losses are included in
current profits and losses.
3) Classification and subsequent measurement of financial liabilities
The Company classifies financial liabilities into financial liabilities measured at fair value and whose changes are included in the
current profits and losses financial liabilities arising from the transfer of financial assets where the conditions for derecognition are
not met or where the Company continues to be involved in the transferred financial assets financial guarantee contracts and financial
liabilities measured at amortized costs.* Financial liabilities measured at fair value and whose changes are included in the current profits and losses
Financial liabilities measured at fair value and whose changes are included in the current profits and losses include trading
financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities designated at fair value with changes
included in current profits and losses. In a business combination not under common control if the Company as the acquirer recognizes
contingent consideration as a financial liability such financial liability shall be accounted for at fair value with changes included in
current profits and losses.Financial liabilities measured at fair value and whose changes are included in the current profits and losses are subsequently
measured at fair value after initial recognition and the resulting gains or losses are included in current profits and losses.The changes in the fair value of financial liabilities measured at fair value and whose changes are included in the current profits
and losses due to changes in the Company's own credit risk are included in other comprehensive income unless such treatment would
cause or increase an accounting mismatch in profit or loss. Other changes in fair value of the financial liabilities are included in current
profits and losses. At the derecognition the accumulated profits and losses previously included in other comprehensive incomes are
transferred from there to the retained earnings.* The transfer of financial assets does not meet the conditions for derecognition or continues to involve financial liabilities
formed by the transferred financial assets.This type of financial liabilities is measured in accordance with the method described in "Recognition basis and measurement
method of financial asset transfer" of the "Important Accounting Policies and Estimates - Financial Instruments".
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* Financial guarantee contract
A financial guarantee contract refers to a contract in which the Company is required to pay a specific amount to the contract holder
who has suffered losses when the specific debtor is unable to pay its debts at maturity in accordance with the terms of the original or
revised debt instrument.Financial guarantee contracts that do not fall under either of the above circumstances * or * shall be subsequently measured
after initial recognition at the higher of the following two amounts: the loss allowance amount determined in accordance with the
"Impairment of Financial Instruments" in the "Important Accounting Policies and Estimates - Financial Instruments"; the balance
after deducting the accumulated amortization amount determined in accordance with the revenue recognition method described in the
"Important Accounting Policies and Estimates - Revenue" from the initial recognition amount.* Financial liabilities measured at amortized costs
Except for the situations described in * * and * above the Company classifies all other financial liabilities as financial
liabilities measured at amortized costs.This type of financial liabilities is measured at the amortized cost using the effective interest rate method after initial recognition.Any gains or losses arising therefrom are included in current profits and losses upon derecognition or amortization in accordance with
the effective interest rate method.
4) Equity instruments
Equity instrument refers to a contract that can prove that the Company has the remaining equity in the assets after deducting all
liabilities. The Company's issuance (including refinancing) repurchase sale or cancellation of equity instruments shall be treated as
changes in equity. Transaction costs related to equity transactions are deducted from equity. Any distribution of interests (exclusive of
dividends) paid to equity holders by the Company is deducted from shareholders' equity. The Company does not recognize changes in
the fair value of equity instruments.
(2) Recognition basis and measurement method for transfer of financial assets
The transfer of financial assets refers to the act of the Company assigning or delivering financial assets (or their cash flows) to a
party other than the issuer of such financial assets. The derecognition of financial assets refers to the removal of previously recognized
financial assets from the Company's balance sheet.Financial assets that meet one of the following conditions shall be derecognized by the Company: 1) The contractual right to
receive the cash flow of the financial asset is terminated; 2) The financial asset has been transferred and almost all risks and rewards
of the ownership of the financial asset have been transferred to the transferee; 3) The financial asset has been transferred. Although the
Company has neither transferred nor retained almost all the risks and rewards of the ownership of the financial asset it has given up
control of the financial asset.If the Company neither transfers nor retains almost all the risks and rewards of the ownership of financial assets and does not
give a control of the financial assets the relevant financial assets shall be recognized according to the degree of continued involvement
in the transferred financial assets and the relevant liabilities shall be recognized accordingly. The degree of continued involvement in
the transferred financial assets refers to the level of risk faced by the enterprise due to changes in the value of the financial assets.If the entire transfer satisfies the derecognition criteria the difference between the following amounts shall be included in current
profits and losses: 1) The book value of the transferred financial asset on the date of derecognition; 2) The sum of the consideration
received for the transfer of financial assets and the amount corresponding to the derecognized part of the cumulative fair value changes
originally recognized in other comprehensive income. Where the partial transfer of financial assets meets the conditions for
derecognition the book value of the transferred financial assets as a whole shall be apportioned between the derecognized part and the
non-derecognized part according to their respective relative fair values and the difference between the following two amounts shall be
included in current profits and losses: 1) The book value of the derecognized part on the date of derecognition; * The sum of the
consideration received from the derecognized part and the amount corresponding to the derecognized part of the cumulative fair value
changes originally recognized in other comprehensive income. For non-trading equity instruments designated by the Company as
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measured at fair value with changes included in other comprehensive income if the transfer of the entire or part of such instruments
meets the conditions for derecognition the difference calculated by the above method shall be included in retained earnings.
(3) Conditions for derecognition of financial liabilities
If the current obligation of a financial liability (or part of it) has been discharged the recognition of the financial liability (or part
of it) shall be terminated by the Company. When the Company (the borrower) enters into an agreement with the lender to replace an
existing financial liability with a new one and the contract terms of the new financial liability are substantially different from those of
the original one the original financial liability shall be derecognized and a new financial liability shall be recognized simultaneously.When the Company makes substantive modifications to the contract terms of the original financial liability (or a portion thereof) it
derecognizes the original financial liability and simultaneously recognizes a new financial liability in accordance with the modified
terms.Where a financial liability (or part thereof) is derecognized the Company shall include the difference between its book value and
the consideration paid (including non-cash assets transferred out or liabilities assumed) in current profits and losses. If the Company
repurchases a portion of its financial liabilities the overall book value of the financial liability shall be allocated based on the proportion
of the fair value of the continuously recognized part and the derecognized part on the repurchase date to the overall fair value. The
difference between the book value distributed to the derecognized part and the consideration paid (including non-cash assets transferred
out or liabilities undertaken) shall be included in current profits and losses.
(4) Determination of fair value of financial instruments
The methods for determining the fair value of financial assets and financial liabilities are described in the "Important
Accounting Policies and Estimates - Fair Value".
(5) Impairment of financial instruments
The Company performs impairment and recognizes loss provisions on financial assets measured at the amortized cost contract
assets debt instrument investments measured at fair value with changes recognized in other comprehensive income lease receivables
and financial guarantee contracts as described in "Classification and subsequent measurement of financial liabilities" of the "Important
Accounting Policies and Estimates - Financial Instruments" based on expected credit losses. Expected credit losses refer to the
weighted average value of credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference
between all contractual cash flows receivable from the contract and all cash flows expected to be received by the Company at the
original effective interest rate that is the present value of all cash shortages.For financial assets purchased or originated by the Company that have suffered credit impairment only the cumulative changes
in expected credit losses during the whole duration after initial recognition are recognized as loss reserves on the balance sheet date.For receivables or contract assets that do not contain significant financing components and are generated in transactions as
specified in the "Accounting Standards for Enterprises No. 14 - Revenue" the Company uses a simplified measurement method to
measure loss preparations based on the amount of expected credit losses equivalent to the entire duration of the life.For financial instruments other than those measured by the above-mentioned methods the Company measures loss provisions in
accordance with the general approach and assesses at each balance sheet date whether the credit risk has significantly increased since
initial recognition. If the credit risk of a financial instrument has not significantly increased since initial recognition and is in the first
stage the Company measures the loss provisions at an amount equal to the expected credit losses over the next 12 months. If the credit
risk has significantly increased since initial recognition but no credit impairment has occurred and the asset is in the second stage the
Company measures the loss provisions at the amount of expected credit losses over the entire duration. If a financial asset has
experienced credit impairment since its initial recognition and is in the third stage the Company measures the loss provisions at the
amount of expected credit losses over the entire duration.Expected credit losses over the entire remaining term refer to the expected credit losses resulting from all possible default events
that may occur throughout the entire duration of a financial instrument. The expected credit loss in the next 12 months refers to the
expected credit loss caused by the possible default of financial instruments within 12 months after the balance sheet date (if the expected
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duration of financial instruments is less than 12 months it is the expected duration) which is part of the expected credit losses for the
whole duration.Considering all reasonable and well-grounded information including forward-looking information the Company determines the
relative changes of default risk of the financial instrument that occurred in the duration by comparing the risk of default of the financial
instrument on the balance sheet date with the risk of default on the initial recognition date to assess whether credit risk of the financial
instrument has been increased significantly since the initial recognition. For financial instruments where sufficient evidence regarding
a significant increase in the credit risk cannot be obtained at a reasonable cost at the individual instrument level the Company considers
and assesses whether the credit risk has significantly increased on a portfolio basis. If the Company determines that a financial
instrument has only a low credit risk as of the balance sheet date it is assumed that the credit risk of the financial instrument has not
significantly increased since its initial recognition.The Company re-measures expected credit losses on each balance sheet date. The increase or reversal amount of the loss provision
formed thereby is included in current profits and losses as impairment loss or gain. For financial assets measured at the amortized cost
the loss provision offsets the book value of the financial asset as presented on the balance sheet. For debt instrument investments
measured at fair value with changes recognized in other comprehensive income the Company recognizes loss provisions in other
comprehensive income and does not reduce the book value of the financial asset as presented in the balance sheet.
(6) Offset of financial assets and financial liabilities
When the Company has the legal right to offset the recognized financial assets and financial liabilities and is currently capable
of executing such legal rights and the Company plans to settle the financial assets and liquidate the financial liabilities at the same
time. the financial assets and the amount of financial liabilities are shown in the balance sheet after the offsetting. In addition
financial assets and financial liabilities are listed separately in the balance sheet and are not offset against each other.
12. Fair value
Fair value refers to the price receivable by the market participant from selling an asset or transferring a liability in an ordered
transaction on the date of measurement. The Company measures the relevant assets or liabilities at fair value assuming that the orderly
transactions for the sale of assets or transfer of liabilities take place in the principal market for the relevant assets or liabilities. If there
is no main market the Company assumes that the transaction is conducted in the most favorable market for the relevant assets or
liabilities. The principal market (or the most advantageous market) is the trading market that the Company can access on the
measurement date.The Company adopts valuation techniques that are applicable under the current circumstances and supported by sufficient
available data and other information. The Company considers the ability of market participants to generate economic benefits by using
the asset for its best use or by selling it to other market participants who can use it for its best use. Priority is given to using relevant
observable input values. Only when observable input values cannot be obtained or it is not feasible to obtain them do we use
unobservable input values.Assets and liabilities measured or disclosed at fair value in the financial statements are classified into fair value levels based on
the lowest level input value that is significant to the overall fair value measurement: The first level input value is an unadjusted quote
for the same asset or liability that can be obtained on the measurement date in an active market; the second level input value is an input
value that is directly or indirectly observable for related assets or liabilities other than the first level input value including quotes for
similar assets or liabilities in an active market; quotes for identical or similar assets or liabilities in a non-active market; observable
inputs other than quoted prices including interests and yield curves that are observable during the normal quote interval; the third level
input value is an unobservable input for the relevant assets or liabilities including interest rates stock volatility future cash flows of
the abandonment obligations assumed in business combinations and financial forecasts made using one's own data which cannot be
directly observed or verified by observable market data. On each balance sheet date the Company re-evaluates the assets and liabilities
that are recognized in the financial statements and measured at fair value on a continuing basis to determine whether there has been a
transfer between fair value measurement levels.
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13. Notes receivable
(1) Determination method and accounting treatment method of expected credit losses of notes receivable
The Company determines the expected credit losses of notes receivable and makes accounting treatment in accordance with the
simplified measurement method as described in "Impairment of Financial Instruments" of the "Important Accounting Policies and
Estimates - Financial Instruments". On the balance sheet date the credit loss of the notes receivable is measured at the present value
of the difference between the contractual cash flows receivable and the expected cash flows to be received. The Company conducts
separate impairment tests on notes receivable with significantly different credit risk characteristics and estimates expected credit losses.The remaining notes receivable are classified into several groups based on credit risk characteristics. The expected credit losses are
estimated on the portfolio basis with reference to the historical credit loss experience based on the current situation and considering
forward-looking information.
(2) Combination categories for bad debt reserves based on credit risk characteristics and the determination basis
Portfolio Name Basis for determining portfolio
The acceptor has a high credit rating has not defaulted on bills in history has
Banker’s acceptance portfolio extremely low credit loss risk and has a strong ability to fulfill its cash flow
obligations under payment contracts in the short term
Commercial acceptance bill
According to the credit rating of the acceptor.portfolio
The comparison table between the aging of commercial acceptance bills and the expected credit loss rate is as follows:
Aging Expected credit loss rate of notes receivable (%)
Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
(3) Calculation method of aging of the credit risk characteristic combination confirmed by aging
The Company calculates the aging of notes receivable based on the principle of first in first out.
(4) Criteria for determining the bad debt reserve made individually
The Company conducts separate impairment tests on notes receivable with significantly different credit risk characteristics such
as a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of credit impairment.
14. Accounts receivable
(1) Determination method and accounting treatment method of expected credit losses of accounts receivable
The Company determines the expected credit losses of accounts receivable and makes accounting treatment in accordance with
the simplified measurement method as described in "Impairment of Financial Instruments" of the "Important Accounting Policies and
Estimates - Financial Instruments". On the balance sheet date the credit loss of the accounts receivable is measured at the present value
of the difference between the contractual cash flows receivable and the expected cash flows to be received. The Company conducts
separate impairment tests on accounts receivable with significantly different credit risk characteristics and estimates expected credit
losses. The remaining accounts receivable are classified into several groups based on credit risk characteristics. The expected credit
losses are estimated on the portfolio basis with reference to the historical credit loss experience based on the current situation and
considering forward-looking information.
(2) Combination categories for bad debt reserves based on credit risk characteristics and the determination basis
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Portfolio Name Basis for determining portfolio
Accounts receivable from related parties within the scope of the Company's
Related party portfolio
consolidated financial statements
Aging portfolio Including accounts receivable other than the above portfolio
The comparison table between the aging of aging portfolios and the expected credit loss rate is as follows:
Aging Expected credit loss rate of accounts receivable (%)
Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
(3) Calculation method of aging of the credit risk characteristic combination confirmed by aging
The Company calculates the aging of accounts receivable based on the principle of first in first out.
(4) Criteria for determining the bad debt reserve made individually
The Company conducts separate impairment tests on accounts receivable with significantly different credit risk characteristics
such as a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of credit impairment.
15. Other receivables
(1) Determination method and accounting treatment method of expected credit losses of other receivables
The Company determines the expected credit losses of other accounts receivable and makes accounting treatment in accordance
with the general method as described in "Impairment of Financial Instruments" of the "Important Accounting Policies and Estimates -
Financial Instruments". On the balance sheet date the credit loss of other accounts receivable is measured at the present value of the
difference between the contractual cash flows receivable and the expected cash flows to be received. The Company conducts separate
impairment tests on other accounts receivable with significantly different credit risk characteristics and estimates expected credit losses.The remaining accounts receivable are classified into several groups based on credit risk characteristics. The expected credit losses are
estimated on the portfolio basis with reference to the historical credit loss experience based on the current situation and considering
forward-looking information.
(2) Combination categories for bad debt reserves based on credit risk characteristics and the determination basis
Portfolio Name Basis for determining portfolio
Aging portfolio Other receivables classified by age with similar credit risk characteristics.
(1) All kinds of security deposit and cash pledge related to production and
operation projects and can be recovered at the expiration of the period;
Portfolio of deposits security deposits
(2) Employee provisions and collection and payment on behalf of others;
employee loans export tax refunds etc.
(3) Taxes and fees for the goods to be recovered when declared for export
according to the tax policy.This portfolio includes accounts receivable from subsidiaries within the
Related party portfolio
consolidation scope.The comparison table between the aging of aging portfolios and the expected credit loss rate is as follows:
Aging Expected credit loss rate of other receivables (%)
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Within 1 year 5.00
1-2 years 10.00
2-3 years 30.00
Over 3 years 100.00
(3) Calculation method of aging of the credit risk characteristic combination confirmed by aging
The Company calculates the aging of other accounts receivable based on the principle of first in first out.
(4) Criteria for determining the bad debt reserve made individually
The Company conducts separate impairment tests on other accounts receivable with significantly different credit risk
characteristics such as a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of
credit impairment.
16. Contract assets
(1) Methods and standards for the recognition of contract assets
Contract assets refer to the right of the Company to receive consideration for the transfer of goods to customers and the right
depends on other factors other than the passage of time. The Company's unconditional (i.e. only depending on the time lapses) right
to collect consideration from the customers shall be listed as receivables.The Company offsets contract assets and contract liabilities under the same contract and presents them on a net basis.
(2) Impairment of contract assets
1) Determination methods and accounting treatment methods of the expected credit losses of contract assets
The Company determines the expected credit losses of contract assets and makes accounting treatment in accordance with the
simplified measurement method as described in "Impairment of Financial Instruments" of the "Important Accounting Policies and
Estimates - Financial Instruments". On the balance sheet date the credit loss of the contract assets is measured at the present value of
the difference between the contractual cash flows receivable and the expected cash flows to be received. The Company conducts
separate impairment tests on contract assets with significantly different credit risk characteristics and estimates expected credit losses.The remaining contract assets are classified into several groups based on credit risk characteristics. The expected credit losses are
estimated on the portfolio basis with reference to the historical credit loss experience based on the current situation and considering
forward-looking information.
2) Combination categories for impairment provisions based on credit risk characteristics and the determination basis
Portfolio Name Basis for determining portfolio
Other accounts receivable classified by age with similar
Aging portfolio
credit risk characteristics
3) Calculation method of aging of the credit risk characteristic combination confirmed by aging
The Company calculates the aging of contract assets based on the principle of first in first out.
4) Criteria for determining the impairment provisions made individually
The Company conducts separate impairment tests on contract assets with significantly different credit risk characteristics such as
a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of credit impairment.
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17. Inventories
(1) Inventory category valuation method for issuing inventory inventory taking system amortization method for low value
consumables and packaging materials
1) Inventories include finished products or commodities held by the Company for sale in daily activities products in process of
production materials consumed in the process of production or provision of labor services in-transit materials consigned processing
materials and contract performance costs.
2) Enterprises measure inventories at actual cost. * The cost of purchased inventory is the procurement cost of such inventory.
The cost of inventory obtained through further processing consists of the procurement cost and processing cost. * In debt restructuring
when the debtor uses inventory to settle debts the entry value of the inventory should be determined based on the fair value of the
creditor's claim waived and the directly attributable taxes and fees incurred to bring the inventory to its current location and condition.* On the premise that the non-monetary asset exchange has commercial substance and the fair value of the assets received or
exchanged can be reliably measured the entry value of the inventory received from the non-monetary asset exchange is usually
determined based on the fair value of the exchanged assets unless there is conclusive evidence that the fair value of the exchanged
assets is more reliable; for non-monetary asset exchanges that do not meet the above conditions the book value of the exchanged assets
and the relevant taxes and fees payable shall be used as the cost for the inventory received. 4) The entry value of the inventory obtained
by absorption and merger of enterprises under the same control shall be determined according to the book value of the combined party;
the entry value of the inventory obtained by absorption and merger of enterprises not under the same control shall be determined at fair
value.
3) The cost of inventory issued by the enterprise is measured by the weighted average method.
4) Amortization method for low value consumables and packaging materials
* Low value consumables are amortized by the one-off write-off method;
* Packaging materials are amortized by the one-off write-off method;
* Other turnover materials are amortized using the one-off write-off method.
5) Inventory taking system of the company is a perpetual inventory system.
(2) Recognition conditions and accrual method of inventory depreciation reserves
On the balance sheet date inventories are measured at the lower of their costs and net realizable value. The net realizable value
of the inventory is based on the amount that the estimated selling price of the inventory subtracts the estimated cost selling expenses
and relevant taxes and fees occurring in the future. Confirmation of net realizable value should be based on the strong evidence for
acquisition and ownership of the inventory while taking into consideration the purpose of holding inventories as well as the effects of
the event after the balance sheet date. Except where there is clear evidence that the market price on the balance sheet date is abnormal
the net realizable value of inventory items at the end of the current period is determined based on the market price on the balance sheet
date among which:
1) For goods inventories directly used for sale such as finished products goods and materials for sale during the normal
production and operation process the net realizable value shall be recognized by the estimated selling expenses of the inventory minus
the estimated selling and distribution expenses and related taxes;
2) For material inventories to be processed during the normal production and operation process the net realizable value shall be
recognized by the estimated selling price of the finished products produced minus the estimated costs to be incurred upon completion
estimated selling expenses and relevant taxes. On the balance sheet date if a portion of the same inventory has a contract price
agreement and other parts do not have a contract price their net realizable value shall be determined separately and compared with
their corresponding costs to determine the amount of provision or reversal for inventory depreciation reserves.At the end of the period the inventory falling price reserves are accrued according to individual inventory items; however for
the inventory with large quantity and low unit price the inventory falling price reserves shall be accrued according to the inventory
category; and for inventories that are related to product series produced and sold in the same region have the same or similar end use
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or purpose and are difficult to be measured separately from other items the inventory falling price reserves shall be accrued on a
consolidated basis.After the provision for inventory write-down if the factors causing any write-down of the inventories do not exist any more and
the net realizable value of inventory is higher than its book value it shall be reversed in the amount of original provision for inventory
write-down. The reversed amount shall be included in the current profits and losses.
18. Held-for-sale assets
(1) Criteria for classification as held-for-sale assets
If the Company recovers the book value mainly by selling (including non-monetary assets exchange with commercial essence
the same below) rather than continuously using one non-current asset or disposal group it shall divide it into the held-for-sale category
when the following conditions are met:
1) In accordance with the practice of selling such assets or disposal groups in similar transactions they can be sold immediately
under current conditions;
2) Their sales are very likely to happen that is the Company has already made a resolution on a sales plan and obtained a certain
purchase commitment and their sales are expected to be completed within one year. The sale shall be approved by relevant authorities
or regulator according to the requirements of pertinent regulations has been approved. The determined purchase commitment refers to
the legally binding purchase agreement signed between the Company and other parties which contains important clauses such as
transaction price time and sufficiently severe penalty for breach of contract so that the possibility of major adjustment or cancellation
of the agreement is extremely small.If the Company loses control over a subsidiary due to the sale of its investment in the subsidiary or other reasons the overall
investment in the subsidiary shall be classified as held for sale in the parent company's individual financial statements when the
proposed investment in the subsidiary meets the criteria for classification as held for sale. In the consolidated financial statements all
assets and liabilities of the subsidiary are classified as held for sale.When non-current assets or disposal groups held for sale no longer meet the classification criteria for held-for-sale assets the
Company ceases to classify them as held-for-sale assets. If some assets or liabilities are removed from a disposal group held for sale
and the remaining assets or liabilities in the disposal group form a new disposal group that still meets the classification criteria for held-
for-sale assets the Company will classify the new disposal group as held-for-sale assets. Otherwise non-current assets that meet the
classification criteria for held-for-sale assets will be classified as held-for-sale assets individually.For non-current assets or disposal groups that first meet the classification criteria for held-for-sale assets in the current period the
balance sheet of comparable accounting periods shall not be adjusted.
(2) Initial measurement and subsequent measurement of held-for-sale non-current assets or disposal groups
For non-current assets or disposal groups that are classified as held for sale on the acquisition date the initial measurement amount
and the net amount of fair value (assuming that they are not classified as held for sale) minus selling expenses shall be compared and
the lower amount shall be measured at the initial measurement. Except for non-current assets or disposal groups obtained in a business
combination the difference arising from the initial measurement amount being the net amount of fair value minus selling expenses of
non-current assets or disposal groups is included in current profits and losses.Before the Company initially classifies a non-current asset or a disposal group as held for sale it measures the book values of the
individual assets and liabilities within the non-current asset or disposal group in accordance with the relevant accounting standards.When the Company initially measures or remeasures the non-current assets or disposal groups held for sale on the balance sheet date
if the book value is higher than the net value of fair value minus selling expenses the book value shall be written down to the net value
of fair value minus selling expenses and the amount written down shall be recognized as losses from impairment of assets and included
in current profits and losses. At the same time provision for impairment of held-for-sale assets shall be made. The non-current assets
held for sale or the non-current assets of the disposal group are not depreciated or amortized and the interest on debt and other fees of
the disposal group held for sale shall be recognized further.
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For the amount of losses from impairment of assets recognized by the disposal group held for sale the book value of goodwill in
the disposal group shall be offset first and then the book value shall be offset proportionally according to the proportion of the book
value of non-current assets measured and stipulated in the "Accounting Standards for Business Enterprises No. 42 - Non-Current Assets
Held for Sale Disposal Group and Termination of Business of the Disposal Group" (hereinafter referred to as No. 42 Standard) in the
disposal group. When the Company remeasures the disposal group held for sale on the balance sheet date it first measures the book
values of the assets and liabilities in the disposal group that are not subject to the measurement provisions of No. 42 Standard in
accordance with the relevant accounting standards and then conducts accounting treatment in accordance with the above-mentioned
relevant provisions.If the net amount of the fair value of non-current assets held for sale minus the selling expenses increases on the subsequent
balance sheet date the amount previously written down shall be restored and reversed within the amount of losses from impairment of
assets recognized after being classified as held for sale and the reversed amount shall be included in current profits and losses. The
impairment loss of assets recognized before being classified as held for sale is not reversed.If the net amount of the fair value of the disposal group held for sale minus the selling expenses increases on the subsequent
balance sheet date the amount previously written down shall be restored and reversed within the amount of losses from impairment of
assets recognized for non-current assets to which the measurement provisions of No. 42 Standard are applicable after being classified
as held for sale and the reversed amount shall be proportionally increased to the book value of each non-current asset in the disposal
group excluding goodwill in accordance with the proportion of the book value of such assets to the total book value of the disposal
group as measured under the applicable provisions of No. 42 Standard and the reversed amount shall be included in current profits
and losses. The book value of goodwill that has been offset and the losses from impairment of assets shall not be reversed before they
are classified as held for sale.
(3) Derecognition and measurement of non-current assets or disposal groups classified as held for sale
When non-current assets or disposal groups are no longer classified as held for sale categories or non-current assets are removed
from the disposal groups held for sale because they no longer meet the classification conditions of held for sale categories they shall
be measured according to the lower of the following two: (1) The book value before being divided into held-for-sale category should
have been recognized to be the amount after adjustments such as depreciation amortization or impairment based on the situation in
case it is not divided into the held-for-sale category; (2) Recoverable amount.When the Company terminates the recognition of non-current assets or disposal groups held for sale the unrecognized gains or
losses shall be included in the current profits and losses.
(4) Conditions for discontinued operations
Discontinued operations are components that meet one of the following conditions and can be distinguished separately and have
been disposed of or classified as held for sale:
1) This component represents an independent main business or a separate main business area;
2) This component is part of an associated plan to dispose an independent main business or a separate main business area;
3) This component is a subsidiary acquired exclusively for resale.
(5) Presentation of discontinued operations
Disposal groups intended for disposal by ceasing use rather than by sale that meet the definition of discontinued operations in
terms of components shall be presented as discontinued operations from the date of cessation of use. When the Company loses control
over a subsidiary due to the sale of its investment in the subsidiary or other reasons and the subsidiary meets the definition of
discontinued operations the relevant gains or losses from discontinued operations shall be presented in the consolidated financial
statements. In the income statement the adjustment amount of the gain or loss from the disposal of discontinued operations shall be
presented as the gain or loss from discontinued operations.When non-current assets or disposal groups are no longer classified as held for sale or when non-current assets are removed from
a disposal group classified as held for sale the Company reports the adjustment amount of the book value of the non-current assets or
disposal groups in the current income statement as a component of continuing operations. When the Company's investments in
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subsidiaries joint operations joint ventures associates or certain investments in joint ventures or associates are no longer classified
as held for sale or removed from a disposal group classified as held for sale the Company adjusts the comparative data of the
comparable accounting periods in the current financial statements accordingly after such classification as held for sale.Impairment losses or reversals and gains or losses from disposal of non-current assets or disposal groups held for sale that do not
meet the definition of discontinued operations are presented as part of continuing operations. Operating profit and loss and disposal
profit and loss such as impairment loss and reversal amount of discontinued operations are presented as discontinued operating profit
and loss.For the discontinued operations presented in the current period the Company will re present the information originally presented
as the profit and loss from continuing operations as the profit and loss from discontinued operations in the comparable accounting
period in the current financial statements. If the discontinued operation no longer meets the classification criteria for the held-for-sale
assets the Company shall in the current financial statements reclassify the information previously presented as discontinued operation
gains or losses as continuing operation gains or losses for the comparable accounting periods.
19. Debt investment
The Company determines the expected credit losses of debt investments and makes accounting treatment in accordance with the
general method as described in "Impairment of Financial Instruments" of the "Important Accounting Policies and Estimates - Financial
Instruments". On the balance sheet date the Company measures the credit loss of debt investments by the present value of the difference
between the contractual cash flows receivable from each individual debt investment and the expected cash flows to be received.
20. Long-term receivables
The Company determines the expected credit losses of lease receivables and long-term receivables with significant financing
components formed by transactions regulated by the "Accounting Standards for Enterprises No. 14 - Revenue" in accordance with the
simplified measurement method described in "Impairment of Financial Instruments" of the "Important Accounting Policies and
Estimates - Financial Instruments". For other long-term receivables the expected credit losses are determined and accounted for in
accordance with the general method described in "Impairment of Financial Instruments" of the "Important Accounting Policies and
Estimates - Financial Instruments". On the balance sheet date the Company measures the credit loss of long-term receivables based
on the present value of the difference between the contractual cash flows receivable and the expected cash flows receivable for each
individual long-term receivable.
21. Long-term equity investment
The long-term equity investment referred to in this section means the long-term equity investment of the Company in the investee
over which the Company has control joint control or significant impact including equity investments in subsidiaries joint ventures
and associates.
(1) Judgment standard for common control and significant impact
Common control refers to the sharing of control over a certain arrangement under related agreements while related activities of
such arrangement must be recognized only with the unanimous consent of the parties involved in the sharing of control. Where the
Company and other joint parties have common control over an investee and are entitled to the net assets of the investee such investee
shall be a joint venture of the Company. When determining whether there is joint control the protective rights enjoyed are not taken
into account.Significant impact refers to the situation where the Company has the power to participate in the financial and operating decisions
of an enterprise but cannot control individually or jointly with other parties the formulation of these policies. Where the Company is
able to have material influences on an investee such investee shall be its associates. When determining whether it can exert significant
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impact on the investee the impact of the investor's direct or indirect holding of the voting shares of the investee and the current
enforceable potential voting rights held by the investor and other parties on the assumption of conversion into equity of the investee
including the impact of the current convertible warrants share options and convertible corporation bonds issued by the investee.
(2) Determination of the initial investment cost of long-term equity investment
1) In case of a business combination under the same control if the combining party pays cash transfers non-cash assets assumes
debts or issues equity securities as the combination consideration the initial investment cost shall be the share of the book value of the
owner's equity of the combined party in the ultimate controller's consolidated financial statements on the combination date. The
difference between the initial investment cost of long-term equity investment and the cash paid the book value of non-cash assets
transferred the book value of debts assumed or the total par value of shares issued shall be adjusted to the capital reserve. if the capital
reserve is insufficient to offset the retained earnings shall be adjusted. If the equity of the combined party under common control is
obtained step by step through multiple transactions and the business merger under common control is finally formed whether it belongs
to a "package deal" shall be dealt with respectively: if it belongs to a "package deal" each transaction shall be accounted for as a
transaction to obtain control. If it does not belong to the "package deal" on the combination date the initial investment cost of the
long-term equity investment shall be the share of the book value of the shareholders' equity of the combined party in the consolidated
financial statements of the ultimate controller. The capital reserve shall be adjusted according to the difference between the initial
investment cost of the long-term equity investment and the sum of the book value of the long-term equity investment before the merger
plus the book value of the new payment consideration for the shares further obtained on the merger date; if the capital reserve is
insufficient to offset the retained earnings shall be adjusted. Other comprehensive income recognized for equity investment held before
the combination date due to equity method accounting or other equity instrument investments is not subject to accounting treatment
for the time being.
2) In case of a business combination under different control the Company recognizes the combination cost recognized on the date
of acquisition as the initial investment cost of long-term equity investment. The combination cost refers to the fair value of the assets
paid liabilities incurred or assumed and equity securities issued by the acquirer on the date of acquisition for the purpose of acquiring
the control over the acquiree. The agency fees and other related administrative expenses of the auditing legal servicesassessment
consulting incurred by the acquirer for the business combination shall be included in current profits and losses when incurred. The
transaction costs of the equity securities or debt securities issued by the acquirer as consideration for the merger shall be included in
the initial recognition amount of the equity securities or debt securities. The Company treats the contingent consideration stipulated in
the combination agreement as part of the consideration transferred in the business combination and includes it in the cost of the business
combination at its fair value on the date of acquisition. For a merger under different control that is achieved through multiple
transactions in steps it shall be determined in accordance with the Accounting Standards for Enterprises whether such multiple
transactions constitute a "package deal". If the transaction belongs to a "package deal" each transaction shall be treated as a transaction
to obtain control for accounting treatment. If it does not belong to the "package deal" the sum of the book value of the equity investment
originally held by the acquiree and the new investment cost shall be used as the initial investment cost of the long-term equity
investment calculated by the cost method. If the originally held equity is accounted for by the equity method the relevant other
comprehensive income will not be accounted for temporarily. For equity investments that were previously classified as other equity
instruments the difference between their fair value and book value as well as the accumulated fair value changes previously recorded
in other comprehensive income shall be directly transferred to retained earnings.
3) For other equity investments except long-term equity investments formed through business combinations they are initially
measured at cost: If they are acquired by paying cash the actual purchase price paid shall be taken as the initial investment cost. If they
are acquired by issuing equity securities the fair value of the equity securities issued shall be taken as the initial investment cost. The
expenses directly related to the issuance of equity securities shall be determined in accordance with the relevant provisions of the
"Accounting Standards for Business Enterprises No. 37 - Presentation of Financial Instruments". On the premise that the non-monetary
asset exchange has commercial substance and the fair value of the assets received or exchanged and the tariffs payable can be reliably
measured the initial investment cost of the long-term equity investment received from the non-monetary asset exchange is determined
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based on the fair value of the exchanged assets unless there is conclusive evidence that the fair value of the exchanged assets is more
reliable; for non-monetary asset exchanges that do not meet the above conditions the book value of the exchanged assets and the
relevant taxes and fees payable shall be used as the initial investment cost for the long-term equity investment received. The initial
investment cost of long-term equity investments obtained through debt restructuring shall be determined based on the fair value of the
creditor's rights given up. Costs taxes and other necessary expenses directly related to the acquisition of long-term equity investments
are also included in the cost of investment.If the investment can be added for material influence or common control on the investee but without control the cost of long-term
equity investment shall be the sum of the fair value of the originally held equity investment determined as per the "Accounting
Standards for Enterprises No. 22 - Recognition and Measurement of Financial Instruments" and the additional investment cost. It shall
be used as the initial investment cost accounted for using the equity method. For equity investments that were previously classified as
other equity instruments the difference between their fair value and book value as well as the accumulated fair value changes
previously recorded in other comprehensive income shall be directly transferred to retained earnings.
(3) Subsequent measurement and profit or loss recognition methods for long-term equity investments
1) Long-term equity investments accounted for using the cost method
Long-term equity investments of subsidiaries of the Company are accounted for using the cost method. Except the declared but
not released cash dividends or profits which are included in actual amount or consideration paid for acquiring investments the profit
distribution or cash dividends declared by the investees are recognized as the investment income for current period.
2) Long-term equity investment accounted for using equity method
Long-term equity investments in associates and joint ventures are accounted for using the equity method.When equity method is adopted in accounting if the cost of initial investment of long-term equity investment exceeds identifiable
fair value of net assets of investees sharable at investment the initial investment cost of long-term equity investment shall not be
adjusted. If the initial investment cost of long-term equity investment is less than the fair value share of the identifiable net assets of
the investee at the time of investment the difference shall be included in current profits and losses and the cost of long-term equity
investment shall be adjusted accordingly. After the long-term equity investment is acquired if the accounting policies and accounting
periods adopted by the investee entity are inconsistent with the Company the financial statements of the investee shall be adjusted
according to the accounting policies and accounting periods of the Company and the investment profits and losses and other
comprehensive income shall be recognized. The investment income and other comprehensive income shall be recognized respectively
according to the share of net profit and loss and other comprehensive income realized by the investee that should be enjoyed or shared
and the book value of the long-term equity investment shall be adjusted. In recognition of the share of the net profit or loss of the
investee entity the net profit of the investee shall be adjusted and confirmed on the basis of the fair value of the identifiable assets of
the investee entity when the investment is made. The Company shall calculate the attributable part according to the profits or cash
dividends declared to be distributed by the investee and reduce the book value of long-term equity investment accordingly; the
Company shall adjust the book value of long-term equity investment and include it in the owner's equity for other changes in the
owner's equity of the investee other than net profits and losses other comprehensive income and profit distribution. The unrealized
profits or losses arising from the intra-company transactions amongst the Company and its associates and joint ventures are eliminated
in proportion to the Company's equity interest in the associates and joint ventures and then based on which the investment income is
recognized. The internal trading losses incurred but not realized between the Company and the investees belonging to asset impairment
losses shall be recognized in full amount.When the Company confirms that it shall share the losses incurred by the investee it shall handle them in the following order:
firstly offset the book value of long-term equity investments. Secondly if the book value of long-term equity investments is not
sufficient to offset investment losses shall be recognized to the extent of other long-term equity book values that essentially constitute
net investments in the investee and the book value of long-term accounts receivable shall be offset. Finally after the above processing
if the enterprise still bears additional obligations as stipulated in the investment contract or agreement the expected liabilities shall be
recognized based on the expected obligations and included in the current investment loss. If the investee entity realizes the net profit
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in the later period the Company will resume the recognition of the revenue after the unrecognized loss share has been made up by the
revenue share.During the holding period of the investment if the investee prepares consolidated financial statements the calculation shall be
based on the amount attributable to the investee in the net profit other comprehensive income and other changes in owner's equity in
the consolidated financial statements.If the assets invested by the Company to the joint venture or associate constitute the business and the investor obtains the long-
term equity investment but does not obtain the control right the fair value of the investment business shall be taken as the initial
investment cost of the new long-term equity investment and the difference between the initial investment cost and the book value of
the investment business shall be fully included in current profits and losses. If the assets sold by the Company to joint ventures or
associates constitute a business the difference between the consideration obtained and the book value of the business shall be included
in current profits and losses. If the assets acquired by the Company from associates or joint ventures constitute a business the
accounting treatment shall be carried out in accordance with the "Accounting Standards for Business Enterprises No. 20 – Business
Combinations" and the gains or losses related to the transaction shall be recognized in full.
(4) Disposal of long-term equity investments
When disposing of long-term equity investment the balance between the book value and actual price for acquisition shall be
included into the current profits and losses.
1) Disposal of long-term equity investment accounted for using the equity method
For long-term equity investments accounted for using the equity method if the remaining equity is still accounted for using the
equity method after disposal the accounting treatment for the portion originally recognized in other comprehensive income shall be
carried out on the same basis as the direct disposal of relevant assets or liabilities by the investee in a corresponding proportion when
the investment is disposed of. The owner's equity which is recognized by the fluctuation of the investee's other owner's equity except
for the net profit or loss other comprehensive income and profit distribution shall be carried over into the current profits and losses as
per the proportion.If the Company loses joint control or significant influence on the investee due to the disposal of part of the equity investment the
remaining equity after the disposal shall be accounted for in accordance with the financial instrument recognition and measurement
standards. The difference between the fair value and the book value on the day when the joint control or significant influence is lost is
included in current profits and losses. The other comprehensive income recognized by the original equity investment due to the equity
method is used for accounting treatment on the same basis as the direct disposal of related assets or liabilities by the investee when the
equity method is terminated. All the owner's equity recognized due to the changes in the owner's equity of the investee other than net
profit or loss other comprehensive income and profit distribution shall be transferred to the current profit or loss in full when the equity
method of accounting is no longer adopted.
2) Disposal of long-term equity investment accounted for using the cost method
For long-term equity investments that are accounted for by the cost method and the remaining equity is still accounted for by the
cost method after disposal other comprehensive income recognized by the equity method accounting or the Recognition and
Measurement of Financial Instruments before obtaining the control over the invested company shall be accounted for on the same basis
as the direct disposal of related assets or liabilities by the investee and shall be carried forward to the current profits and losses in
proportion. Changes in other owner's equity other than net profit or loss other comprehensive income and profit distribution in the net
assets of the investee recognized by the equity method shall be carried forward to the current profit and loss in proportion.Where the Company's shareholding ratio decreases due to capital increase by other investors resulting in the loss of control but
the ability to exercise joint control or significant influence over the investee the Company shall recognize its share of the increase in
the investee's net assets resulting from the capital increase based on the new shareholding ratio. The difference between this amount
and the book value of the long-term equity investment corresponding to the decreased shareholding ratio shall be included in current
profits and losses. Then adjustments shall be made as if the equity method had been applied since the acquisition of the investment in
accordance with the new shareholding ratio.
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If the Company loses control over a subsidiary due to the disposal of part of its equity investment or other reasons and the
remaining equity after disposal can jointly control or exert significant influence over the investee it shall be accounted for using the
equity method. The remaining equity shall be adjusted as if it had been accounted for using the equity method since the date of
acquisition. The other comprehensive income and other owner's equity recognized due to the equity method accounting for the equity
investment held before the date of acquisition shall be carried forward proportionally; if the remaining equity after disposal cannot
exercise joint control or have a significant impact on the investee in the preparation of individual financial statements the accounting
treatment shall be carried out in accordance with the relevant provisions of the "Accounting Standards for Enterprises No. 22 -
Recognition and Measurement of Financial Instruments". The difference between the fair value and the book value on the date of loss
of control shall be included in current profits and losses. Other comprehensive income and owner's equity shall be carried forward to
the current profit and loss.The Company disposes of equity investment in subsidiaries step by step through multiple transactions until the loss of control. If
the above transactions belong to a package deal each transaction shall be accounted for as a transaction to dispose of equity investment
in subsidiaries and lose control. Before the loss of control the difference between each disposal price and the book value of long-term
equity investment corresponding to the disposed equity shall be recognized as other comprehensive income when the control right is
lost it will be transferred to the current profits and losses of the control right.
22. Investment real estate
Measurement model of investment real estate
Cost method measurement
Depreciation or amortization method
The investment real estate refers to the properties held for earning rentals or capital appreciation or both including the land use
right which has already been leased out land use right which is held for transfer after its appreciation and buildings which have already
been leased out (including buildings that have been constructed or developed for the purpose of leasing and buildings that are being
constructed or developed for the purpose of leasing).Investment real estate is initially measured at cost and subsequently measured using the cost model. Expenditures related to
investment real estate can be incorporated into their cost if the potential economic benefits related to them are likely to flow into the
Company and their cost can be reliably measured. Otherwise subsequent expenditures should be recognized in current profits and
losses in which they are incurred.For investment real estate measured under the cost model depreciation or amortization is provided for using the same methods as
those for fixed assets and intangible assets.When the use of investment real estate changes to self-use from the date of change the investment real estate shall be converted
into fixed assets or intangible assets and the book value before conversion shall be taken as the entry value after conversion. When the
use of self-used real estate or inventory changes to earning rents or capital appreciation from the date of change fixed assets intangible
assets or inventory shall be converted into investment real estate and the book value before conversion shall be taken as the entry value
after conversion.The impairment test method and impairment provision method for investment real estate are detailed in "Long-term assets
impairment" of the "Important Accounting Policies and Estimates".If the investment real estate is disposed or permanently withdrawn from use and is expected to be unable to obtain economic
benefits from its disposal the confirmation of the investment real estate shall be terminated. The amount of proceeds on sale transfer
retirement or damage of any investment real estate net of the book value of the investment real estate and the relevant taxes shall be
accounted as current profit & loss.
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23. Fixed assets
(1) Recognition conditions
Fixed assets mean the tangible assets held for producing commodities providing services renting or operating
management with a service life in excess of one accounting year.No fixed asset may be recognized unless it simultaneously satisfies the following conditions: 1) The economic benefits relating
to the fixed asset are likely to flow into the enterprise; and 2) Cost of such fixed assets can be measured reliably. Subsequent
expenditures related to fixed assets that meet the recognition criteria shall be included in the cost of fixed assets Expenditures that do
not meet the above conditions shall be included in current profits and losses when incurred.
(2) Depreciation methods
Depreciation Life Annual depreciation
Category Depreciation method Residual value rate (%)
(year) rate (%)
Houses and buildings Straight-line method 20-50 5 1.90-4.75
Machinery equipment Straight-line method 5-10 5 9.50-19.00
Transportation vehicles Straight-line method 3-5 5 19.00-31.67
Electronic equipment
Straight-line method 4 5 23.75
and others
Descriptions:
1) For the decoration expenses of fixed assets that meet the capitalization conditions depreciation is separately accrued using the
straight-line method over the shorter period between the intervals of two renovations and the remaining useful life of the fixed assets.
2) The depreciation rate of fixed assets with provision for impairment shall also be calculated and determined by deducting the
cumulative amount of provision for impairment of fixed assets.
3) The Company shall at least review the useful life and estimated net residual value and depreciation method of fixed assets at
the end of year. Any change shall be accounted for as the change in accounting estimate.
24. Construction in process
Construction in progress is recognized when it is probable that economic benefits will flow in and the cost can be measured
reliably. Construction in progress is measured at the actual cost incurred before the asset reaches its expected conditions for use.Construction in progress is transferred to fixed assets when it reaches the expected conditions for use according to the actual
project cost. For those that have reached the expected conditions for use but have not yet been subjected to final accounts they shall
be transferred to fixed assets based on the estimated value. After the final accounts are processed the original estimated value shall be
adjusted based on the actual cost but the depreciation already calculated shall not be adjusted.The impairment test method and impairment provision method for construction in progress are detailed in "Long-term assets
impairment" of the "Important Accounting Policies and Estimates".
25. Borrowing costs
Borrowing costs are loan interests amortization of depreciation or appreciation auxiliary expenses and exchange differences
from foreign currency borrowings etc.
(1) Recognition principles for capitalization of borrowing costs
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Borrowing costs of the Company which can be classified directly as expenses for the acquisition construction or production
activities for preparing an asset eligible for capitalization shall be capitalized and booked into cost of capital; other borrowing costs
shall be defined upon occurred as expenses on the basis of the amount and included in current profits and losses.
(2) Period of capitalization of borrowing costs
1) The borrowing costs shall be capitalized when all of the following conditions are satisfied: 1) Asset expenditure has already
incurred; 2) The borrowing costs have already incurred; 3) Acquisition construction or production activities necessary to bring the
asset to reach expected conditions for use or sale are in progress.
2) Suspension of capitalization: If the construction or production of an asset that meets the capitalization conditions is interrupted
abnormally and the interruption lasts for more than three consecutive months the capitalization of borrowing costs shall be suspended.Borrowing costs incurred during the interruption period are recognized as current expenses until the construction or production
activities of the asset resume; if the interruption is a necessary step for making the eligible assets under acquisition construction or
production reach the expected conditions for use or marketing the capitalization of the borrowing costs shall be continued.
3) Cease of capitalization: When the acquisition construction or production of assets that meet the capitalization conditions is
ready for its expected conditions for use or sale the capitalization of borrowing costs will cease. When a portion of the assets that meet
the capitalization conditions are completed and can be used separately the capitalization of the borrowing costs for that portion of the
assets shall cease. If each part of the purchased or produced asset is completed separately but can only be used or sold to the outside
world after the overall completion the capitalization of borrowing costs shall be stopped when the entire asset is completed.
(3) Calculation methods for capitalization rate and capitalized amount of borrowing costs
Where a special loan is borrowed for the purchase and construction or production of assets eligible for capitalization the amount
of interest to be capitalized is determined by subtracting the interest income from depositing the unused loan funds in the bank or the
investment income from temporary investments from the actual interest expenses incurred during the current period of the specific loan
(including the amortization of discount or premium determined by the effective interest rate method). For the acquisition or production
of assets that meet the capitalization conditions and have occupied general borrowings the amount of interest on general borrowings
that should be capitalized is determined by multiplying the weighted average of the asset expenditures exceeding the asset expenditures
of specific borrowings by the capitalization rate (weighted average interest rate) of the occupied general borrowings. During the
capitalization period the capitalized amount of interest for each accounting period shall not exceed the actual interest amount incurred
on the relevant borrowings in the current period. The exchange differences arising from the principal and interest of foreign currency-
specific borrowings are capitalized during the capitalization period. Auxiliary expenses incurred for specific borrowings shall be
capitalized if they occur before the assets being constructed or produced which meet the capitalization conditions reach the expected
conditions for use or sale. Expenses incurred after the assets reach the expected conditions for use or sale are included in current profits
and losses. The auxiliary expenses incurred in general borrowings are included in current profits and losses when incurred. If there is
a discount or premium on the loan the amount of discount or premium to be amortized for each accounting period shall be determined
using the effective interest rate method and the interest amount for each period shall be adjusted.
26. Intangible assets
(1) Useful life and its determination basis estimated situation amortization method or review procedure
1) Initial measurement of intangible assets
Initial recognition of intangible assets is determined by acquisition costs. Costs of purchased intangible assets include purchase
price related taxes as well as other expenditures directly attributable to making such assets ready for intended use. Where the payment
of the acquisition price for intangible assets is delayed beyond the normal credit terms for those with financing nature the cost of
intangible assets is determined at the present value of the acquisition price. When an intangible asset is obtained from a debtor in debt
restructuring as debt settlement its entry value shall be determined based on the fair value of the abandoned claim and other costs
directly attributable to bringing the asset to its intended use such as taxes. On the premise that a non-monetary asset exchange has
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commercial substance and the fair value of the assets exchanged in or out can be reliably measured the cost of the intangible assets
acquired in a non-monetary asset exchange shall be the fair value of the assets given up and the relevant taxes and fees payable unless
there is conclusive evidence that the fair value of the assets acquired is more reliable; for non-monetary asset exchanges that do not
meet the above conditions the book value of the exchanged assets and the relevant taxes and fees payable shall be used as the cost for
the intangible asset received and no profit or loss shall be recognized.Expenditures related to intangible assets are concluded into cost of intangible assets only if relevant economic benefits are likely
to flow to the entity and the cost can be measured reliably; all other expenditures shall be included in current profits and losses.Acquired land-use rights are usually recognized as intangible assets. Regarding self-constructed land or buildings relevant land-
use rights expenditures and construction costs of buildings shall be recognized as intangible assets and fixed assets separately.Regarding purchased plant and buildings expenditures shall be distributed into land-use rights and buildings. Whereas it is difficult to
reasonably distribute it shall be wholly recognized as fixed assets.
2) Useful life and its determination basis estimated situation amortization method or review procedure of intangible assets
Based on a comprehensive assessment of factors such as the contractual or statutory rights of intangible assets industry conditions
historical experience and expert opinions if it can be reasonably determined that an intangible asset will bring economic benefits to
the Company for a certain period it is classified as an intangible asset with a limited useful life; otherwise it is regarded as an intangible
asset with an indefinite useful life.For intangible assets with a limited useful life the following factors are typically considered when estimating their useful lives:
* The normal life cycle of the products produced by using the asset and information on the useful lives of similar assets; * The
current situation and future development trends in technology and processes; * The market demand for the products or services
provided by the asset; * The expected actions of current or potential competitors; * The expected maintenance expenditures to
maintain the asset's ability to generate economic benefits and the Company's ability to pay such expenditures; * Relevant legal
provisions or similar restrictions on the control period of the asset such as the term of a license or lease; * The correlation with the
useful lives of other assets held by the Company etc. The estimated useful lives of intangible assets with a limited useful life are as
follows:
Item Basis Estimated Useful Lives
Software Benefit period 2-10 years
From obtaining the land use right to the
Land use rights Benefit period
termination date of the land use right
For intangible assets with an indefinite useful life the basis for determining the indefinite useful life is as follows:
Intangible assets with a finite useful life are amortized systematically and reasonably within their useful lives in accordance with
the expected realization method of the economic benefits related to such intangible assets. If the expected realization method cannot
be reliably determined the straight-line method is adopted for amortization. Intangible assets with an indefinite useful life are not
amortized but their useful lives are reviewed annually and impairment tests are conducted.At the end of each year the Company reviews the useful life and amortization method of intangible assets with limited useful life.If it is different from previous estimates the original estimates shall be adjusted and changed according to accounting estimates. If the
Company expects that certain intangible assets cannot bring future economic benefits to it the book value of the intangible asset shall
be all transferred into the current profits and losses.
(2) The scope of R&D expenditure collection and related accounting treatment methods
The expenditures of internal research and development projects of the Company are divided into research expenditures and
development expenditures. Specific standards for dividing the research stage and development stage of the Company's internal research
and development projects: The planned investigation stage carried out to acquire new technologies and knowledge etc. shall be
identified as the research stage which is characterized by planning and exploration. The stage of applying research results or other
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knowledge to a plan or design before commercial production or use in order to produce new or substantially improved materials
devices products etc. shall be identified as the development stage. This stage is characterized by its targeted nature and a relatively
high possibility of achieving results.Expenditures of internal research and development projects during research stage are included in current profits and losses upon
occurrence. Expenses incurred during the development phase of internal research and development projects are recognized as intangible
assets when the following conditions are met: 1) Complete such intangible asset to make it usable or salable with technical feasibility;
2) Having the intent to finish and use or sell the intangible asset; 3) The ways in which intangible assets generate economic benefits
include proving that there is a market for the products produced by using the intangible assets or for the intangible assets themselves
and that the intangible assets will be used internally their usefulness shall be proved; 4) There is sufficient support from technical
financial resources and other resources to complete development of such intangible assets and the ability to use or sell such intangible
assets; 5) The expenditures attributable to development stage of such intangible assets shall be measured reliably. Expenditures that do
not meet the above conditions shall be included in current profits and losses when incurred. If expenditure in research stage and
expenditure in development stage fail to be divided generated research expenditure shall be concluded in current profits and losses
when they are incurred.
27. Long-term assets impairment
Long-term assets such as long-term equity investments investment real estate measured at cost fixed assets construction in
progress right-of-use assets intangible assets and goodwill etc. may indicate that impairment has occurred if any of the following
signs are present:
(1) The market price of the asset has dropped significantly in the current period and the decline is much greater than the expected
decline due to the passage of time or normal use.
(2) The economic technological or legal environment in which the enterprise operates or the market in which the asset is located
has undergone or will undergo major changes in the current period or in the near future which will have an adverse impact on the
enterprise.
(3) The market interest rate or other market investment return rate has increased in the current period affecting the discount rate
used by the enterprise to calculate the present value of the expected future cash flows of the asset resulting in a significant reduction
in the recoverable amount of the asset.
(4) There is evidence that the asset has become outdated or its physical entity has been damaged.
(5) The asset has been or will be idle discontinued or planned for early disposal.
(6) Internal reports of the enterprise indicate that the economic performance of the asset has been or will be lower than expected
such as the net cash flow or operating profit (or loss) generated by the asset being far lower (or higher) than the expected amount.
(7) Other indications that the asset may have suffered impairment.
If there are indications of impairment of the above-mentioned long-term assets as of the balance sheet date impairment tests shall
be conducted. If the result of the impairment test indicates that the recoverable amount of the asset is lower than its book value an
impairment provision shall be made according to the difference and included in the impairment loss. The recoverable amount is the
higher of the fair value of the asset less disposal costs and the present value of the asset's estimated future cash flows. The determination
method of fair value is detailed in Note V 12. The disposal expenses shall include the relevant legal expenses relevant taxes truckage
as well as the direct expenses for bringing the assets into a marketable state. The present value of the asset's estimated future cash flow
shall be determined per the estimated future cash flow generated in the process of the asset's continuous use and the final disposal
based on the account upon selecting proper discount rate to discount the asset.The provision for asset impairment shall be calculated and recognized on an individual basis. If it is difficult to estimate the
recoverable amount of any individual asset its recoverable amount shall be determined based on the asset group to which the concerned
asset belongs. The group of assets is the minimum group of assets forming a cash-generating unit.
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During the impairment test the book value of the goodwill shown separately in financial statements is dividing to the asset group
or combination of group assets that are expected benefit from the enterprise merger synergies. In case that the test results show that the
recoverable amount of assets group or combination of assets groups including the allocated goodwill is lower than the book value the
corresponding impairment loss is recognized accordingly. The amount of the impairment loss shall be offset by the carrying amount
of such goodwill apportioned to the asset group or the combination of asset groups then offset the book value of other assets
proportionally based on the proportion of the book value of other assets other than goodwill in the asset group or the combination of
asset groups.Goodwill and intangible assets with indefinite useful lives shall be subject to impairment tests at least annually at the end of each
fiscal year.Once the above losses from impairment of assets are recognized they will not be reversed for the value recovered in the subsequent
periods.
28. Long-term deferred expenses
Long-term deferred expenses are recorded based on the actual amount incurred and amortized evenly over the benefit period or
specified period. If a long-term deferred expense item cannot benefit future accounting periods the amortized value of the item that
has not yet been amortized will be fully transferred to the current profit and loss.
29. Contract liabilities
Contract liabilities refer to the obligation of the Company to transfer goods to customers for consideration received or receivable
from customers. The Company offsets contract assets and contract liabilities under the same contract and presents them on a net basis.
30. Employee compensation
(1) Accounting treatment methods for short-term compensation
During the accounting period when employees of the Company provide services the actual employee wages and bonuses as well
as the social insurance premiums including medical insurance work-related injury insurance and maternity insurance and housing
provident fund paid by the Company in accordance with the prescribed standards and ratios are recognized as liabilities and included
in current profits and losses or the cost of related assets. Employee benefits that are non-monetary benefits shall be measured at fair
value if they can be reliably measured. If the liability is expected not to be fully settled within twelve months after the end of the annual
reporting period in which the employee provides the related services and the financial impact is significant the liability shall be
measured at its discounted amount.
(2) Accounting treatment method for post employment benefits
The post employment welfare plan includes a defined contribution plan and a defined benefit plan. Where the defined contribution
plan is a post employment welfare plan in which the enterprise will no longer assume further payment obligations after paying fixed
fees to an independent fund; a defined benefit plan refers to a post employment welfare plan other than a defined contribution plan.The Company contributes to the basic endowment insurance and unemployment insurance for its employees in accordance with
the relevant regulations of the current government. During the accounting period when the employees provide services to the Company
the amount to be contributed as calculated based on the defined contribution plan is recognized as a liability and included in current
profits and losses or the cost of related assets.
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After the Company regularly pays the above-mentioned funds in accordance with national standards it has no further payment
obligations.
(3) Accounting treatment method for dismissal benefits
The employee compensation liabilities arising from dismission welfare shall be recognized and included in current profits and
losses when the Company cannot unilaterally withdraw the dismission welfare provided by the labor relationship termination plan or
the reduction proposal and the Company confirms the costs or expenses related to the reorganization involving the payment of
termination benefits whichever is earlier. But for the condition in which the welfare after firing cannot be fully paid within twelve
months after the date indicated on the annual report it should be paid as other long-term employee benefits.
31. Estimated liabilities
When the obligation related to product quality guarantee or contingent matters meets the following conditions simultaneously
they shall be recognized as estimated liabilities: (1) The obligation is the current obligation of the Company; (2) Performance of this
obligation will probably cause outflow of economic interest of the Company; (3) The amount of such obligation can be measured
reliably.The estimated liabilities are initially measured according to the best estimate of the expenditure required to fulfill the relevant
current obligations and factors such as risks uncertainties and time value of money related to contingencies are taken into account. If
the time value of money has a significant impact the best estimate is determined by discounting the relevant future cash outflows.The best estimate is handled in the following situations: If there is a continuous range (or interval) of required expenses and the
likelihood of various outcomes occurring within that range is the same the best estimate is determined based on the average of the
upper and lower limits of the range. If there is no continuous range (or interval) of required expenses or although there is a continuous
range the likelihood of various outcomes occurring within that range is different in the event that there is a contingency involving a
single item the best estimate shall be determined based on the amount most likely to occur; if the contingency involves multiple items
the best estimate shall be determined based on various possible outcomes and related probabilities.If all or part of the expenditures to pay off estimated liabilities by the Company are expected to be compensated by third parties
once it is basically certain that compensation amount can be received that amount can be recognized as asset individually but will not
exceed book value of estimated liabilities.The book value of the estimated liabilities is reviewed on each balance sheet date. Where there is concrete evidence proving that
the book value cannot truly reflect the current best estimate the book value of estimated liabilities shall be adjusted according to the
current best estimate.
32. Share-based payments
(1) Types of share-based payments
The Company's share-based payments are transactions that grant equity instruments or assume liabilities based on equity
instruments to obtain services provided by employees or other parties. This includes equity settled share-based payments and cash
settled share-based payments.
(2) Method for determining the fair value of equity instruments
1) If there is an active market it shall be determined based on the quoted prices in the active market; 2) Valuation techniques are
adopted if there is no active market including reference to prices used in recent market transactions by various parties who are familiar
with the situation and voluntary transactions reference to the current fair value of other financial instruments that are substantially the
same discounted cash flow method and option pricing model.
(3) Basis for confirming the best estimate of exercisable equity instruments
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On each balance sheet date during the waiting period the best estimate is made by the Company based on the latest changes in
the number of eligible employees and subsequent information and the estimated number of eligible equity instruments is revised. On
the vesting date the final estimated number of exercisable equity instruments is consistent with the actual number of exercisable equity
instruments.
(4) Accounting treatment for share-based payments
1) Equity settled share-based payments
For share-based payments settled in equity that are made in exchange for services provided by employees if the rights are
immediately exercisable after grant the fair value of the equity instrument on the grant date is recognized as an expense in the relevant
cost or expense account and the capital reserve is adjusted accordingly. If the rights are exercisable only after the completion of a
service period or the achievement of a performance condition on each balance sheet date during the waiting period the fair value of
the equity instrument on the grant date is recognized as an expense in the relevant cost or expense account based on the best estimate
of the number of equity instruments that will be exercisable and the capital reserve is adjusted accordingly. No further adjustments are
made to the recognized cost or expense and the total owner's equity after the vesting date.For share-based payments settled in equity that are made in exchange for services provided by other parties if the fair value of
the services provided by the other parties can be reliably measured it shall be measured at the fair value of the services on the acquisition
date. If the fair value of the services provided by the other parties cannot be reliably measured but the fair value of the equity instrument
can be reliably measured it shall be measured at the fair value of the equity instrument on the acquisition date and it is included in the
relevant cost or expense with the owner's equity increased accordingly.
2) Cash settled share-based payments
For share-based payments settled in cash that are made in exchange for employee services if they are immediately exercisable
upon grant the fair value of the liability assumed by the Company on the grant date is recognized as an expense in the relevant cost or
expense and the liability is increased accordingly. For cash settled share-based payment that can be exercised only after completing
the services in the waiting period or meeting the prescribed performance conditions in exchange for employee services on each balance
sheet date in the waiting period based on the best estimate of the exercisable rights the services obtained in the current period shall be
included in the cost or expense and the corresponding liabilities according to the fair value amount of the Company's liabilities. On
each balance sheet date and settlement date before the settlement of relevant liabilities the fair value of liabilities shall be re-measured
and the changes shall be included in the current profits and losses.
3) Modification and termination of share-based payment plans
If the modification increases the fair value of the granted equity instrument the Company recognizes the increase in the fair value
of the equity instrument as an increase in the amount of services obtained; if the modification increases the number of granted equity
instruments the Company recognizes the increase in the fair value of the additional equity instruments as an increase in the amount of
services obtained; if the company modifies the vesting conditions in a way that is favorable to the employees the Company considers
the modified vesting conditions when dealing with the vesting conditions.If the modification reduces the fair value of the granted equity instrument the Company continues to recognize the amount of
services obtained based on the fair value of the equity instrument on the grant date without considering the reduction in the fair value
of the equity instrument; if the modification reduces the number of granted equity instruments the Company treats the reduction as the
cancellation of the granted equity instruments; if the vesting conditions are modified in a way that is unfavorable to the employees the
modified vesting conditions are not considered when the Company deals with the vesting conditions.If the equity-settled share-based payment is cancelled it is treated as accelerated vesting on the cancellation date and the
unrecognized amount is immediately recognized (the amount that should be recognized during the remaining waiting period is
immediately included in current profits and losses and capital reserve is recognized at the same time). If the employee or other parties
are able to meet the non-vesting conditions but fail to do so during the waiting period it is treated as the cancellation of the equity-
settled share-based payment. However if new equity instruments are granted and it is determined on the grant date of the new equity
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instruments that they are intended to replace the cancelled equity instruments the new equity instruments are treated in the same way
as if the terms and conditions of the original equity instruments were modified.
(5) Other
Share-based payment transactions involving enterprises within the scope of the Company's consolidation the Company and its
actual controller or other shareholders or the Company and other enterprises within the same group shall be handled in accordance
with the relevant provisions of Article 7 of the Interpretation No. 4 of the Accounting Standards for Business Enterprises on share-
based payments within a group.
33. Share repurchase
When the Company acquires its own shares due to reduction of registered capital or rewarding employees etc. the actual payment
amount shall be treated as treasury shares and recorded for reference. If the repurchased shares are cancelled the difference between
the total par value of the cancelled shares (calculated based on the par value per share and the number of cancelled shares) and the
actual payment amount for the repurchase shall be offset against the capital reserve. If the capital reserve is insufficient to cover the
offset the retained earnings shall be offset. If the repurchased shares are awarded to the Company's employees they shall be treated as
share-based payments settled in equity. When the employees exercise their rights to purchase the Company's shares and the Company
receives the payment the cost of the treasury shares delivered to the employees and the accumulated amount of the capital reserve
(other capital reserves) during the waiting period shall be written off and the difference shall be adjusted to the capital reserve (share
premium).
34. Revenue
Accounting policies adopted for disclosing revenue recognition and measurement according to business types
(1) General principle for revenue recognition
The Company's revenue mainly comes from selling goods. The Company uses the transfer of control as the criterion for
determining the timing of revenue recognition. The Company recognizes the revenue when performance obligations under the contract
are performed i.e. the consumer obtains the control power over relevant goods.If any of the following conditions is met the Company is deemed to have performed its performance obligations over a period of
time; otherwise it is deemed to perform its performance obligations at a point in time: 1) Customers obtain and consume the economic
benefits brought by the Company's performance at the same time as the Company's performance; 2) Customers can control the goods
under construction in the process of performance of the Company; 3) The goods produced in the process of performance by the
Company have irreplaceable uses and the Company has the right to collect payments for the accumulated performance so far during
the whole contract period.For the performance obligations within a certain period of time the Company recognizes the revenue in accordance with the
performance progress during the period except that the performance progress cannot be determined reasonably. When the performance
of the performance cannot be reasonably determined if the cost incurred by the Company is expected to be compensated the revenue
will be recognized according to the amount of cost incurred until the performance of the performance can be reasonably determined.For the performance obligations performed at a certain time point the Company recognizes revenue at the time when the customer
obtains control over the relevant goods. In the judgment of whether the customer has obtained the control over the goods the Company
will consider the following indications: 1) The Company enjoys the current collection right in respect of the goods that is the customer
has the current payment obligation in respect of the goods; 2) The Company has transferred the legal title of the goods to the customer
that is the customer already owns the legal title of the goods; 3) The Company has transferred the physical goods to the customer that
is the customer has possessed the physical goods; 4) The Company has transferred the main risks and rewards of the ownership of the
goods to the customer that is the customer has obtained the main risks and rewards of the ownership of the goods; 5) The customer
has accepted the product; 6) Other signs that customers have gained control of the goods.
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If the contract contains two or more performance obligations the Company shall on the commencement date of the contract
apportion the transaction price to each individual performance obligation according to the relative proportion of the individual selling
price of the goods promised by each individual performance obligation and measure the income according to the transaction price
apportioned to each individual performance obligation. The transaction price is the amount of consideration that the Company is
expected to be entitled to receive for the transfer of goods to customers. Amounts collected by the Company on behalf of third parties
and amounts that the Company expects to refund to customers are accounted for as liabilities and are not included in the transaction
price. Where there is variable consideration in a contract the Company determines the best estimate of variable consideration based
on expected value or the most likely amount to occur but the transaction price including variable consideration shall not exceed the
amount of the cumulative recognized revenue that is highly unlikely to result in a significant reversal when the relevant uncertainty is
eliminated. If there are significant financing components in the Contract the Company will determine the transaction price based on
the amount payable which is assumed to be paid by the customer in cash when obtaining the control right on goods. The difference
between the transaction price and the contract consideration shall be amortized using the effective interest rate method during the
contract period. On the commencement date of the contract if the Company expects that the interval between the customer's acquisition
of control over the goods and the customer's payment of the price shall not exceed one year the significant financing component of the
contract shall not be taken into account.
(2) Specific principles for recognizing the Company's revenue
1) The principle for recognizing domestic offline sales revenue of products: If the Company sells its products to engineering
contractors dealers and end customers and the contract is signed without installation the Company will send the goods to the customer
or the customer will pick them up at their doorstep according to the delivery method agreed in the sales contract. The customer receives
the goods and accepts them as qualified. The revenue is recognized when the Company obtains the customer's receipt certificate.
2) The principle for recognizing revenue from overseas offline sales of products: For domestic companies that directly export and
sell products FOB terms are adopted. For those that declare and export through sea and air freight the export customs declaration
procedures are completed the customs declaration form is obtained and the revenue is recognized when obtaining the bill of lading.For customs declaration and export through express delivery revenue shall be recognized based on the date of the customs declaration.If the overseas subsidiary sells overseas the goods shall be delivered to the customer or picked up at the customer's doorstep according
to the agreed delivery method with the customer. Revenue shall be recognized when the customer receives the goods and the acceptance
is qualified.
3) The principle for recognizing sales revenue through online self operation mode of products: In self operation mode the
Company mainly sells products directly to consumers through domestic e-commerce platforms (Tmall Taobao JD PDD Suning) and
overseas e-commerce platforms (Amazon Lazada Shoppe). The Company confirms online self operated business revenue when
sending out goods either directly confirmed by consumers or automatically confirmed by the system's default delivery time and
meeting the return period terms.
4) Principle for recognizing sales revenue of system integration: The sales of company system integration products include
providing customers with supporting products installation debugging and system trial operation and other supporting services. After
passing the acceptance inspection sales revenue is recognized.
5) Software sales revenue recognition principle: The software is directly provided to the buyer and requires a dedicated software
authorization code to be used. After the software authorization code is provided to the buyer the realization of software sales revenue
is recognized. If the company contract stipulates that the software needs to be installed debugged or inspected the software sales
revenue will be recognized after the installation debugging or inspection are completed and an acceptance report is obtained.
(3) Principles for income processing of specific transactions
1) A contract with quality assurance clauses attached
The Company shall assess whether the quality assurance provides a separate service beyond ensuring that the products sold meet
established standards to customers. If the Company provides additional services it shall be treated as a single performance obligation
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and subject to accounting treatment in accordance with the income standards; otherwise the quality assurance responsibility shall be
accounted for in accordance with the accounting standards for contingencies.
2) Main responsible persons and agents
The Company determines whether it the main responsible person or agent when engaging in transactions based on whether it has
control over the goods or services before transferring them to customers. If the Company is able to control the goods or services before
transferring them to customers it is the main responsible person and recognizes revenue based on the total amount of consideration
received or receivable; otherwise the Company acts as an agent and recognizes revenue based on the expected amount of commission
or handling fees entitled to receive. This amount is determined by deducting the total amount of consideration received or receivable
from the amount payable to other relevant parties.
35. Contract cost
(1) Recognition conditions for contract costs
Contract costs include contract acquisition costs and contract performance costs.If the incremental cost incurred by the Company for acquiring the contract is expected to be recovered it shall be recognized as
an asset as the contract acquisition cost. Other expenditures incurred by the Company for the purpose of obtaining the contract other
than the incremental costs expected to be recovered are included in current profits and losses when incurred except those expressly
borne by the customer.Cost incurred by the Company for the performance of the contract which does not fall within the scope of other Accounting
Standards for Enterprises other than the revenue standards and meets the following conditions at the same time is recognized as an
asset as the contract performance cost: 1) The cost is directly related to a current or expected contract including direct labor direct
materials manufacturing expenses (or similar expenses) costs clearly borne by the customer and other costs incurred solely as a result
of the contract; 2) This cost increases the resources that the Company will use to fulfill its performance obligations in the future; 3)
The cost is expected to be recovered.
(2) Amortization of assets related to contract costs
The assets recognized at the cost of contract acquisition and the assets recognized at the contract performance costs (hereinafter
referred to as the assets related to contract costs) are amortized on the same basis as the recognition of goods or services related to the
assets and included in current profits and losses. For amortization periods of contract acquisition costs not exceeding one year they are
included in current profits and losses when incurred.
(3) Impairment of assets related to contract costs
When determining the impairment loss of assets related to contract costs the Company first determines the impairment loss of
other assets related to the contract that are recognized in accordance with other Accounting Standards for Enterprises. Then the
Company determines the impairment loss of the assets related to the contract costs. If the book value of the assets related to contract
costs is higher than the difference between the expected remaining consideration for the transfer of goods related to the asset and the
estimated cost to be incurred for the transfer of the related goods of the Company the excess shall be subject to provision for impairment
and recognized as losses from impairment of assets.After impairment provisions have been made if the factors that led to the impairment in previous periods change and the
difference between the expected remaining consideration that the Company can obtain from the transfer of the goods related to the
asset and the estimated costs to be incurred for the transfer of such goods exceeds the book value of the asset the previously recognized
impairment provisions shall be reversed and included in current profits and losses. However the book value of the asset after the
reversal shall not exceed the book value that would have been recorded if no impairment provision had been made.
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36. Government subsidies
(1) Type
Government subsidies refer to monetary and non-monetary assets acquired by the Company from the government for free.Government subsidies are divided into government subsidies related to assets and government subsidies related to income.Government subsidies related to assets refer to the governmental subsidies that are obtained by the Company and used for
constructing long-term assets or forming the long-term assets in other ways including fiscal grants for the purchase of fixed assets or
intangible assets and fiscal subsidies for the interest on specific borrowings for fixed assets etc. The government subsidies related to
income refer to other government subsidies other than those related to assets. For the government subsidies that include both asset-
related and income-related portions accounting treatments shall be subject to different portions; if difficult to distinguish them they
shall be classified as government subsidies related to income in whole.The specific criteria adopted by the Company for classifying government subsidies are as follows:
1) If the government subsidy document stipulates that the subsidy target uses the subsidy to purchase construct or otherwise form
long-term assets or if the subsidy target's expenditure is mainly used for purchasing constructing or otherwise forming long-term
assets it is classified as government subsidies related to assets.
2) If the government subsidy obtained based on the government subsidy document is entirely or mainly used to compensate for
expenses or losses that will occur in the future or have already occurred it is classified as government subsidies related to income.
3) If the government document does not clearly specify the subsidy target the government subsidy will be classified as either a
government subsidy related to assets or a government subsidy related to income in the following ways: 1) If the government document
clearly specifies the particular project the subsidy is intended for the classification is made based on the relative proportion of the
expenditure amount that will form assets and the expenditure amount that will be recorded as expenses in the budget of that particular
project. This classification ratio needs to be reviewed on each balance sheet date and changed if necessary; 2) If the government
document only makes a general statement about the purpose and does not specify a particular project it is classified as a government
subsidy related to income.
(2) Recognition of government subsidies
The Company usually confirms and measures government subsidies based on the actually received amount when they are actually
received. However at the end of the period there is conclusive evidence showing that it can meet the relevant conditions stipulated by
the financial support policy. The government subsidies measured according to the receivable amount shall meet all the following
requirements:
1) The subsidy is based on the financial support project officially issued and actively publicized by local finance department in
accordance with the provisions of the "Regulations on the Disclosure of Government Information" and its financial fund management
method which shall be inclusive (any enterprise which meets the specified requirements may apply) rather than dedicated to specific
enterprise;
2) The amount of subsidy receivable has been recognized by government authority departments via issuance of documents or the
amount can be reasonably calculated according to relevant regulations in the financial fund management method officially issued and
no significant uncertainty is expected for such amount;
3) The appropriation period has been specified in relevant approved subsidy document and there is corresponding financial budget
for the appropriation of such subsidy so it is reasonable certain that the subsidy can be received within specified period;
4) Any other relevant requirements which shall be met according to the specific conditions of the Company and the subsidy.
(3) Accounting treatment of government subsidies
If government subsidies are monetary assets they shall be measured at the amount received or receivable. If government subsidies
are non-monetary assets they shall be measured at fair value. If the fair value cannot be obtained reliably it shall be measured at the
nominal amount. Government subsidies measured at their nominal amounts are directly included in the current profits and losses.Based on the essence of economic transactions the Company determines whether a certain type of government subsidy business
shall be accounted for using the gross price method or the net amount method.
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Item Accounting content
Government subsidy categories accounted for using the gross Other government subsidies except for government interest
price method subsidies
Government subsidy categories accounted for using the net
Government interest subsidies
amount method
Government subsidies related to assets shall be used to offset the book value of the related assets or recognized as deferred incomes.Government subsidies related to assets are recognized as deferred income and included in the profits and losses in stages within the
useful life of the assets constructed or purchased in a reasonable and systematic way.Government subsidies related to income used to compensate related costs or losses in later periods shall be recognized as deferred
income and included in current profits and losses or to write off related costs during the period of recognition of related costs or losses.Relevant costs or losses incurred for compensation shall be directly included in current profits and losses or to write off related costs.The government subsidies related to the enterprise's daily activities shall be included in other income or offset against relevant
costs; and the government subsidies unrelated to the enterprise's daily activities shall be included in non-operating income and
expenditure.The policy-based preferential loan discount obtained by the Company will be accounted according to the following two conditions:
1) Where the finance allocates the discount fund to the lending bank and the lending bank provides a loan at the policy-based
preferential interest rate for the enterprise the Company includes the actually received loan amount as the entry value of the loan and
counts relevant borrowing costs based on loan principal and the policy-based preferential interest rate.
2) Where the finance directly allocates the discount fund to the Company the Company uses the corresponding discount to
offset relevant borrowing costs.If the recognized government subsidies need to be returned the Company will conduct accounting treatment for the current
period when they need to be returned:
1) If the book value of the relevant assets is offset at the time of initial recognition the book value of the assets shall be
adjusted.
2) If there is relevant deferred income the book balance of relevant deferred income shall be offset and the excess shall be
included in current profits and losses.
3) If it belongs to other circumstances it shall be directly included in current profits and losses.
The principle for distinguishing government subsidies recorded in different profit and loss items is: The governmental subsidies
related with the Company's daily activities shall be included in other income or write down related costs according to the economic
business essence. Government subsidies unrelated to the Company's daily activities are included in non-operating income and
expenditure.
37. Deferred income tax assets/deferred tax liabilities
(1) Recognition and measurement of deferred income tax assets and deferred income tax liabilities
The Company adopts the balance sheet liabilities method to recognize deferred income tax based on the temporary difference
between the book value of assets/liabilities and tax basis at the balance sheet date. The current income tax and deferred income tax of
the Company are included in current profits and losses as income tax expense or income except for the income tax arising from the
following circumstances: 1) Business combination; 2) Transactions or events directly recognized in owner's equity; 3) Dividend
expenditures on financial instruments classified as equity instruments in accordance with the "Accounting Standards for Business
Enterprises No. 37 - Presentation of Financial Instruments" etc. can be deducted before corporate income tax in accordance with tax
policies provided that the distributed profits are derived from transactions or events previously recognized in the owner's equity.For any deductible temporary difference any deductible loss or tax credit that can be carried forward to future years the
corresponding deferred income tax assets shall be recognized to the extent that the amount of future taxable income to be offset by the
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deductible temporary difference deductible loss or tax deduction to be likely obtained unless the said deductible temporary difference
is generated in the following transactions:
This transaction is not a business combination. At the time of the transaction it neither affects accounting profit nor taxable
income (or deductible losses) and the initially recognized assets and liabilities will not generate equivalent taxable temporary
differences and deductible temporary differences.
(2) For deductible temporary differences related to the investments of subsidiaries associates and joint ventures the corresponding
deferred income tax assets are recognized if the following conditions are met: the temporary differences are likely to be reversed in the
foreseeable future and the taxable income amount used to offset the deductible temporary differences is likely to be obtained in the
future.Deferred income tax liabilities shall be recognized for all taxable temporary difference unless the said taxable temporary
difference is generated in the following transactions:
1) The initial recognition of the goodwill or the initial recognition of the assets or liabilities caused in the dealing with the
following feature: This transaction is not a business combination. At the time of the transaction it neither affects accounting profit
nor taxable income (or deductible losses) and the initially recognized assets and liabilities will not generate equivalent taxable
temporary differences and deductible temporary differences.
2) The temporary taxable difference related to the subsidiaries joint ventures and associates whose time of the reverse can be
controlled and which is unlikely to be reversed in the excepted future.Based on the differences between the book value and the tax base of assets and liabilities (for items not recognized as assets or
liabilities the differences between their tax bases determined in accordance with tax laws and their book values) deferred income tax
assets or deferred income tax liabilities are recognized by calculating at the applicable tax rate during the period expected to recover
the asset or settle the liability.For individual transactions that are not business combinations and do not affect accounting profits or taxable income (or deductible
losses) at the time of occurrence and where the initial recognition of assets and liabilities results in equal amounts of taxable temporary
differences and deductible temporary differences (including lease transactions where the lessee initially recognizes lease liabilities and
includes them in right-of-use assets on the commencement date of the lease term and transactions where estimated liabilities are
recognized due to the existence of disposal obligations for fixed assets and other assets and included in the cost of the relevant assets
etc.) the Company recognizes the corresponding deferred income tax liabilities and deferred income tax assets for the taxable
temporary differences and deductible temporary differences arising from the initial recognition of assets and liabilities at the time of
the transaction.The recognition of deferred income tax assets is limited to the extent that it is probable that sufficient taxable income will be
available in future periods to utilize the deductible temporary differences. On the balance sheet date if there is conclusive evidence
that it is probable that sufficient taxable income will be available in future periods to utilize the deductible temporary differences the
Company recognizes deferred income tax assets that were not recognized in previous accounting periods. The book value of deferred
income tax assets is reviewed. If it is probable that sufficient taxable income will not be available in future periods to utilize the benefit
of deferred income tax assets the book value of deferred income tax assets is reduced. When it is probable that sufficient taxable
income will be available the reduction is reversed.
(2) The current income tax assets and liabilities of the Company shall be presented as the net amount after being offset
when the Company has the legal right to carry out net settlement and intends to carry out net settlement or when the assets
are acquired at the same time when liabilities are paid off.When the Company has the legal right to settle current income tax assets and current income tax liabilities on a net basis and the
deferred income tax assets and deferred income tax liabilities are related to income taxes levied by the same tax authority on the same
taxable entity or on different taxable entities but during each significant period in which the deferred income tax assets and liabilities
are reversed in the future the taxable entities involved intend to settle the current income tax assets and liabilities on a net basis or to
229ZKTeco 2024 Annual Report
acquire assets and settle liabilities simultaneously the Company presents the deferred income tax assets and deferred income tax
liabilities at the net amount after offsetting.
38. Leasing
(1) Accounting treatment method for leasing as a lessee
1) Right-of-use assets
On the beginning date of the lease term the Company recognizes the right to use assets for leases other than short-term leases and
low value asset leases. The right-of-use asset is initially measured at cost which includes: the initial measurement amount of the lease
liability; Lease payments made before or on the commencement date of the lease term (net of any lease incentives received); Initial
direct expenses incurred; The costs that the Company expects to incur for dismantling and removing the leased assets restoring the
site where the leased assets are located or restoring the leased assets to the state agreed in the lease terms.The Company depreciates the right-of-use assets using the straight-line method. For leased assets where it is reasonably certain
that the ownership of the leased assets can be obtained at the end of the lease term the Company depreciates the assets over the
remaining useful life of the leased assets. If it is not reasonably certain that the ownership of the leased assets can be obtained at the
end of the lease term the leased assets shall be depreciated over the shorter of the lease term and the remaining useful life of the leased
assets.
2) Lease liabilities
On the beginning date of the lease term the Company recognizes the lease liability for leases other than short-term leases and low
value asset leases. Lease liabilities are initially measured according to the present value of the unpaid lease payments. Lease payments
include: Fixed payment and substantial fixed payment. If there is lease incentive the relevant amount of lease incentive shall be
deducted; the variable lease payment amount which depends on the index or ratio. It is determined at the initial measurement based
on the index or ratio on the commencement date of the lease term. The exercise price of the purchase option provided that the Company
reasonably determines that the option will be exercised; The amount to be paid for the exercise of the option to terminate the lease
provided that the lease term reflects that the Company will exercise the option to terminate the lease; The amount expected to be paid
according to the residual value of the guarantee provided by the Company. The Company adopts the embedded interest rate of the lease
as the discount rate. if the embedded interest rate of the lease cannot be determined the incremental borrowing rate of the Company
shall be used as the discount rate.The Company calculates the interest expense of the lease liability in each period of the lease term according to the fixed periodic
interest rate and records it into the current profit and loss or the cost of relevant assets. The amount of variable lease payments not
included in the measurement of lease liabilities shall be included in the current profits and losses or relevant asset costs when actually
incurred.After the commencement date of the lease term the Company remeasures the lease liability based on the present value of the
revised lease payments in the following circumstances: The Company's assessment of the purchase option renewal option or
termination option changes or the actual exercise of the renewal option or termination option is inconsistent with the original
assessment; the expected amount payable for the residual value guarantee changes; or the index or rate used to determine the lease
payments changes. When remeasuring the lease liability the Company adjusts the book value of the right-of-use asset accordingly.Where the book value of the right-of-use asset has been reduced to zero but the lease liability still needs to be further reduced the
Company will include the remaining amount in the current profits and losses.
3) Basis for judgment and accounting treatment for simplified processing of short-term leases and leases of low-value assets
The Company chooses not to recognize the right of use assets and lease liabilities for short-term leases and low-value asset leases
and the relevant lease payments are included in the current profit and loss or relevant asset costs according to the straight-line method
in each period of the lease term. Short-term lease refers to a lease with a lease term of no more than 12 months and excluding the
purchase option on the beginning date of the lease term. Low value asset lease refers to the lease with lower value when the single
230ZKTeco 2024 Annual Report
leased asset is a brand-new asset. Where the Company sublets or expects to sublet the leased assets the original lease does not belong
to the lease of low value assets.
4) Lease change
If the lease is changed and the following conditions are met at the same time the Company shall treat the change of the lease as a
separate lease for accounting treatment: The change of the lease expands the scope of the lease or extends the lease term by adding the
right to use one or more leased assets; The increased consideration is equivalent to the amount adjusted according to the conditions of
the contract at the separate price for most of the expansion of the lease scope.Where the lease change is not accounted for as a separate lease on the effective date of the lease change the Company re-allocates
the consideration of the contract after the change re-determines the lease term and re-measures the lease liability according to the
present value calculated by the lease payment after the change and the revised discount rate.
(2) Accounting treatment method for leasing as a lessor
On the lease commencement date the Company divides the lease into financial lease and operating lease. Finance lease refers to
a lease that essentially transfers almost all the risks and rewards related to the ownership of leased assets regardless of whether the
ownership is finally transferred or not. Operating leases refer to leases other than finance leases.When the Company is the sublessee lessor the sublease is classified based on the use right assets generated from the original
lease. If the original lease is a short-term lease and the Company elects not to recognize a right-of-use asset and lease liability for the
original lease the Company classifies the sublease as an operating lease.
1) Accounting treatment of operating lease
The lease receipts from operating leases are recognized as rental income on a straight-line basis in each period of the lease term.The Company capitalizes the initial direct expenses related to operating leases and allocates them into the current profits and losses
on the same basis as the recognition of rental income during the lease term. The amount of variable lease payments not included in the
lease receipts shall be included in the current profits and losses when actually incurred.
2) Accounting treatment of financial lease
On the lease commencement date the Company recognizes the finance lease receivables for the finance lease and terminates the
recognition of the finance lease assets. When the Company initially measures the finance lease receivables the net amount of the lease
investment is taken as the entry value of the finance lease receivables. The net lease investment is the sum of the unguaranteed residual
value and the present value of the lease receipts not received on the beginning date of the lease term discounted at the interest rate
embedded in the lease.The Company calculates and recognizes the interest income of each period within the lease term according to the fixed periodic
interest rate. The derecognition and impairment of finance lease receivables shall be accounted for in accordance with "Important
Accounting Policies and Estimates - Financial Instruments". The amount of variable lease payments not included in the measurement
of net lease investment shall be included in the current profit and loss when it actually occurs.
39. Restricted shares
Under the equity incentive plan the Company grants restricted shares to the incentive objects. The incentive objects first subscribe
for the shares. If the unlocking conditions stipulated in the equity incentive plan are not met subsequently the Company will repurchase
the shares at the pre-agreed price. If the restricted shares issued to employees have completed the registration and other capital increase
procedures in accordance with relevant regulations on the grant date the Company recognizes the share capital and capital reserve
(share premium) based on the subscription proceeds received from the employees; at the same time it recognizes treasury shares and
other payables for the repurchase obligation.
231ZKTeco 2024 Annual Report
40. Explanations on Important Accounting Estimates and Judgments
In the application of accounting policies due to the inherent uncertainties in operating activities the Company needs to make
judgments estimates and assumptions regarding the book values of certain items in the financial statements that cannot be accurately
measured. These judgments estimates and assumptions are based on the past experience of the Company's management and are made
after considering other relevant factors. These judgments estimates and assumptions can affect the reported amounts of revenue
expenses assets and liabilities as well as the disclosure of contingent liabilities as of the balance sheet date. However the actual results
resulting from the uncertainties of these estimates may differ from the current estimates of the Company's management which may
lead to significant adjustments to the carrying amounts of affected assets or liabilities in the future. The Company regularly reviews
the aforementioned judgments estimates and assumptions on a going concern basis. Changes in accounting estimates that only affect
the current period are recognized in the period of change; changes that affect both the current period and future periods are recognized
in both the period of change and future periods. As of the balance sheet date the significant areas where the Company needs to make
judgments estimates and assumptions regarding the amounts of financial statement items are as follows:
(1) Classification of leases
When the Company acts as a lessor in accordance with the "Accounting Standards for Enterprises No. 21 - Leases" leases are
classified as operating leases and finance leases. In making the classification management needs to analyze and judge whether all the
risks and rewards related to the ownership of the leased assets have been substantially transferred to the lessee.
(2) Impairment of financial instruments
The Company assesses the impairment of accounts receivable measured at amortized cost debt investments contract assets and
receivable financing measured at fair value and included in other comprehensive income as well as other debt investments using the
expected credit loss model. The application of the expected credit loss model involves significant judgments and estimates by
management. Key parameters for measuring expected credit losses include probability of default loss given default and exposure at
default. The Company establishes models for probability of default loss given default and exposure at default based on quantitative
analysis of historical data and forward-looking information. Differences between the actual impairment results of financial instruments
and the original estimates will affect the book value of the financial instruments and the recognition or reversal of credit impairment
losses in the period when the estimates are changed.
(3) Provision for inventory write-down
The Company measures inventories at the lower of cost and net realizable value in accordance with its inventory accounting policy.Provision for inventory write-down is made for inventories with costs higher than net realizable value and for obsolete and slow-
moving inventories. The impairment of inventories to net realizable value is based on an assessment of the marketability of the
inventories and their net realizable value. The identification of inventory impairment requires management to make judgments and
estimates based on conclusive evidence and taking into account factors such as the purpose of holding the inventories and the impact
of events after the balance sheet date. Differences between the actual results and the original estimates will affect the book value of the
inventories and the recognition or reversal of the provision for inventory write-down in the period when the estimates are changed.
(4) Depreciation and amortization
The Company depreciates and amortizes investment real estate fixed assets and intangible assets measured at cost over their
useful lives taking into account their residual values using the straight-line method. The Company reviews the useful lives of these
assets regularly to determine the amount of depreciation and amortization to be recognized in each reporting period. The useful lives
are determined by the Company based on its past experience with similar assets and expectations of technological updates. If there are
major changes in previous estimates adjustments will be made to the depreciation and amortization expenses in future periods.
(5) Deferred income tax assets
232ZKTeco 2024 Annual Report
The Company recognizes deferred income tax assets for all unused tax losses to the extent that it is probable that there will be
sufficient taxable profits in the future to offset these losses. This requires management of the Company to make significant judgments
to estimate the timing and amount of future taxable profits taking into account tax planning strategies to determine the amount of
deferred income tax assets to be recognized.
(6) Income tax
In the normal course of operating activities there is a certain degree of uncertainty regarding the final tax treatment and calculation
of some transactions. Whether certain items can be deducted before tax requires the approval of the tax authorities. If the final
determination of these tax matters differs from the initially estimated amount such differences will affect the current income tax and
deferred income tax for the period in which the final determination is made.
(7) Fair value measurement
Some of the Company's assets and liabilities are measured at fair value in the financial statements. When estimating the fair value
of an asset or liability the Company uses observable market data available; if the first level input values cannot be obtained it engages
a qualified third-party valuation agency to conduct the valuation during which the Company's management closely cooperates with it
to determine the appropriate valuation techniques and input values for the relevant models. Information on the valuation techniques
and input values used in determining the fair value of various assets and liabilities is detailed in Note V 12 "Disclosure of Fair Value".
41. Changes of significant accounting policies and accounting estimates
(1) Significant accounting policy changes
□Applicable □ Not applicable
The Company implemented the provisions on the accounting treatment for guarantee-type quality assurance that does not
constitute a separate performance obligation as stipulated in "Interpretation No. 18 of the Accounting Standards for Business
Enterprises" issued by the Ministry of Finance as of December 6 2024 and retrospectively adjusted the comparable period information.The specific adjustment details are as follows:
Unit: RMB
Name of report items that are Affected amount on consolidated Affected amount on the parent
significantly affected financial statements company's financial statements
2023 Income Statement Items
Operating cost 3876351.51 3567150.28
Selling expenses -3876351.51 -3567150.28
Income Statement Items for January to
November 2024
Operating cost 3701443.25 3183296.96
Selling expenses -3701443.25 -3183296.96
The Company implemented the provisions on the classification of current and non-current liabilities as stipulated in the
"Interpretation No. 17 of the Accounting Standards for Business Enterprises" (CK [2023] No. 21 hereinafter referred to as
"Interpretation No. 17") issued by the Ministry of Finance on October 25 2023 starting from January 1 2024. This change in
accounting policy will have no significant impact on the Company's financial statements.The Company implemented the provisions on the disclosure of supplier financing arrangements as stipulated in Interpretation No.
17 starting from January 1 2024. This change in accounting policy will have no significant impact on the Company's financial
statements.
233ZKTeco 2024 Annual Report
The Company implemented the provisions on the accounting treatment for sale and leaseback transactions as stipulated in
Interpretation No. 17 starting from January 1 2024. This change in accounting policy will have no significant impact on the Company's
financial statements.
(2) Changes in significant accounting estimates
□ Applicable □Not applicable
(3) Implementation of new accounting standards adjustment for the first time starting from 2024. Relevant project
information on financial statements at the beginning of the year
□ Applicable □Not applicable
42. Others
None
VI. Taxation
1. Main tax types and tax rates
Tax Type Tax Basis Tax rates
13.00%9.00%6.00%5.00%
Selling goods or providing taxable 3.00% and applicable value-added tax
VAT
services rate for overseas subsidiaries in their
registered location
Urban maintenance and construction tax Paid turnover tax amount 7.00% 5.00%
Please refer to the disclosure statement in
Enterprise income tax Taxable income
the table below.Based on 70% of the original value of
Property tax the property (or rental income) as the tax 1.20%、12.00%
benchmark
Education surcharge Actual amount of turnover tax paid 3.00%
Local education surcharges Actual amount of turnover tax paid 2.00%
Disclosure of information on taxpayers with different corporate income tax rates
Name of Taxpayer Income tax rate
ZKTECO CO. LTD. 15.00%
Xiamen Zkteco Biometric Identification Technology Co. Ltd. 20.00%
Shenzhen ZKTeco Biometric Identification Technology Co.
20.00%
Ltd.ZK INVESTMENTS INC. 21.00%
ZK TECHNOLOGY LLC Please refer to Note VI 3 (1).ZKTeco Sales Co. Ltd. 25.00%
Hangzhou ZKTeco Hanlian E-commerce Co. Ltd. 20.00%
ZKCserv Technology Limited Co. Ltd. 20.00%
Dalian ZKTeo CO. Ltd. 20.00%
XIAMEN ZKTECO CO. LTD. 15.00%
ZKTECO VIETNAM TECHNOLOGY COMPANY LIMITED 20.00%
ZKTECO (GUANGDONG) CO. LTD 15.00%
Xi'an ZKTeco Co. Ltd. 20.00%
ZKTECO CO. LIMITED 16.50% 8.25%
234ZKTeco 2024 Annual Report
ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET
25.00%
LIMITED SIRKETI.ZKTECO LATAM S.A. DE C.V. 30.00%
ZK SOFTWARE DE MEXICO S.A. DE C.V. 30.00%
ZKTECO COLOMBIA SAS 35.00%
ZKTECO (M) SDN. BHD. 24.00%
ZKTECO BIOMETRICS INDIA PRIVATE LIMITED 25.00% 15.00%
ZKTECO EUROPE SL 25.00%
ZKTECO IRELAND LIMITED 12.50%
ZKTeco Deutschland GmbH 31.225%
ZKTECO ITALIA S.R.L. 27.9%
ZKTECO UK LTD 19.00% 25.00%
ZKTECO PERU SOCIEDAD ANONIMA CERRADA 29.5%
ZKTECO THAI CO. LTD. 20.00% 15.00% 0.00%
ZKTeco Chile SpA 27.00%
SOLUCIONES INTEGRALES Y SISTEMAS SpA 27.00%
ZKTECO SECURITY L.L.C 9.00%
ZKTECO ARGENTINA S.A. 25.00% 30.00% 35.00%
Limited Liability Company "ZKTeco biometrics and security" 20.00%
ZKTECO Investment Inc. 21.00%
ZKTECO USA LLC Please refer to Note VI 3 (1).ARMATURA LLC Please refer to Note VI 3 (1).Armatura Co. Ltd. 25.00% 22.00% 20.00% 10.00%
RALVIE AI INC. 26.50%
ZKTeco Japan Co. Ltd. 23.20%
PT. ZKTECO BIOMETRICS INDONESIA 22.00% 11.00%
ZK INVESTIMENTOS DO BRASIL LTDA. 25.00%
ZKTECO DO BRASIL S.A. 25.00%
ZKTeco Latam R&D S.A. 25.00% 30.00% 35.00%
NGTECO CO. LIMITED 16.50% 8.25%
ZKTECO BIOMETRIC LIMITED 30.00%
ZKTECO PANAMA S.A. 5.00%
ZK INTELLIGENT SOLUTIONS (PTY) LTD 27.00%
ZKTECO BIOMETRICS KENYA LIMITED 30.00%
ZKTECO ROMANIA S.R.L 16.00%
Hubei ZKTeco Co. Ltd. 20.00%
Wuhan ZKTeco Perception Technology Co. Ltd. 20.00%
ZKTECO SG INVESTMENT PTE. LTD. 4.25% 8.50% 17.00%
ZKTECO SINGAPORE PTE. LTD. 4.25% 8.50% 17.00%
ZKDIGIMAX PTE. LTD. 4.25% 8.50% 17.00%
ZKDIGIMAX PANAMA S.A. 25.00%
Armatura Tech Co. Ltd. 20.00% 15.00% 0.00%
ZKDIGIMAX (PTY) LTD 27.00%
PT. ZKDIGIMAX EXCEL NOBLE 22.00% 11.00%
ZKDIGIMAX CHINA CO. LTD. 20.00%
ZKDIGIMAX COLOMBIA SAS 35.00%
ZK TECHNOLOGY MOROCCO 30.00%
ZKTECO EGYPT LLC 22.50%
ZKTECO BUSINESS SOLUTIONS COMPANY 20.00%
ZKTeco Polska Sp. z o.o. 19.00%
ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co.
20.00%
Ltd.
235ZKTeco 2024 Annual Report
2. Tax incentives
(1) Article 28 of the "Law of the People's Republic of China on Enterprise Income Tax" stipulates that high-tech enterprises that
require key support from the state shall be subject to corporate income tax at a rate of 15.00%.
1) In November 2024 the Company obtained a high-tech enterprise certificate (No. GR202444001492) which is valid for three
years.
2) In November 2022 XIAMEN ZKTECO CO. LTD. obtained a high-tech enterprise certificate (No. GR202235100737) which
is valid for three years.
3) In December 2022 Zkteco (Guangdong) Co. Ltd. obtained a high-tech enterprise certificate (No. GR202244002616) which
is valid for three years.
(2) According to the relevant provisions of the "Notice of the Ministry of Finance and the State Administration of Taxation on
Value-added Tax Policies for Software Products" (CS [2011] No. 100) and the "Notice on Questions of Policies on Encouraging the
Development of the Software and Integrated Circuit Industries" (CS [2000] No. 25) from January 1 2011 for general taxpayers of
value-added tax who sell software products developed and produced by themselves after value-added tax is levied at the applicable
tax rate a policy of taxation and drawback has been implemented for the portion of its actual value-added tax burden exceeding 3.00%.
(3) According to the "Announcement on Further Supporting the Development of Micro and Small Enterprises and Individual
Industrial and Commercial Households" (Announcement No. 12 of the State Administration of Taxation of the Ministry of Finance
2023) from January 1 2023 to December 31 2027 small-scale value-added tax taxpayers small and micro profit enterprises and
individual industrial and commercial households can reduce resource tax by half (excluding water resource tax) urban maintenance
and construction tax property tax urban land use tax stamp duty (excluding securities transaction stamp duty) farmland occupation
tax education surcharge and local education surcharge. The policy of reducing the taxable income of small and micro profit enterprises
by 25.00% and paying corporate income tax at a rate of 20.00% will continue to be implemented until December 31 2027. This policy
is applicable to Xiamen Zkteco Biometric Identification Technology Co. Ltd. Shenzhen ZKTeco Biometric Identification Technology
Co. Ltd. Hangzhou ZKTeco Hanlian E-commerce Co. Ltd. ZKCserv Technology Limited Co. Ltd. Dalian ZKTeo CO. Ltd. Xi'an
ZKTeco Co. Ltd. Hubei ZKTeco Co. Ltd. Wuhan ZKTeco Perception Technology Co. Ltd. ZKTeco Huayun (Xiamen) Integrated
Circuit Co. Ltd. ZKDIGIMAX CHINA CO. LTD. and ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co. Ltd.
3. Others
(1) LLC type companies are not required to pay corporate income tax and the profits of LLC companies are summarized to C-
corp type company shareholders or individual shareholders and then shareholders pay income tax.
(2) ZKTECO ARGENTINA S.A. and ZKTeco Latam R&D S.A. are taxed at 25.00% on the amount ranging from ARS 0 to ARS
34703523.08. For the portion exceeding ARS 34703523.08 but not exceeding ARS 347035230.79 the tax rate is 30.00%. Any
amount exceeding ARS 347035230.79 is taxed at 35.00%.
(3) Coexistence of two types of corporate income tax of ZKTECO BIOMETRICS INDIA PRIVATE LIMITED: (1) Normal Tax
corporate income tax rate is 25.00%; (2) MAT Tax: In 2024 the MAT Tax rate was 15.00%. When the Company's tax payable is less
than 15.00% of its book profit the minimum alternative tax is paid calculated as 15.00% of its book profit; Normal Tax and MAT
Tax whichever is higher.
(4) The corporate income tax rate for ZKTeco Deutschland GmbH in 2024 is 31.225%.
(5) ZKTECO THAI CO. LTD. and Armatura Tech Co. Ltd. are small and medium-sized enterprises (SMEs) that meet the
following two conditions: 1) As of the last day of the accounting cycle the paid in capital shall not exceed THB 5 million; 2) The total
annual revenue from selling goods or providing services shall not exceed THB 30 million. Applicable to tax rates of 20.00% 15.00%
and 0.00% specifically including: accounting profits below THB 300000.00 with a tax rate of 0.00%; from THB 300000.00 to THB
3000000.00 with a tax rate of 15.00%; above THB 3000000.00 with tax rate of 20.00%. If the above two conditions are not met
the tax rate is applicable at 20.00%.
236ZKTeco 2024 Annual Report
(6) The corporate income tax rate of ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET LIMITED SIRKETI for the
year 2024 was 25%.
(7) PT.ZKTECO BIOMETRICS INDONESIA and PT. ZKDIGIMAX EXCEL NOBLE apply the corporate income tax rate for
the year 2024 as follows:
1) When the total sales revenue does not exceed IDR 4.8 billion the applicable income tax rate is 11.00%;
2) When the total sales exceed IDR 4.8 billion and do not exceed IDR 50 billion the taxable income of IDR 4.8 billion accounting
for the proportion of total sales shall be calculated at a tax rate of 11.00% and the taxable income of the part exceeding IDR 4.8 billion
accounting for the proportion of total sales shall be calculated at a tax rate of 22.00%;
3) When the total sales exceed IDR 50 billion the applicable income tax rate is 22.00%.
Armatura Co. Ltd. has an income tax rate of 10.00% for sales between KRW 0.00 to KRW 200 million; 20.00% for KRW 200
million to 20 billion; 22.00% for KRW 20-300 billion and 25.00% for over KRW 300 billion.
(9) The applicable income tax rates for ZKTECO CO. LIMITED and NGTECO CO. LIMITED are 8.25% and 16.50%
respectively; the tax rate is 8.25% for accounting profits of HKD 2 million and the tax rate is 16.50% for those exceeding HKD 2
million.
(10) ZKTECO PANAMA S.A. obtained the letter of authorization for the Colon Free Zone Panama on August 30 2021. In 2022
export income of enterprises within the zone was exempt from corporate income tax. From January to February 2022 the corporate
income tax rate for sales revenue in Panama was 25.00%. On March 3 2022 they obtained the SEM license and from March 2022
the corporate income tax rate for sales revenue in Panama was 5.00%.
(11) The applicable income tax rates for ZKTECO SG INVESTMENT PTE. LTD. ZKTECO SINGAPORE PTE. LTD. and
ZKDIGIMAX PTE.LTD in 2024 were 4.25% 8.50% and 17.00% respectively; the taxable income rate was 4.25% for those within
SGD 10000 8.50% for those between SGD 10000 and SGD 200000 and 17.00% for the excess.
(12) The applicable corporate income tax rate for ZKTECO UK LTD in 2024 is as follows: Starting from April 2023 if the profit
exceeds GBP 250000 the income tax rate is 25.00%; if the profit is below GBP 50000 19.00% still applies; if the profit is between
GBP 50000 and GBP 250000 25.00% applies and marginal relief is implemented.
(13) The applicable corporate income tax rate for RALVIE AI INC. in 2024 is as follows: The basic tax rate for federal income
tax is 38.00%. After deducting the tax exemption items specified in Section 149 (1) (t) of the "Law of the People's Republic of China
on Enterprise Income Tax" enterprises can enjoy a 10.00% federal tax credit for income obtained in various provinces (or territories)
of Canada. At the same time the general corporate income tax rate is reduced by 13.00% resulting in a 15.00% federal income tax
rate. The general corporate tax rate in Ontario is 11.50%. The combined federal and Ontario income tax rate is 26.50%.
(14) For income exceeding JPY 8 million the corporation tax rate (income tax) of ZKTeco Japan Co. Ltd. is 23.20%.
(15) The corporate tax of ZKTECO SECURITY L.L.C. is levied on taxable income at the following rates:
1) For enterprises with taxable income not exceeding the tax threshold stipulated in the Cabinet decision (375000 dirhams) the
applicable tax rate is 0.00%;
2) For enterprises with taxable income exceeding the tax threshold the applicable tax rate is 9.00%;
3) For the compliant income portion of free zone compliant enterprises the applicable tax rate is 0.00%;
4) For the non-compliant income portion of free zone compliant enterprises the applicable tax rate is 9.00%.
VII. Notes to Consolidated Financial Statements
1. Monetary funds
Unit: RMB
Item Ending Balance Beginning Balance
Cash on hand 772216.84 1401947.05
237ZKTeco 2024 Annual Report
Cash in bank 1423494905.16 1921774208.61
Other monetary funds 49067783.97 67748799.12
Total 1473334905.97 1990924954.78
Including: total amount deposited
359182516.43269209971.66
abroad
Other explanations:
Note 1: As of December 31 2024 the bank deposits included the principal ending balance of time deposits with a maturity of more
than three months and intended to be held to maturity amounting to RMB 198918980.00 (December 31 2023: RMB 598547190.12)
and the amount of interest receivable that has not yet matured was RMB 12227894.14 (December 31 2023: RMB 20402541.16)
which are not classified as cash and cash equivalents. Please refer to the explanation in Note VII (59) "Supplementary information of
cash flow statement".Note 2: For details of funds with restricted ownership or usage rights such as those mortgaged pledged seized frozen or detained
please refer to the explanation in Note VII (23) "Assets with restricted ownership or use rights".
2. Trading financial assets
Unit: RMB
Item Ending Balance Beginning Balance
Financial assets measured at fair value
and whose changes are included in the 491331815.79 80980203.63
current profits and losses
Including:
Financial products 491331815.79 80887585.81
Forward foreign exchange settlement and
0.0092617.82
sales
Including:
Total 491331815.79 80980203.63
Other explanations:
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Ending Balance Beginning Balance
Banker's acceptance 165450.00 0.00
Trade acceptance 0.00 0.00
Total 165450.00 0.00
(2) Disclosure by bad debt accrual method
Unit: RMB
Category Ending Balance Beginning Balance
238ZKTeco 2024 Annual Report
Book balance Bad debt reserve Book balance Bad debt reserve
Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Including:
Bills receivable
for dad debt
165450.16545
reserve 100.00% 0.00 0.00
000.00
withdrawn by
portfolio
Including:
165450.16545
Total 100.00% 0.00 0.00
000.00
If the bad debt reserve of notes receivable is made according to the general model of expected credit losses:
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Redeem/redem Ending Balance Balance Provision Others
reversal ption
The amount of bad debt reserves recovered or reversed in the current period is significant:
□ Applicable Not applicable□
Note: No notes receivable which have been endorsed or discounted by the Company at the end of the period but not yet due on the
balance sheet date.
4. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 504979612.03 465244619.74
1-2 years 47589232.67 41128894.34
2-3 years 15397520.31 4763523.90
Over 3 years 5704760.98 3103189.24
3-4 years 3287160.38 1424766.06
4-5 years 1197968.12 377084.95
Over 5 years 1219632.48 1301338.23
Total 573671125.99 514240227.22
(2) Disclosure by bad debt accrual method
Unit: RMB
239ZKTeco 2024 Annual Report
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Accounts
receivable
with 195358 195358 70250 600900 10160
3.41%100.00%0.001.37%85.54%
individual 54.24 54.24 09.31 9.31 00.00
provision for
bad debts
Including:
Accounts
receivable
with
insignificant
1953581953587025060090010160
single amount 3.41% 100.00% 0.00 1.37% 85.54%
54.2454.2409.319.3100.00
and bad debt
reserve
withdrawn
separately
Receivable
with 519
47878
combined 554135 351209 014 507215 284279
96.59%6.34%98.63%5.60%7313.6
provision for 271.75 33.86 337. 217.91 04.25
6
bad debt 89
reserve
Including:
519
47878
Aging 554135 351209 014 507215 284279
96.59%6.34%98.63%5.60%7313.6
portfolio 271.75 33.86 337. 217.91 04.25
6
89
519
47980
573671546567014514240344369
Total 100.00% 9.53% 100.00% 6.70% 3313.6
125.9988.10337.227.2213.56
6
89
Bad debt reserve made individually: 19535854.24
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
AREEJ
Expected non-
SECURTECH 0.00 0.00 13649377.28 13649377.28 100.00%
recoverable
TRADING LLC
Hainan Jialing
Digital Expected non-
2032000.001016000.002032000.002032000.00100.00%
Technology Co. recoverable
Ltd.Noble IT
Expected non-
Solutions Co. 415485.70 415485.70 421686.28 421686.28 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 371452.20 371452.20 376995.64 376995.64 100.00%
recoverable
Securit
240ZKTeco 2024 Annual Report
Al Asma Expected non-
353391.81353391.81360448.21360448.21100.00%
Technology recoverable
TIMEWATCH
Expected non-
INFOCOM 300723.36 300723.36 305211.28 305211.28 100.00%
recoverable
PVT. LTD.Shenzhen Xuhui
Information Expected non-
326350.00326350.00270358.32270358.32100.00%
Technology Co. recoverable
Ltd.Shanghai Leqi
Automation Expected non-
521950.00521950.00261950.00261950.00100.00%
Technology Co. recoverable
Ltd.Gansu Fourth
Expected non-
Construction 224676.00 224676.00 224676.00 224676.00 100.00%
recoverable
Group Co. Ltd.VENDEMMIA
COMERCIO Expected non-
201017.79201017.79204017.72204017.72100.00%
INTERNACIO recoverable
NAL LTDA
ASIA
IDENTIFICATI
ON AND
Expected non-
SECURITY 167864.95 167864.95 170370.11 170370.11 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
Wanqiao
Information Expected non-
165900.00165900.00165900.00165900.00100.00%
Technology recoverable
Co.Ltd.Tianjin Eagle
Eye Expected non-
178130.00178130.00162281.00162281.00100.00%
Biotechnology recoverable
Co. Ltd.Baoneng Urban
Development
Expected non-
and 155292.00 155292.00 155292.00 155292.00 100.00%
recoverable
Construction
Group Co. Ltd.Hainan
Zhongkong IOT Expected non-
200089.00200089.00122173.74122173.74100.00%
Technology Co. recoverable
Ltd.PONTO RHJ Expected non-
100061.62100061.62101554.91101554.91100.00%
EIRELI - ME recoverable
SECUZAA
SECURITY
Expected non-
SOLUTIONS 98224.87 98224.87 99690.74 99690.74 100.00%
recoverable
LAB PRIVATE
LIMITED
INTELLISMAR
T Expected non-
74495.8474495.8475607.5975607.59100.00%
TECHNOLOG recoverable
Y INC.Qianxinan Expected non-
74672.0074672.0074672.0074672.00100.00%
Mengku recoverable
241ZKTeco 2024 Annual Report
Business
Service Co.Ltd.RBB
Expected non-
Technologies 62167.12 62167.12 61357.44 61357.44 100.00%
recoverable
Private Limited
Yichang Anlian
Intelligent
Expected non-
Technology 56085.00 56085.00 56085.00 56085.00 100.00%
recoverable
Development
Co. Ltd.Guizhou
Zhongjiang
Intelligent 334800.21 334800.21
Technology Co.Ltd.Dongguan
Yukong
Security 53703.00 53703.00
Technology Co.Ltd.Northwood
244778.11244778.11
Investors LLC
Logile 105108.97 105108.97
Expected non-
Others 206589.76 206589.76 184148.98 184148.98 100.00%
recoverable
Total 7025009.31 6009009.31 19535854.24 19535854.24
Bad debt reserve made by portfolio: 35120933.86
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 554135271.75 35120933.86 6.34%
Total 554135271.75 35120933.86
Explanations on the basis for determining the portfolio:
Provision for bad debts by combination: 35120933.86
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year (including 1
494204325.6924710216.355.00%
year)
1-2 years 44649438.08 4464943.75 10.00%
2-3 years 13336763.23 4001029.01 30.00%
Over 3 years 1944744.75 1944744.75 100.00%
Total 554135271.75 35120933.86
Explanations on the basis for determining the portfolio:
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
242ZKTeco 2024 Annual Report
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Redeem/redem Ending Balance Balance Provision Others
reversal ption
Withdrawing
bad debt
6009009.3114913211.34409755.94936550.87-40059.6019535854.24
reserves by
individual item
Bad debt
reserve
28427904.256663103.920.000.0029925.6935120933.86
withdrawn by
portfolio
Total 34436913.56 21576315.26 409755.94 936550.87 -10133.91 54656788.10
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 936550.87
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanations on accounts receivable verification:
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending
balance
Unit: RMB
243ZKTeco 2024 Annual Report
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
Customer 1 47108886.15 47108886.15 8.21% 2356141.69
Customer 2 33271684.28 33271684.28 5.80% 2284123.86
Customer 3 27516974.69 27516974.69 4.79% 1375848.73
Customer 4 19486553.08 19486553.08 3.39% 1051921.51
Customer 5 13649377.28 13649377.28 2.38% 13649377.28
Total 141033475.48 141033475.48 24.57% 20717413.07
5. Contract assets
(1) Contract asset situation
Unit: RMB
Ending Balance Beginning Balance
Item Bad debt Bad debt
Book balance Book value Book balance Book value
reserve reserve
Quality
guarantee
335494.48122699.34212795.14321793.7839607.47282186.31
deposit
receivable
Total 335494.48 122699.34 212795.14 321793.78 39607.47 282186.31
(2) Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Item Change amount Reasons for changes
(3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Withdrawing
bad debt
0.000.00%0.000.00%0.000.000.00%0.000.00%0.00
reserves by
individual item
Including:
Bad debt
reserve 335494.4 122699.3 212795 321793.7 39607. 282186
100.00%36.57%100.00%12.31%
withdrawn by 8 4 .14 8 47 .31
portfolio
244ZKTeco 2024 Annual Report
Including:
Aging 335494.4 122699.3 212795 321793.7 39607. 282186
100.00%36.57%100.00%12.31%
portfolio 8 4 .14 8 47 .31
335494.4122699.3212795321793.739607.282186
Total 100.00% 36.57% 100.00% 12.31%
84.14847.31
Bad debt reserve made individually: 0
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Single item
0.000.000.000.000.00%
provision
Total 0.00 0.00 0.00 0.00
Bad debt reserve made by portfolio: 122699.34
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 335494.48 122699.34 36.57%
Total 335494.48 122699.34 36.57%
Explanations on the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses
□ Applicable □Not applicable
(4) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Provision in current Recovery or reversal in Charged or written off
Item Reasons
period the current period in current period
Impairment provisions
Provision for
made based on the
impairment by 83091.87
aging distribution and
portfolio
expected credit risk
Total 83091.87 ——
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Other explanations:
245ZKTeco 2024 Annual Report
(5) Actual write-off situation of contract assets in the current period
Unit: RMB
Item Write-off amount
Information on important contract asset verification
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanations on contract asset verification:
Other explanations:
6. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Other receivables 41144121.16 32744574.20
Total 41144121.16 32744574.20
(1) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 4674861.45 14563843.76
Guarantee deposit 14910797.93 14264601.52
Reserve funds and loans 3115748.90 5408335.70
Collection and payment on behalf of
2721289.573604884.91
others
Withholding and paying social security
1642381.431784200.95
and provident fund on behalf of others
Export tax refund 15515710.55 3537610.99
Others 1778689.71 1840576.77
Total 44359479.54 45004054.60
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 28324198.88 19030462.60
246ZKTeco 2024 Annual Report
1-2 years 1755594.41 1949905.24
2-3 years 1554437.48 3010293.84
Over 3 years 12725248.77 21013392.92
3-4 years 2869212.53 1467967.79
4-5 years 221614.92 9492724.32
Over 5 years 9634421.32 10052700.81
Total 44359479.54 45004054.60
3) Disclosure by bad debt accrual method
□Applicable □ Not applicable
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Withdrawing
bad debt 16083 16083 1238463 1062414 1760489.
3.63%100.00%0.0027.52%85.78%
reserves by 49.35 49.35 6.67 7.18 49
individual item
Including:
Withdrawing
bad debt 16083 16083 1238463 1062414 1760489.
3.63%100.00%0.0027.52%85.78%
reserves by 49.35 49.35 6.67 7.18 49
individual item
Bad debt
reserve 42751 16070 41144 3261941 1635333. 3098408
96.37%3.76%72.48%5.01%
withdrawn by 130.19 09.03 121.16 7.93 22 4.71
portfolio
Including:
Aging 28021 16070 11951 2920550. 1635333. 1285216.
6.32%57.35%6.49%55.99%
portfolio 84.00 09.03 74.97 05 22 83
Portfolio of
deposits
security
deposits 39948 39948 2969886 2969886
90.05%0.000.00%65.99%0.000.00%
employee 946.19 946.19 7.88 7.88
loans export
tax refunds
etc.
443593215341144450040512259483274457
Total 100.00% 7.25% 100.00% 27.24%
479.5458.38121.164.600.404.20
Bad debt reserve made individually: 1608349.35
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
CNB
Expected non-
TECHNOLOG 1289511.78 1289511.78 1308756.05 1308756.05 100.00%
recoverable
Y INC.
247ZKTeco 2024 Annual Report
Expected non-
New bio 375838.74 375838.74 299593.30 299593.30 100.00%
recoverable
Total 1665350.52 1665350.52 1608349.35 1608349.35
Bad debt reserve made by portfolio: 1607009.03
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year (including 1
1149117.8357455.825.00%
year)
1-2 years 64695.60 6469.56 10.00%
2-3 years 64695.60 19408.68 30.00%
Over 3 years 1523674.97 1523674.97 100.00%
Total 2802184.00 1607009.03
Explanations on the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
64064.261571268.9610624147.1812259480.40
12024
Balance as of January
1 2024 in the current
period
Provision in current
3838.89-53000.0089576.8240415.71
period
Canceled after
verification in the 9048373.48 9048373.48
current period
Other changes -10447.33 31284.25 -57001.17 -36164.25
Balance as of
57455.821549553.211608349.353215358.38
December 31 2024
Classification basis and bad debt reserve provision ratio for each stage
Changes in book balance with major changes in loss reserves during the current period
□ Applicable □Not applicable
4) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Category Beginning Current period change amount Ending Balance
248ZKTeco 2024 Annual Report
Balance Return or Write-off or
Provision Others
reversal cancellation
Withdrawing
bad debt
10624147.1889576.820.009048373.48-57001.171608349.35
reserves by
individual item
Bad debt
reserve
1635333.22-49161.110.000.0020836.921607009.03
withdrawn by
portfolio
Total 12259480.40 40415.71 0.00 9048373.48 -36164.25 3215358.38
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Other receivables actually written off 9048373.48
Other major receivable written off:
Unit: RMB
Whether the
Verification and
Nature of other payment is
cancellation
Company name accounts Write-off amount Write-off reason incurred due to
programs that have
receivable related
been performed
transactions
Shenzhen Zhongan
Intelligent Control Bad debt write off
Current account 6052062.77 Nonrecoverable No
Technology Co. process
Ltd.Shenzhen
Zhikongtaike
Bad debt write off
Biometric Current account 2500000.00 Nonrecoverable No
process
Technology Co.Ltd.Total 8552062.77
Explanations on writing off other receivables:
249ZKTeco 2024 Annual Report
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
No. 1 Export tax refund 15515710.55 Within 1 year 34.98% 0.00
No. 2 Guarantee deposit 4800000.00 Over 3 years 10.82% 0.00
Within 1 year 1-2
No. 3 Current account 1696196.57 years 2-3 years 3.82% 1551709.73
more than 3 years
No. 4 Current account 1308756.05 Over 3 years 2.95% 1308756.05
Within 1 year 2-3
No. 5 Guarantee deposit 910055.30 years more than 3 2.05% 0.00
years
Total 24230718.47 54.62% 2860465.78
7. Prepayments
(1) Prepayments listed by aging
Unit: RMB
Ending Balance Beginning Balance
Aging
Amount Proportion Amount Proportion
Within 1 year 25493011.77 95.98% 22706163.01 96.80%
1-2 years 1044012.35 3.93% 580816.58 2.48%
2-3 years 450.85 0.00% 20400.64 0.09%
Over 3 years 23998.01 0.09% 150527.01 0.63%
Total 26561472.98 23457907.24
Explanations on the reasons why prepayments with an aging of over 1 year and significant amounts were not settled in a timely manner:
There were no significant prepayments with an aging period exceeding one year that were not settled in a timely manner at the end of
the period.
(2) Prepayments of the top five ending balances collected by prepayment object
Unit: RMB
Proportion of the total amount of
Company name Ending Balance
prepayments at the end of the period
Supplier 1 3947273.28 14.86%
Supplier 2 2700514.69 10.17%
Supplier 3 1578400.00 5.94%
Supplier 4 1450625.23 5.46%
250ZKTeco 2024 Annual Report
Supplier 5 662588.49 2.49%
Total 10339401.69 38.92%
Other explanations: No obvious impairment signs of the prepayments were found at the end of the period so no impairment provision
was made.
8. Inventories
Whether the Company needs to comply with disclosure requirements in the real estate industry
No
(1) Inventory classification
Unit: RMB
Ending Balance Beginning Balance
Inventory Inventory
depreciation depreciation
reserves or reserves or
Item contract contract
Book balance Book value Book balance Book value
performance performance
cost cost
impairment impairment
reserves reserves
Raw materials 93407452.97 4182521.26 89224931.71 131431792.72 2989549.95 128442242.77
Products in
10928773.180.0010928773.188583812.250.008583812.25
process
Inventory
240786117.7413846891.80226939225.94238881580.2612576970.86226304609.40
goods
Sending goods 8482461.31 268995.00 8213466.31 9129100.21 174341.27 8954758.94
Consigned
processing 429360.95 0.00 429360.95
materials
Total 353604805.20 18298408.06 335306397.14 388455646.39 15740862.08 372714784.31
(2) Inventory depreciation reserves and contract performance cost impairment reserves
Unit: RMB
Increase in current period Decrease in current period
Beginning
Item Reversal or Ending Balance Balance Provision Others Others
reselling
Raw materials 2989549.95 1557658.44 4580.81 369267.94 0.00 4182521.26
Inventory
12576970.869758998.31-450618.748038458.630.0013846891.80
goods
Sending goods 174341.27 240448.97 0.00 145795.24 0.00 268995.00
251ZKTeco 2024 Annual Report
Total 15740862.08 11557105.72 -446037.93 8553521.81 0.00 18298408.06
Provision for inventory depreciation made by portfolio
Unit: RMB
End of the period Opening
Portfolio Name Provision ratio Provision ratio Revaluation Beginning Revaluation
Ending Balance for inventory for inventory
reserve Balance reserve
depreciation depreciation
Provision standards for inventory depreciation reserves made by portfolio
9. Non-current assets due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Debt investment due within one year 19802583.11 16902617.83
Other creditor's right investment due
0.000.00
within one year
Long-term receivables due within one
580655.24354996.91
year
Total 20383238.35 17257614.74
(1) Debt investment due within one year
□Applicable □ Not applicable
1) Information on debt investment due within one year
Unit: RMB
Ending Balance Beginning Balance
Portfolio Name Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Certificates of
11060888.5411060888.54
Deposit (CD)
Term deposits 19802583.11 19802583.11 5841729.29 5841729.29
Total 19802583.11 19802583.11 16902617.83 16902617.83
Changes in provision for depreciation of debt investments due within one year in the current period
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
2) Important debt investments due within one year at the end of the period
Unit: RMB
Item Face value Coupon rate Due Date Effective interest rate Overdue principal
252ZKTeco 2024 Annual Report
Ending Beginning Ending Beginning
Balance Balance Balance Balance
(2) Other creditor's debt investment due within one year
□ Applicable □Not applicable
10. Other current assets
Unit: RMB
Item Ending Balance Beginning Balance
Advance payment of income tax 11474437.07 6221029.24
Value added tax deduction amount 21313002.62 19249699.10
Other prepaid taxes 283376.31 395080.94
Total 33070816.00 25865809.28
Other explanations:
11. Debt investment
(1) Information on debt investment
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Bank CD -
35235692.0235235692.0257795333.2957795333.29
Principal
Bank CD -
342697.25342697.251391881.441391881.44
Interest
Debt
investment due -19802583.11 -19802583.11 -16902617.83 -16902617.83
within one year
Total 15775806.16 15775806.16 42284596.90 42284596.90
Changes in provision for depreciation of debt investments in the current period
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
(2) Important debt investments at the end of the period
Unit: RMB
Ending Balance Beginning Balance
Debt Effective Effective
items Face Coupon Due Overdue Face Coupon Due Overdue interest interest
value rate Date principal value rate Date principal
rate rate
253ZKTeco 2024 Annual Report
(3) Provision for impairment
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1 2024 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
(4) Actual verification of debt investments in the current period
Unit: RMB
Item Write-off amount
Actually written-off debt investment 0.00
Information on important debt investment verification
Explanations on debt investment verification:
Changes in book balance with major changes in loss reserves during the current period
□ Applicable □Not applicable
Other explanations:
12. Long-term receivables
(1) Information on long-term receivables
Unit: RMB
Ending Balance Beginning Balance
Discount rate
Item Bad debt Bad debt
Book balance Book value Book balance Book value range
reserve reserve
Employee 3.60%-
6059956.796059956.792802225.142802225.14
housing loan 4.30%
Long-term
receivables 3.60%-
-580655.24-580655.24-354996.91-354996.91
due within 4.30%
one year
Total 5479301.55 5479301.55 2447228.23 2447228.23
254ZKTeco 2024 Annual Report
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Including:
Including:
Provision for bad debt reserve based on a general model of expected credit losses
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1 2024 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance Balance Provision Others
reversal cancellation
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Other explanations:
(4) Long-term receivables actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important long-term receivable verification:
255ZKTeco 2024 Annual Report
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanations on long-term receivable verification:
None
13. Long-term equity investment
256ZKTeco 2024 Annual Report
Unit: RMB
Increase or decrease in the current period
Investment
Beginning Cash profit or Ending Beginning Other Change dividend Ending balance of Additional loss balance of Investee balance (book Reduced comprehensiv s in s or Impairmen balance (book impairmen
value) investmen recognized Others
impairmen
t provision investment e income other profits t provision
value)
t under t provision
adjustments equities declared
equity
to pay
method
I. Joint ventures
Subtotal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
II. Joint venture
-
Silk ID
274331.88281599.250.00275546.00.000.000.000.000.001214.120.00
Systems Inc.
0
CV 55707.0
3741608.660.00-12587.590.000.000.000.003784728.11
SquaredInc. 4
ZKTECO
SMART -
22677.0
CITY 1765948.08 0.00 351838.8 0.00 0.00 0.00 0.00 1436786.20
0
(THAILAND 8
) CO. LTD.Xiamen
Xingniu
Yunyu
Venture -
24000000.023760577.9
Capital 0.00 239422.0 0.00 0.00 0.00 0.00 0.00
02
Partnership 8
Enterprise
(Limited
Partnership)
--
29781888.679598.128982092.2
Subtotal 281599.25 0.00 275546.0 603848.5 0.00 0.00 0.00 0.00 0.00
263
05
29781888.6--79598.128982092.2
Total 281599.25 0.00 0.00 0.00 0.00 0.00 0.00
2275546.0603848.563
257ZKTeco 2024 Annual Report
05
258ZKTeco 2024 Annual Report
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable □Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
None
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
None
Other explanations:
At the end of the period no obvious signs of impairment were found in the long-term equity investment so no impairment provision
was made.
14. Investment real estate
(1) Investment real estate adopting cost measurement model
□Applicable □ Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use rights Total
progress
I. Original book value
1. Beginning
34416026.1534416026.15
Balance
2. Increase in
current period
(1)
Outsourcing
(2)
Transferred from
inventory fixed assets
and construction in
progress
(3) Increase
in business merger
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance 34416026.15 34416026.15
259ZKTeco 2024 Annual Report
II. Accumulated
depreciation and
accumulated
amortization
1. Beginning
11270537.3011270537.30
Balance
2. Increase in
1641172.081641172.08
current period
(1) Provision
1641172.081641172.08
or amortization
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance 12911709.38 12911709.38
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance
IV. Book value
1. Ending book
21504316.7721504316.77
value
2. Beginning book
23145488.8523145488.85
value
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable□ Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
None
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the
260ZKTeco 2024 Annual Report
actual situation of that year
Other explanations:
(2) Investment real estate adopting fair value measurement model
□ Applicable □Not applicable
(3) Converted to investment real estate and measured at fair value
Unit: RMB
Accounting Impact on other
Conversion Approval Impact on
Item subject before Amount comprehensive
reason procedure profit and loss
conversion income
(4) Investment real estate without completed property ownership certificate
Unit: RMB
Reasons for not completing the property
Item Book value
ownership certificate
Other explanations:
1. Explanations on impairment tests for investment real estate measured at cost model
At the end of the period no obvious signs of impairment of investment real estate were found so no impairment provision
was made.
2. There was no investment real estate for which the property ownership certificates have not been completed.
3. There was no investment real estate subject to any restrictions on ownership or use rights such as mortgage pledge seizure
freezing or detention.
15. Fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Fixed assets 535337384.82 470167242.89
Disposal of fixed assets -45451.60
Total 535337384.82 470121791.29
(1) Status of fixed assets
Unit: RMB
Electronic
Houses and Machinery Transportation
Item equipment and Total
buildings equipment vehicles
others
I. Original book
value:
1. Beginning 436302048.48 53924758.04 12969475.15 105042864.86 608239146.53
261ZKTeco 2024 Annual Report
Balance
2. Increase in
82211610.791373506.821093429.4313906736.3598585283.39
current period
(1)
8658791.831353199.60972441.7715340626.2926325059.49
Purchase
(2)
Transferred from
71236686.4514425.08857686.2672108797.79
construction in
progress
(3)
Increase in
business merger
(4)
Differences in
foreign currency 2316132.51 5882.14 120987.66 -2291576.20 151426.11
statement
translation
3. Decrease in
740350.37654668.14223711.892226234.273844964.67
current period
(1)
Disposal or 740350.37 654668.14 223711.89 2226234.27 3844964.67
retirement
4. Ending
517773308.9054643596.7213839192.69116723366.94702979465.25
balance
II. Accumulated
depreciation
1. Beginning
39285147.0426521285.537991553.1964273917.88138071903.64
Balance
2. Increase in
11287681.985268158.591281455.2614228661.4332065957.26
current period
(1)
11332262.915152106.391278686.6615799154.6333562210.59
Provision
(2)
Differences in
foreign currency -44580.93 116052.20 2768.60 -1570493.20 -1496253.33
statement
translation
3. Decrease in
181866.83408147.37154352.081751414.192495780.47
current period
(1)
Disposal or 181866.83 408147.37 154352.08 1751414.19 2495780.47
retirement
4. Ending
50390962.1931381296.759118656.3776751165.12167642080.43
balance
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
262ZKTeco 2024 Annual Report
current period
(1)
Provision
3. Decrease in
current period
(1)
Disposal or
retirement
4. Ending
balance
IV. Book value
1. Ending
467382346.7123262299.974720536.3239972201.82535337384.82
book value
2. Beginning
397016901.4427403472.514977921.9640768946.98470167242.89
book value
(2) Temporarily idle fixed assets
Unit: RMB
Original book Accumulated Impairment
Item Book value Remarks
value depreciation provision
(3) Fixed assets leased out through operating leases
Unit: RMB
Item Ending book value
(4) Fixed assets without completed property ownership certificate
Unit: RMB
Reasons for not completing the property
Item Book value
rights certificate
Houses and buildings of the Multimodal Part of the factory building has been
Biometrics Digitalization Industrial Base 8429076.60 transferred to fixed assets but the entire
Construction Project project is not yet completed.Other explanations:
1. The original value of fixed assets that have been fully depreciated at the end of the period but are still in use is RMB
44556666.45.
2. There was no fixed asset subject to any restrictions on ownership or use rights such as mortgage pledge seizure freezing or
detention.
(5) Impairment test of fixed assets
□ Applicable □Not applicable
263ZKTeco 2024 Annual Report
(6) Disposal of fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Transportation vehicles -45451.60
Total -45451.60
Other explanations:
None
16. Construction in progress
Unit: RMB
Item Ending Balance Beginning Balance
Construction in progress 226445932.02 138986483.73
Engineering materials 0.00 0.00
Total 226445932.02 138986483.73
(1) Construction in progress
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Multimodal
Biometrics
Digitalization
179899141.410.00179899141.4187417407.700.0087417407.70
Industrial Base
Construction
Project
Hybrid
Biometrics IoT
0.000.000.0022612110.240.0022612110.24
Intelligent
Industrial Base
Thai factory
construction
40007675.650.0040007675.6526210787.400.0026210787.40
and office
buildings
American
Manufacturing
Factory 6539114.96 0.00 6539114.96 2746178.39 0.00 2746178.39
Construction
Project
Total 226445932.02 0.00 226445932.02 138986483.73 0.00 138986483.73
264ZKTeco 2024 Annual Report
(2) Current changes in important construction in progress
Unit: RMB
Amount Other Proportion of Including:
Accumulated Current
transferred to decreases accumulated current Source
Budget Beginning Increase in Ending Engineering amount of interest
Project Name fixed assets in in the project interest of
amount Balance current period Balance progress interest capitalization
the current current investment to capitalized Funds
capitalization rate
period period budget amount
Multimodal
Biometrics Partial
Digitalization 284566264.9 17989914 completion
87417407.70100910810.318429076.600.0066.18%0.000.001
Industrial Base 1 1.41 and transfer
Construction to fixed assets
Project
Hybrid
Biometrics IoT
214042000.0
Intelligent 22612110.24 1208099.23 23820209.47 0.00 0.00 110.71% Completed 2359113.42 0.00 2
0
Industrial Base
Project
Thai factory Partial
construction 109095400.0 40007675 completion
26210787.4053656399.9739859511.720.0073.21%0.000.003
and office 0 .65 and transfer
buildings to fixed assets
607703664.921990681
Total 136240305.34 155775309.51 72108797.79 0.00 2359113.42 0.00
17.06
Note: 1. Own funds and raised funds
2. Own funds bank loans and raised funds
3. Own funds
265ZKTeco 2024 Annual Report
(3) Current provision for impairment of construction in progress
Unit: RMB
Increase in the Decrease in the Reason for
Item Beginning Balance Ending Balance
current period current period provision
Other explanations:
At the end of the period no obvious signs of impairment of construction in progress were found so no
impairment provision was made.
(4) Impairment test of construction in progress
□ Applicable □Not applicable
(5) Engineering materials
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Total 0.00 0.00
Other explanations:
None
17. Right-of-use assets
(1) Information on right-of-use assets
Unit: RMB
Electronic equipment
Item Houses and buildings Transportation vehicles Total
and others
I. Original book value
1. Beginning
104168448.022613027.1023200.93106804676.05
Balance
2. Increase in
39109669.351705739.2240815408.57
current period
Lease 42083046.30 1825611.11 43908657.41
Differences in foreign
currency statement -2973376.95 -119871.89 -3093248.84
translation
3. Decrease in
37326312.73951475.1438277787.87
current period
Lease expiration 18809281.72 54879.24 18864160.96
Lease change 3932495.27 3932495.27
Termination of lease 14584535.74 896595.90 15481131.64
4. Ending balance 105951804.64 3367291.18 23200.93 109342296.75
II. Accumulated
266ZKTeco 2024 Annual Report
depreciation
1. Beginning
66794766.611327043.4113147.1768134957.19
Balance
2. Increase in
26355051.571065176.554640.2027424868.32
current period
(1) Provision 27820969.78 1185097.34 4640.20 29010707.32
Differences in foreign
currency statement -1465918.21 -119920.79 -1585839.00
translation
3. Decrease in
33968058.99601683.9134569742.90
current period
(1) Disposal
Lease expiration 18367958.90 55184.13 18423143.03
Lease change 3522385.87 3522385.87
Termination of lease 12077714.22 546499.78 12624214.00
4. Ending balance 59181759.19 1790536.05 17787.37 60990082.61
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
4. Ending balance
IV. Book value
1. Ending book
46770045.451576755.135413.5648352214.14
value
2. Beginning book
37373681.411285983.6910053.7638669718.86
value
(2) Impairment test of right-of-use assets
□ Applicable □Not applicable
Other explanations: No impairment signs of the right-of-use assets were found at the end of the period so no impairment provision
was made.
18. Intangible assets
(1) Intangible assets
Unit: RMB
Item Land use rights Patent rights Non-patent Software Others Total
267ZKTeco 2024 Annual Report
technology
I. Original book
value
1.
Beginning 71989469.29 13302286.08 116032.85 85407788.22
Balance
2. Increase
in current 11700760.11 26155243.91 180.38 37856184.40
period
(1)
11886065.4926303706.8338189772.32
Purchase
(2)
Internal R&D
(3)
Increase in
business
merger
(4) Differences
in foreign
currency -185305.38 -148462.92 180.38 -333587.92
statement
translation
3.
Decrease in 111927.07 111927.07
current period
(1)
5732.375732.37
Disposal
(2) Decrease in
business 106194.70 106194.70
merger
4. Ending
83690229.4039345602.92116213.23123152045.55
balance
II. Accumulated
amortisation
1.
Beginning 11344981.45 7995689.88 50745.21 19391416.54
Balance
2. Increase
in current 1242153.90 2704928.73 15536.64 3962619.27
period
(1)
1242153.902826100.0313897.764082151.69
Provision
(2) Differences
in foreign
currency -121171.30 1638.88 -119532.42
statement
translation
3.
Decrease in 46387.06 46387.06
current period
(1)
4351.844351.84
Disposal
268ZKTeco 2024 Annual Report
(2) Decrease in
business 42035.22 42035.22
merger
4. Ending
12587135.3510654231.5566281.8523307648.75
balance
III. Provision
for impairment
1.
Beginning
Balance
2. Increase
in current
period
(1)
Provision
3.
Decrease in
current period
(1)
Disposal
4. Ending
balance
IV. Book value
1. Ending
71103094.0528691371.3749931.3899844396.80
book value
2.
Beginning book 60644487.84 5306596.20 65287.64 66016371.68
value
1. The proportion of intangible assets formed through internal R&D of the company to the balance of intangible assets at the end of
this period is 0.00%.
2. Explanations on the impairment test for intangible assets
At the end of the period no obvious signs of impairment of intangible assets were found so no impairment provision was made.
3. There are no land use rights for which the relevant certificates have not been completed.
4. There was no intangible asset subject to any restrictions on ownership or use rights such as mortgage pledge seizure freezing or
detention.
19. Goodwill
(1) Original book value of goodwill
Unit: RMB
Name of Increase in the current period Decrease in the current period
invested entity
Beginning
or matters Formed by Exchange rate Exchange rate Ending Balance Balance
forming business Disposals fluctuations fluctuations
goodwill merger
ZKTECO (M)
173149.072584.02175733.09
SDN. BHD.ZK
331654.654949.51336604.16
INVESTIMEN
269ZKTeco 2024 Annual Report
TOS DO
BRASIL
LTDA.Total 504803.72 7533.53 512337.25
(2) Provision for impairment of goodwill
Unit: RMB
Name of Increase in the current period Decrease in the current period
invested entity
Beginning
or matters Ending Balance
Balance
forming Provision Disposals
goodwill
Total
(3) Information related to the asset group or portfolio of asset groups where goodwill is located
Composition and basis of the
Is it consistent with previous
Name asset group or portfolio to Operating segments and basis
years
which it belongs
An asset group or portfolio of
asset groups that can
independently generate cash
flow taking into account the
ZKTECO (M) SDN. BHD. synergistic effects of business Not applicable Yes
mergers and the
management's management or
monitoring of production and
operating activities.An asset group or portfolio of
asset groups that can
independently generate cash
flow taking into account the
ZK INVESTIMENTOS DO
synergistic effects of business Not applicable Yes
BRASIL LTDA
mergers and the
management's management or
monitoring of production and
operating activities.Changes in asset group or asset portfolio
Objective facts and basis that
Name Composition before change Composition after change
lead to changes
Other explanations:
None
(4) Specific method for determining the recoverable amount
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable □Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
270ZKTeco 2024 Annual Report
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
(5) Completion of performance commitments and corresponding impairment of goodwill
When goodwill is formed there is a performance commitment and the reporting period or the previous period in the reporting period
is within the performance commitment period
□ Applicable □Not applicable
Other explanations:
None
20. Long-term deferred expenses
Unit: RMB
Amortization
Increase in current Other reduced
Item Beginning Balance amount for the Ending Balance
period amounts
current period
Decoration works 2513047.50 3188981.65 1568450.70 -6060.73 4139639.18
Employee housing
loan deferred 641657.60 126179.60 145563.08 622274.12
interest
Others 614142.71 606045.94 426564.34 793624.31
Total 3768847.81 3921207.19 2140578.12 -6060.73 5555537.61
Other explanations:
21. Deferred income tax assets/deferred tax liabilities
(1) Deferred income tax assets not offset
Unit: RMB
Ending Balance Beginning Balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for
47192027.836521838.0936366162.245804206.98
impairment of assets
Unrealized profits from
84185246.3517508200.2398721713.0217452699.91
internal transactions
Deductible losses 285896113.31 42872331.32 207081168.58 31091802.32
Withholding rebates 10022833.77 1393756.83 15007767.78 2143716.17
Estimated liabilities 600000.00 90000.00
271ZKTeco 2024 Annual Report
Share-based payments 7866303.64 1177039.86
Provision for inventory
14186283.122370858.9611003159.271906570.77
write-down
Deferred income 1420041.44 213006.22 1853549.62 278032.44
Lease liabilities 49257032.77 10466405.35 35689297.38 7313490.56
Payroll payable 2236010.00 342401.50
Total 494395588.59 81688798.50 414189121.53 67257559.01
(2) Non-offsetting deferred income tax liabilities
Unit: RMB
Ending Balance Beginning Balance
Item Taxable temporary Deferred income tax Taxable temporary Deferred income tax
difference liabilities difference liabilities
Changes in fair value
of trading financial 3617185.62 542577.84 755429.17 113314.37
instruments
Accelerated
depreciation of fixed 16600073.87 2490011.08 22133567.26 3320431.55
assets
Right-of-use asset 46681772.88 9697505.58 34457850.98 6895307.56
Total 66899032.37 12730094.50 57346847.41 10329053.48
(3) Deferred income tax assets or liabilities listed at net amount after offset
Unit: RMB
Amount of mutual Amount of mutual
Ending balance of Beginning balance of
offset between deferred offset between deferred
deferred income tax deferred income tax
Item income tax assets and income tax assets and
assets and liabilities assets and liabilities
liabilities at the end of liabilities at the
after offset after offset
period beginning of period
Deferred income tax
81688798.5067257559.01
assets
Deferred income tax
12730094.5010329053.48
liabilities
(4) Details of unconfirmed deferred income tax assets
Unit: RMB
Item Ending Balance Beginning Balance
Deductible temporary difference 16623824.03 12690171.04
Deductible losses 96349663.36 67373596.51
Total 112973487.39 80063767.55
(5) The deductible losses of unrecognized deferred income tax assets will expire in the following years
Unit: RMB
Year Closing amount Opening amount Remarks
202415985752.57
20251274747.096481611.28
272ZKTeco 2024 Annual Report
20262241647.993921974.11
20276892984.6410275824.68
202815815109.7614889082.61
2029 and beyond 70125173.88 15819351.26
Total 96349663.36 67373596.51
Other explanations:
22. Other non-current assets
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Prepayment for
0.000.000.00787973.040.00787973.04
decoration
Prepaid
equipment 4620055.22 0.00 4620055.22 370641.60 0.00 370641.60
payment
Prepayment for
0.000.000.0015725991.210.0015725991.21
software
Total 4620055.22 0.00 4620055.22 16884605.85 0.00 16884605.85
Other explanations:
None
23. Assets with restricted ownership or use right
Unit: RMB
End of the period Opening
Item Restricted Restricted Restricted Restricted
Book balance Book value Book balance Book value
type situation type situation
Bank
acceptance bill
Bill deposit: margin of RMB
Deposit
RMB 46693268.67
Deposit funds in
Monetary 45703490.78 funds in transit
47843704.40 47843704.40 and funds 54954670.48 54954670.48 transit
funds Funds in of RMB
in transit frozen
transit: RMB 7461401.81
funds
2140213.62 frozen litigation
funds of RMB
800000.00
Fixed assets 204397423.28 199029492.12 Mortgage Note
Intangible
49453695.00 43848942.89 Mortgage Note
assets
Construction
110185544.37 110185544.37 Mortgage Note
in progress
Total 47843704.40 47843704.40 418991333.13 408018649.86
Other explanations:
273ZKTeco 2024 Annual Report
Note: On December 16 2019 the subsidiary of the Company ZKTECO (GUANGDONG) CO. LTD signed a "Fixed Asset Loan
Contract" with the number of DY (3100) 2019 GD Zi No. 013346 and a maximum mortgage contract with the number of DY (3100)
2019 GD Zi No. 024957 with the Dongguan Branch of Bank of Dongguan Co. Ltd. agreeing to a loan amount of RMB 206 million
and a loan term from December 16 2019 to December 15 2029 and agree that the land with the number Y (2018) DGBDCQ No.
0259880 is used as collateral and the Company has signed a contract with Dongguan Branch of Bank of Dongguan Co. Ltd. with the
number DY (3100) 2019 ZGB Zi No. 024956 with a maximum guarantee amount of RMB 250 million. Considering that the land area
of the Company's collateral has changed and a new real estate certificate has been obtained for the collateral on October 19 2020 the
subsidiary of the Company ZKTECO (GUANGDONG) CO. LTD has signed a supplementary agreement with the number
20201013001 with Dongguan Branch of Bank of Dongguan Co. Ltd. which stipulates to change the collateral to Y (2020) DGBDCQ
No. 0248681 land.On November 27 2024 the subsidiary of the Company Zkteco (Guangdong) Co. Ltd. signed the "Agreement on Termination
of Mortgage Contract" "Agreement on Termination of Fixed Asset Loan Contract" with Bank of Dongguan Co. Ltd. Dongguan Branch
and the Company signed the "Agreement on Termination of Guarantee Contract" with Bank of Dongguan Co. Ltd. Dongguan Branch.These agreements terminated the aforementioned loan contract mortgage contract and guarantee contract and lifted the mortgage on
all mortgaged properties. As of December 31 2024 the Company has no assets mortgaged to the Bank of Dongguan Co. Ltd.Dongguan Branch.
24. Notes payable
Unit: RMB
Category Ending Balance Beginning Balance
Bank acceptance bill 134784219.75 122573544.09
Total 134784219.75 122573544.09
The total amount of unpaid notes payable at the end of this period is RMB 0.00.
25. Accounts payable
(1) Listing of accounts payable
Unit: RMB
Item Ending Balance Beginning Balance
Material payment 173900619.81 217082802.45
Equipment payment 898794.71 932731.16
Service fee 5020813.02 4834986.05
Project payment 42641363.41 18294116.38
Others 2953051.88 3939546.28
Total 225414642.83 245084182.32
(2) Important accounts payable with aging over 1 year or overdue
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Other explanations:
None
274ZKTeco 2024 Annual Report
26. Other payables
Unit: RMB
Item Ending Balance Beginning Balance
Other payables 45821035.19 36735314.36
Total 45821035.19 36735314.36
(1) Other payables
1) List of other payables by nature of money
Unit: RMB
Item Ending Balance Beginning Balance
Employee reimbursement 1648647.92 5222956.92
Payment to be settled 5241858.41 3980996.11
Withholding and paying social security
125966.01331708.81
and provident fund on behalf of others
Current account 6093622.83 7424919.78
Collection and payment on behalf of
1552934.62328337.90
others
Guarantee deposit 2489844.38 3653667.64
Others 28668161.02 15792727.20
Total 45821035.19 36735314.36
(2) Important other accounts payable with aging over 1 year or overdue
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Other explanations:
27. Contract liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Advances on sales 71168318.91 65331106.17
Total 71168318.91 65331106.17
Significant contract liabilities with an aging of over 1 year
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Item Change amount Reasons for changes
275ZKTeco 2024 Annual Report
28. Payroll payable
(1) List of payroll payable
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
I. Short-term
56407899.55533347611.88536918257.2552837254.18
compensation
II. Post-employment
welfare - defined 222202.43 28211465.15 28016857.23 416810.35
contribution plan
III. Dismissal benefit 2910107.17 2173197.39 736909.78
Total 56630101.98 564469184.20 567108311.87 53990974.31
(2) List of short-term compensation
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
1.Salary bonus
54515552.19491272776.51495118424.8550669903.85
allowance and subsidy
2. Employee benefits 463201.20 8614612.85 8837229.63 240584.42
3.Social insurance 196370.08 27195857.31 26740502.58 651724.81
Including:
medical insurance 195814.68 26021264.47 25567396.05 649683.10
premium
Work-
related injury insurance 555.40 727810.61 726324.30 2041.71
premium
Birth
446782.23446782.23
insurance premium
4. Housing fund 54239.09 5750542.29 5711887.77 92893.61
5. Labor union
expenditure and
1178536.99513822.92510212.421182147.49
personnel education
fund
Total 56407899.55 533347611.88 536918257.25 52837254.18
(3) List of defined contribution plan
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
1. Basic endowment
214173.6127184238.6727001126.93397285.35
insurance expenses
2.Unemployment
8028.821027226.481015730.3019525.00
insurance
276ZKTeco 2024 Annual Report
Total 222202.43 28211465.15 28016857.23 416810.35
Other explanations:
29. Taxes payable
Unit: RMB
Item Ending Balance Beginning Balance
VAT 5579760.29 7538983.47
Consumption tax 34079.54
Enterprise income tax 6705759.08 15364635.19
Individual income tax 5232563.89 3712496.39
Urban maintenance and construction tax 444230.76 243439.39
Property tax 488175.02 496029.92
Stamp duty 407386.15 499102.75
Education surcharge 440506.80 234127.14
Others 982716.97 769335.65
Total 20281098.96 28892229.44
Other explanations:
30. Non-current liabilities due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Long-term loans due within one year 964811.76 957265.72
Lease liabilities due within one year 21857837.11 20137416.64
Total 22822648.87 21094682.36
Other explanations:
31. Other current liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Sales rebates payable 10022833.77 15007767.78
Tax to be transferred to output tax 2037746.19 1456166.57
Total 12060579.96 16463934.35
Changes in short-term bonds payable:
Unit: RMB
Accruing Amortization of Whether it
Bond Face Coupon Issue Bond Issue Beginning Current Current Ending
interest at excess and is a breach
name value rate Date duration amount Balance issue repayment Balance
face value discount of contract
277ZKTeco 2024 Annual Report
Total
Other explanations:
32. Long-term loan
(1) Classification of long-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Credit borrowings 7986140.65 8767670.76
Long-term loans due within one year -964811.76 -957265.72
Total 7021328.89 7810405.04
Explanations on long-term loan classification:
As of December 31 2024 the credit borrowings included an amount of RMB 8211.50 for accrued but unpaid interest (December
31 2023: RMB 9146.49).
Other explanations including interest rate range:
None
33. Lease liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Lease payment amount 57524873.16 43637253.89
Unrecognized financing charges -6558959.29 -3786551.04
Lease liabilities due within one year -21857837.11 -20137416.64
Total 29108076.76 19713286.21
Other explanations:
34. Estimated liabilities
Unit: RMB
Item Ending Balance Beginning Balance Cause of formation
Pending litigation 0.00 600000.00 Note 1
Total 0.00 600000.00
Other descriptions including important assumptions and estimation explanations related to important estimated liabilities:
Note 1: The main reason for the pending litigation is the estimated liabilities provided from the trademark infringement dispute
between the Company and Shenzhen Zokon Industry Development Co. Ltd. In 2023 the Company set aside an estimated liability of
RMB 600000 for the trademark infringement and unfair competition dispute between Zokon Industry and Shenzhen Xinjiacheng
Intelligent Technology Co. Ltd. The court finally ruled that the Company shall compensate Zokon Industry for economic losses and
reasonable expenses for rights protection totaling RMB 600000. In addition in the case of unfair competition dispute between the
278ZKTeco 2024 Annual Report
Company and Zokon Industry the court finally ruled that Zokon Industry shall compensate the Company and Shenzhen ZKTeco for a
loss of RMB 2 million. In April 2024 the Company proposed the Shenzhen Intermediate People's Court to offset the debt related to
the above case. That is the amount payable by the Company to Zokon Industry in this case was fully offset against the amount payable
by Zokon Industry to the Company based on the Company's lawsuit against Zokon Industry in the unfair competition dispute case.
35. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Beginning Balance Ending Balance Cause of formation
current period current period
Government Financial
1853549.62433508.181420041.44
subsidies allocation
Total 1853549.62 433508.18 1420041.44
Other explanations:
36. Share capital
Unit: RMB
Increase/decrease in this change (+ -)
Beginning
Share Ending
Balance Issue new transferred Bonus Others Subtotal Balance
shares from capital
reserve
Total Shares 194679508.00 1632817.00 1632817.00 196312325.00
Other explanations:
Note 1: On December 31 2024 the Company held the 14th Session of the Third Board Meeting which reviewed and approved
the "Proposal on the Achievement of the Attribution Conditions for the First Attribution Period of the Reserved Grant in the 2022
Restricted Share Incentive Plan" with the number of restricted shares eligible for vesting being 74962 shares. As of December 31
2024 the restricted shares that can be attributed to this portion have not yet completed the attribution registration procedures with
China Securities Depository and Clearing Co. Ltd.Note 2: Explanations on changes in the equity in the current period
In 2024 the Company's equity incentive plan led to an increase in share capital by RMB 1632817.00 due to the vesting of eligible
incentive objects and an increase in capital reserve - share premium by RMB 20687791.39. The above changes in share capital have
been verified by Zhonghui Certified Public Accountants (Special General Partnership) through the issuance of ZHKY [2024] No.
10490 and ZHKY [2024] No. 10614 Capital Verification Reports.
37. Capital reserve
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Capital premium (share
1998953460.6940479404.910.002039432865.60
capital premium)
Other capital reserves 76525914.44 11156466.71 19791613.52 67890767.63
279ZKTeco 2024 Annual Report
Total 2075479375.13 51635871.62 19791613.52 2107323633.23
Other explanations including changes in current period and reasons for changes:
(1) The increase in capital reserve - share premium for the current period is due to: * An increase of RMB 20687791.39 in share
premium due to the second type of restricted share equity incentive of the Company in 2024 as the incentive objects met the attribution
conditions. * An increase of RMB 19791613.52 in share premium due to the transfer from other capital reserve as a result of the
vesting of the second type of restricted share equity incentive.
(2) The increase in capital reserve - other capital reserve for the current period is due to payment of RMB 11156466.71 for the
recognition of share-based payment for the second type of restricted share; the decrease for the current period is due to the decrease of
RMB 19791613.52 for the adjustment for vesting in the current period.
38. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Implementing equity
incentives for 784700.00 58898528.10 59683228.10
repurchasing shares
Total 784700.00 58898528.10 59683228.10
Other explanations including changes in current period and reasons for changes:
The Company held the 7th Session of the Third Board Meeting on November 10 2023 and deliberated and approved the "Proposal
on Repurchasing Company Shares through Centralized Bidding Trading". The Company was agreed to use its own funds to repurchase
the issued RMB denominated ordinary shares of the Company through centralized bidding trading for employee stock ownership plans
or equity incentives.The total transaction amount from January 1 2024 to February 1 2024 is RMB 58898528.10 (excluding transaction costs). As
of February 1 2024 the Company's share repurchase plan has been implemented and the actual repurchase period is from November
30 2023 to February 1 2024. The Company has repurchased a total of 2230000 shares of the Company through a dedicated securities
account for share repurchases through centralized bidding trading. It accounts for 1.1455% of the total share capital of the Company at
that time with a maximum transaction price of RMB 31.40 per share and a minimum transaction price of RMB 23.20 per share. The
total transaction amount is RMB 59683228.10 (excluding transaction costs).
39. Other comprehensive income
Unit: RMB
Amount incurred in the current period
Less: the net
Less: Profit amount that is
and loss included in
included in other
Amount
Beginning other comprehensive Less: Attributable Attributable Ending
Item incurred
Balance comprehensive profits of prior income to parent to minority before income Balance
income at period and tax company after shareholder
tax in the
early stage and retained expenses tax after tax
current period
transferred in earnings
the current transferred
period into the
current profits
280ZKTeco 2024 Annual Report
and loss
I. Other
comprehensive
income to be
28000959.1915860099.6413913848.551946251.0941914807.74
reclassified into
profits and
losses
Translation
difference of
foreign
28000959.1915860099.6413913848.551946251.0941914807.74
currency
financial
statements
Total of other
comprehensive 28000959.19 15860099.64 13913848.55 1946251.09 41914807.74
income
Other explanations including adjusting the effective portion of cash flow hedging gains and losses to the initial recognition amount
of the hedged item:
40. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Legal surplus reserve 60455422.50 3547264.53 64002687.03
Total 60455422.50 3547264.53 64002687.03
Explanations om surplus reserve including changes in current period and reasons for changes:
In accordance with the "Company Law" and the Articles of Association the Company sets aside 10% of the net profit of the
parent company as the statutory surplus reserve.
41. Undistributed profit
Unit: RMB
Item Current period Previous period
Undistributed profits before adjustment
907583024.38788571917.98
at end of the previous period
Total undistributed profits in the
adjustment beginning period (increase in 197066.66
"+" decrease in "–")
Undistributed profit at the end of the
907583024.38788768984.64
adjustment period
Plus: net profits attributable to parent
183045997.93177263675.15
company in this period
Less: withdrawal of legal surplus
3547264.536477417.56
reserves
Dividends payable on ordinary
86602278.6051972217.85
shares
281ZKTeco 2024 Annual Report
Undistributed profit at the end of the
1000479479.18907583024.38
period
Details of undistributed profits at the beginning of the adjustment period:
1) Due to the retrospective adjustment of the "Accounting Standards for Enterprises" and related new regulations the undistributed
profit at the beginning of the period was affected by RMB 0.00.
2) Due to changes in accounting policies the undistributed profit at the beginning of the period was RMB 0.00.
3) Due to significant accounting error correction the undistributed profit at the beginning of the period was RMB 0.00.
4) Due to changes in the scope of consolidation caused by the same control the undistributed profit at the beginning of the period was
RMB 0.00.
5) The total impact of other adjustments on the undistributed profit at the beginning of the period was RMB 0.00.
42. Operating revenue and operating cost
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Revenue Cost Revenue Cost
Main business 1983333772.25 1006601473.91 1961508304.59 1004744536.42
Other businesses 7866619.50 1641172.08 8675377.75 0.00
Total 1991200391.75 1008242645.99 1970183682.34 1004744536.42
Is the lower of net profit before and after deducting non-recurring profits and losses audited negative
□ Yes No□
Breakdown information of operating revenue and operating costs:
Unit: RMB
Division 1 Division 2 Operating revenue Total
Contract
Operating Operating Operating Operating Operating Operating
classification Operating cost Operating cost
revenue cost revenue cost revenue revenue
Business type
Including:
Smart office
303727652.0998325792.77303727652.0998325792.77
products
Smart space
1499690452.95779723331.411499690452.95779723331.41
products
Digital
identity
114134724.2678250118.16114134724.2678250118.16
authentication
products
Smart
business 65780942.95 50302231.57 65780942.95 50302231.57
products
Other
7866619.501641172.087866619.501641172.08
products
Classification
by region of
operation
Including:
Domestic
578972159.13395644140.04578972159.13395644140.04
sales
Overseas 1412228232.62 612598505.95 1412228232.62 612598505.95
282ZKTeco 2024 Annual Report
sales
Market or
customer type
Including:
Distribution 1375597572.70 763784945.17 1375597572.70 763784945.17
Direct sales 607736199.55 242816528.74 607736199.55 242816528.74
Others 7866619.50 1641172.08 7866619.50 1641172.08
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total 1991200391.75 1008242645.99 1991200391.75 1008242645.99
Information related to performance obligations:
Types of
Nature of goods Expected quality
Time for
that the Is it the main refunds to assurance
fulfilling Important
Item Company responsible customers provided by the
performance payment terms
promises to person borne by the Company and
obligations
transfer Company related
obligations
Other explanations:
The expected contract terms of the Company's revenue are all no more than one year. Therefore the simplified practical approach
allowed by the new revenue standard has been adopted and the information on the remaining performance obligations has not been
disclosed.Information related to the transaction price allocated to the remaining performance obligations:
The corresponding income amount for performance obligations that have been signed but have not yet been fulfilled or completed at
the end of this reporting period is RMB 0.00.Information related to variable consideration in the contract:
Significant contract changes or significant transaction price adjustments
283ZKTeco 2024 Annual Report
Unit: RMB
Item Accounting treatment method Amount of impact on income
Other explanations:
43. Tax and surcharges
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Urban maintenance and construction tax 3366145.88 3184784.34
Education surcharge 1992030.65 2042493.50
Property tax 2890612.33 3074798.73
Land use tax 298326.75 298326.75
Stamp duty 2022481.18 1304334.77
Local education surcharges 1328020.39 1083514.29
Other taxes and fees for overseas
17344570.6914630968.49
companies
Others 23591.85 26008.41
Total 29265779.72 25645229.28
Other explanations:
44. Administrative expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 50417534.06 55985922.45
Taxes 1526782.37 1516305.36
Office allowance 2961433.41 3732967.28
Depreciation and amortization 13186424.02 9563920.79
Business entertainment expenses 2243795.78 2181639.95
Repair fee 507259.37 623935.88
Travel expenses 2077900.81 2294921.81
Car expenses 1289240.53 1153626.56
Low-value consumables 525706.51 485661.27
Agency fees 10432632.01 9725385.60
Communications fee 906549.00 1435143.82
Depreciation and amortization of right-
6182069.728215349.26
of-use assets
Share-based payments 1561471.90 5796156.11
Software usage fee 2095226.38 1898576.14
Others 21645515.52 18083989.68
Total 117559541.39 122693501.96
Other explanations:
284ZKTeco 2024 Annual Report
45. Selling expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 281002689.08 263649628.44
Depreciation and amortization 4656990.00 7353199.36
Exhibition and conference fees 11772017.30 8906402.84
Maintenance and testing fees 3879142.09 1820432.59
Service fees and commissions 15670917.01 13876416.30
Rental expenses 4260261.42 5218203.19
Business entertainment expenses 4487589.73 3350710.92
Travel expenses 21362422.58 25614976.83
Office allowance 10214366.20 7861715.27
Insurance premium 6161940.88 5627042.24
Agency fees 14284822.42 9444573.03
Advertising expenses 22326499.72 21164669.10
Depreciation and amortization of right-
17701344.4715232460.82
of-use assets
Share-based payments 4667672.16 14025913.22
Software usage fee 3539639.57 4517834.19
Others 20521305.21 33873536.08
Total 446509619.84 441537714.42
Other explanations:
None
46. R&D expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 155949981.78 158052507.71
Depreciation and amortization 5655928.84 4429001.99
Office allowance 1538982.93 735318.39
Travel expenses 3765461.40 5013751.62
R&D material costs 9453472.80 5516851.51
Software and technical service fees 18927297.70 10305794.57
Depreciation and amortization of right-
2766889.141914549.28
of-use assets
Share-based payments 4171987.22 14172736.25
Others 13240989.59 13472903.24
Total 215470991.40 213613414.56
Other explanations:
None
47. Financial expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest expenses 3871915.67 4114078.22
Including: interest expenses on lease 3598354.76 2912273.16
285ZKTeco 2024 Annual Report
liabilities
Less: interest income 42321327.95 59489145.42
Exchange profits and losses 2642378.63 -1409799.93
Handling fee expenditure 1516388.04 2397607.32
Others 16824.47 56392.08
Total -34273821.14 -54330867.73
Other explanations:
None
48. Other income
Unit: RMB
Sources of other income generation Amount incurred in the current period Amount incurred in the previous period
Government subsidies related to daily
6728971.266117310.30
activities of the enterprise
Refund of individual income tax
256046.97218383.71
handling fee
Value added tax credit additional
deduction and immediate collection and 11382571.60 7047057.12
refund
Total 18367589.83 13382751.13
49. Gains from changes in fair value
Unit: RMB
Sources of gains from changes in fair
Amount incurred in the current period Amount incurred in the previous period
value
Trading financial asset 14859953.45 755429.17
Including: gains from changes in
fair value generated by derivative -92617.82 92617.82
financial instruments
Total 14859953.45 755429.17
Other explanations:
50. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Long-term equity investment income
3001156.732800122.30
accounted by equity method
Investment income from disposal of
-216007.070.00
long-term equity investment
Investment income obtained from
1341696.085290557.19
financial products
Forward foreign exchange settlement and
68155.00-8690555.00
sales contract
Total 4195000.74 -599875.51
286ZKTeco 2024 Annual Report
Other explanations:
51. Losses from credit impairment
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Bad debt losses on accounts receivable -21166559.32 -6401719.41
Bad debt losses on other receivables -40415.71 -24544.62
Total -21206975.03 -6426264.03
Other explanations:
52. Losses from impairment of assets
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
I. Inventory depreciation loss and
contract performance cost impairment -7571805.79 -2865668.77
loss
II. Loss from long-term equity
-281599.25
investment impairment
XI. Impairment loss from contract assets -83091.87 -16465.29
Total -7654897.66 -3163733.31
Other explanations:
53. Gains from disposal of assets
Unit: RMB
Source of gains from disposal of assets Amount incurred in the current period Amount incurred in the previous period
Gains from disposal of non-current assets
-653718.36-129852.62
not classified as held for sale
Including: fixed assets -458532.59 -162260.89
Right-of-use assets -195185.77 32408.27
54. Non-operating revenue
Unit: RMB
Amount incurred in the Amount incurred in the Amount included in current
Item
current period previous period non-recurring profit and loss
Gains from scrapping and
8883.21453.178883.21
damaging non-current assets
Payment not required 4029526.74 249822.34 4029526.74
Penalty income 12840.56 10861.12 12840.56
Others 1494075.79 573622.63 1494075.79
287ZKTeco 2024 Annual Report
Total 5545326.30 834759.26 5545326.30
Other explanations:
55. Non-operating expenditure
Unit: RMB
Amount incurred in the Amount incurred in the Amount included in current
Item
current period previous period non-recurring profit and loss
External donations 2666843.49 205000.00 2666843.49
Extraordinary losses 2857897.51 4603052.11 2857897.51
Inventory loss 0.00 21554.46 0.00
Asset retirement damage and
262103.90497027.01262103.90
loss
Penalty expenses 24762.04 49041.71 24762.04
Others 702175.90 384741.57 702175.90
Total 6513782.84 5760416.86 6513782.84
Other explanations:
56. Income tax expenses
(1) Income tax expense statement
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Current income tax expenses 26862324.29 31675881.56
Deferred income tax expenses -12030198.47 -13346935.47
Total 14832125.82 18328946.09
(2) Accounting profit and income tax expense adjustment process
Unit: RMB
Item Amount incurred in the current period
Total profits 215364130.98
Income tax expenses calculated based on statutory/applicable
32304619.65
tax rates
The impact of different tax rates applicable to subsidiaries -2401121.52
The impact of adjusting previous period income tax -27466.13
The impact of non-taxable income -2652689.94
The impact of non-deductible costs expenses and losses 3383640.20
The impact of deductible losses on unrecognized deferred
-2688337.67
income tax assets in the prior period of use
The impact of deductible temporary differences or deductible
losses on unrecognized deferred income tax assets in the 11363313.36
current period
288ZKTeco 2024 Annual Report
The impact of additional deductions on R&D expenses -24060723.59
Salary paid for the placement of disabled individuals with
-46675.11
additional deductions
The impact of tax rate changes on the beginning deferred
-342433.43
income tax
Income tax expenses 14832125.82
Other explanations:
57. Other comprehensive income
Please refer to Note VII (39) Other comprehensive income for details.
58. Cash flow statement items
(1) Cash relating to operating activities
Other cash received related to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest income 50495974.97 44383418.08
Received government subsidies 6295463.08 5931157.43
Bill deposit 168783921.25 0.00
Current account 33185739.49 19620625.50
Funds in transit 7461401.81 0.00
Others 3647494.47 1226225.97
Total 269869995.07 71161426.98
Explanations on other cash received relating to operating activities:
Other cash paid relating to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Expense payment 235671385.20 203811342.55
Current account 25853763.88 28942938.49
Restricted funds such as restricted
2140213.626565746.56
guarantee deposit and funds in transit
Bill deposit 117403463.32 0.00
Others 2125706.12 2690158.07
Total 383194532.14 242010185.67
Explanations on other cash paid relating to operating activities:
(2) Cash relating to investing activities
Other cash received related to investment activities
Unit: RMB
289ZKTeco 2024 Annual Report
Item Amount incurred in the current period Amount incurred in the previous period
Significant cash received relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposit and wealth management 1651510021.30 783138035.71
Disposal of associates 273552.36 0.00
Total 1651783573.66 783138035.71
Explanations on other cash received relating to investing activities:
Other cash paid relating to investment activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Investment in forward foreign exchange
0.008690555.00
settlement and sales
Total 0.00 8690555.00
Significant cash paid relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposit and wealth management 1631334606.67 492027131.11
Purchase minority equity 12124365.79
Foreign investment in partnership
24000000.00
enterprises
Total 1631334606.67 528151496.90
Explanations on other cash paid relating to investing activities:
(3) Cash relating to financing activities
Other cash received related to financing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Bill deposit 0.00 137765650.54
Total 0.00 137765650.54
Explanations on other cash received relating to financing activities:
Other cash paid in connection with financing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Lease liability payment amount 32270943.96 31230265.90
Bill deposit 0.00 115683494.14
Share repurchase 58898528.10 784700.00
Total 91169472.06 147698460.04
Explanations on other cash paid relating to financing activities:
290ZKTeco 2024 Annual Report
Information on changes in liabilities arising from financing activities
□Applicable □ Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Beginning
Item Non cash Non cash Ending Balance Balance Cash changes Cash changes
changes changes
Non-current
liabilities due 21094682.36 24084255.33 19685232.73 2671056.09 22822648.87
within one year
Long-term loan 7810405.04 552129.12 1219704.47 121500.80 7021328.89
Lease liabilities 19713286.21 44316609.08 12951511.04 21970307.49 29108076.76
Total 48618373.61 68952993.53 33856448.24 24762864.38 58952054.52
(4) Explanations on cash flows presented as net amount
Basis for reporting net
Item Related facts Financial impact
amount
(5) Significant activities and financial impacts that do not involve current cash inflows and outflows
but affect the financial position of the enterprise or may affect the cash flow of the enterprise in the future
59. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Supplementary information Amount in current period Amount of previous period
1. Reconciliation of net profit to cash
flows from operating activities
Net profit 200532005.16 196844004.57
Plus: provision for losses from
28861872.699589997.34
impairment of assets
Depreciation of fixed assets
consumption of oil and gas assets and 35203382.67 31557510.39
productive biological assets
Depreciation of right of use assets 29010707.32 28647400.42
Amortization of intangible assets 4082151.69 1945108.15
Long-term unamortized expenses 2140578.12 1443552.51
Loss from disposal of fixed
assets intangible assets and other long- 653718.36 129852.62
term assets (gains expressed with "-")
Loss on retirement of fixed assets
253220.69496573.84
(gains expressed with "-")
Loss from changes in fair value
-14859953.45-755429.17
(gains expressed with "-")
Financial expenses (gains 6514294.30 -12383912.51
291ZKTeco 2024 Annual Report
expressed with "-")
Investment loss (gains expressed
-589995.313399997.81
with "-")
Decrease of deferred income tax
-14431239.49-11788385.88
assets (increase expressed with "-")
Increases of deferred income tax
2401041.02-1719851.49
liabilities (decrease expressed with "-")
Decrease of inventory (increase
27585758.07-28429295.27
expressed with "-")
Decreases of operational
-69488680.66-130159538.85
receivables (increase expressed with "-")
Increases of operating payables
-20743580.37109897948.82
(decrease expressed with "-")
Others 11211302.24 37285356.91
Net cash flows from operating
228336583.05236000890.21
activities
2. Major investment and financing
activities not relating to cash deposit and
withdrawal
Conversion of debt into capital
Convertible corporate bonds due
within one year
Fixed assets under financing lease 43908657.41 16689236.87
3. Net change of cash and cash
equivalents:
Ending balance of cash 1214344327.43 1317020553.02
Less: beginning balance of cash 1317020553.02 1077608258.10
Plus: ending balance of cash
equivalents
Less: beginning balance of cash
equivalents
Net increase in cash and cash
-102676225.59239412294.92
equivalents
(2) Net cash paid for acquiring subsidiaries in the current period
Unit: RMB
Amount
Including:
Including:
Including:
Other explanations:
292ZKTeco 2024 Annual Report
(3) Net cash received from disposal of subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents received from the disposal of
3.91
subsidiaries in the current period
Including:
ZKTeco Latam R&D S.A. 3.91
Net cash received from disposal of subsidiaries 3.91
Other explanations:
(4) Composition of cash and cash equivalents
Unit: RMB
Item Ending Balance Beginning Balance
I. Cash 1214344327.43 1317020553.02
Including: cash on hand 772216.84 1401947.05
Bank deposit available for
1212348031.021302024477.33
payment at any time
Other monetary funds available
1224079.5713594128.64
for payment at any time
III. Ending balance of cash and cash
1214344327.431317020553.02
equivalents
(5) Information on reporting assets with limited scope of use but still classified as cash and cash
equivalents
Unit: RMB
Reasons for still being
Item Amount in current period Amount of previous period classified as cash and cash
equivalents
(6) Monetary funds that do not belong to cash and cash equivalents
Unit: RMB
Reasons for not being
Item Amount in current period Amount of previous period classified as cash and cash
equivalents
Principal of time deposits and
Please refer to the note in
outstanding interest 211146874.14 618949731.28
Note VII (1).receivable
Margin of bank acceptance Not available for use at any
45703490.7846693268.67
draft time
Not available for use at any
Frozen litigation funds 0.00 800000.00
time
Not actually credited to the
Funds in transit 2140213.62 7461401.81
account
293ZKTeco 2024 Annual Report
Total 258990578.54 673904401.76
Other explanations:
(7) Other significant activity explanations
60. Notes to items in the statement of changes in owner's equity
Explain the names and adjusted amounts of "other" items that have been adjusted to the ending balance of the previous year:
None
61. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Ending foreign currency Ending equivalent RMB
Item Conversion rate
balance balance
Monetary funds 768628408.20
Including: USD 93296372.03 7.1884 670651640.70
EUR 2420618.37 7.5257 18216847.67
HKD 2823103.06 0.9260 2614306.36
AED 20251865.99 1.9711 39919313.23
ZAR 24250616.51 0.3844 9322140.58
IDR 12519464830.66 0.0005 5648456.46
INR 64348215.01 0.0840 5407631.75
THB 10156984.85 0.2126 2159773.94
CLP 110438868.00 0.0072 798791.33
JPY 38237392.64 0.0462 1767829.37
KRW 328657517.00 0.0049 1622839.80
GBP 176846.20 9.0765 1605144.53
VND 4866816704.00 0.0003 1372753.59
SGD 256682.50 5.3214 1365910.26
COP 651909441.47 0.0016 1063852.65
CAD 198008.05 5.0498 999901.05
MYR 540471.31 1.6199 875512.39
TRL 3329269.73 0.2051 682857.09
BRL 419276.76 1.1635 487840.77
MAD 634658.52 0.7100 450592.29
MXN 1172885.00 0.3498 410243.09
NGN 47742711.96 0.0047 222275.72
SAR 107437.48 1.9284 207184.28
ARS 20192265.82 0.0070 140785.73
PLN 72142.82 1.7597 126951.66
KES 1841587.07 0.0556 102422.16
RUB 5311459.43 0.0661 350853.07
AUD 3234.00 4.5070 14575.64
294ZKTeco 2024 Annual Report
EGP 63727.37 0.1414 9010.58
PEN 4672.30 1.9132 8938.96
UYU 3772.00 0.1646 620.83
RSD 110.00 0.0640 7.04
DZD 11400.00 0.0530 603.63
Accounts receivable 526908454.84
Including: USD 55040944.67 7.1884 395656326.66
EUR 1343794.77 7.5257 10112996.25
HKD 762.47 0.9260 706.05
AED 26712546.13 1.9711 52654234.29
MXN 36362807.77 0.3498 12718715.47
INR 139250822.75 0.0840 11702223.11
THB 30165632.72 0.2126 6414398.38
KRW 1810299754.98 0.0049 8938869.01
BRL 3615303.52 1.1635 4206511.36
ZAR 10314687.28 0.3844 3965052.41
PEN 1908035.56 1.9132 3650419.89
JPY 62791065.00 0.0462 2903019.27
CLP 393503420.00 0.0072 2846163.92
SGD 302695.46 5.3214 1610763.62
MYR 1268471.95 1.6199 2054804.52
TRL 7303662.03 0.2051 1498033.45
COP 894969676.68 0.0016 1460503.26
NGN 304815133.54 0.0047 1419127.68
IDR 1669202460.20 0.0005 753100.67
VND 225388530.00 0.0003 63573.98
ARS 9105168.17 0.0070 63483.61
RUB 144000.00 0.0661 9512.04
PHP 1061523.19 0.1243 131949.70
AUD 1742.98 4.5070 7855.63
CAD 14786.57 5.0498 74669.22
GBP 219406.38 9.0765 1991441.39
Other receivables 17728461.99
Including: USD 1043501.57 7.1884 7501109.94
THB 6523312.60 0.2126 1387112.48
INR 14240038.87 0.0840 1196690.33
MXN 3140908.40 0.3498 1098603.87
PEN 415131.53 1.9132 794222.31
EUR 100380.35 7.5257 755432.41
COP 432142797.09 0.0016 705214.93
JPY 8814696.00 0.0462 407529.84
BRL 342486.71 1.1635 398493.31
KRW 80543337.21 0.0049 397705.61
AED 175919.63 1.9711 346762.65
CLP 40438930.00 0.0072 292490.02
SGD 61767.86 5.3214 328691.73
MAD 257175.75 0.7100 182588.60
PLN 72207.17 1.7597 127064.90
MYR 60350.00 1.6199 97761.28
VND 3088671568.00 0.0003 910313.91
NGN 16773432.94 0.0047 78092.06
ARS 9732059.45 0.0070 67854.45
RUB 921066.87 0.0661 60841.87
ZAR 102353.73 0.3844 39345.63
KES 463609.13 0.0556 25784.20
295ZKTeco 2024 Annual Report
SAR 15070.00 1.9284 29061.25
TRL 128820.08 0.2051 26421.93
IDR 30600000.00 0.0005 13805.92
HKD 166581.74 0.9260 154256.31
PHP 187993.76 0.1243 23368.05
XOF 12343133.00 0.0114 140837.00
MMK 7167000.00 0.0034 24533.50
GBP 400.00 9.0764 3630.57
BDT 1880411.69 0.0600 112841.13
Accounts payable 35262262.39
Including: USD 3747494.92 7.1884 26938492.51
EUR 116418.59 7.5257 876131.38
AED 22346.55 1.9711 44048.21
ZAR 737664.07 0.3844 283564.27
MXN 8643159.33 0.3498 3023140.78
THB 4495738.16 0.2126 955970.58
INR 16991861.63 0.0840 1427945.32
CLP 92202920.71 0.0072 666892.87
MYR 21616.60 1.6199 35016.85
NGN 8150251.32 0.0047 37945.05
PEN 228751.42 1.9132 437643.23
ARS 6166578.82 0.0070 42995.11
KRW 13640000.00 0.0049 67351.35
BRL 307099.48 1.1635 357319.22
RUB 33082.92 0.0661 2185.27
MAD 71260.87 0.7100 50593.47
COP 9208208.10 0.0016 15026.92
Other payables 27720310.38
Including: USD 3279317.74 7.1884 23573047.62
EUR 237248.76 7.5257 1785463.00
THB 2876533.27 0.2126 611663.97
EGP 1900828.16 0.1414 268763.04
CLP 27737014.00 0.0072 200618.55
NGN 40971402.27 0.0047 190750.54
MXN 377516.75 0.3498 132045.04
SGD 26003.90 5.3214 138377.15
BRL 100000.00 1.1635 116352.92
KRW 20113372.90 0.0049 99315.49
INR 1147278.07 0.0840 96413.82
JPY 1798529.00 0.0462 83151.39
AED 41682.95 1.9711 82163.03
ARS 6556272.08 0.0070 45712.03
PLN 21123.81 1.7597 37172.14
MAD 46888.99 0.7100 33290.06
MYR 9856.37 1.6199 15966.38
VND 46505402.00 0.0003 13117.49
CAD 2400.00 5.0498 12119.52
TRL 58850.36 0.2051 12070.63
PEN 4260.40 1.9132 8150.91
IDR 3309680.00 0.0005 1493.24
ZAR 2407.74 0.3844 925.56
KES 3001.30 0.0556 166.92
PKR 3159334.62 0.0260 82142.70
MMK 19673894.29 0.0035 68858.63
HKD 11707.00 0.9395 10998.61
Long-term loan 398117.39
296ZKTeco 2024 Annual Report
Including: USD 14676.46 7.1884 105500.27
EUR
HKD
MYR 81336.38 1.6199 131757.24
ZAR 418460.83 0.3844 160859.88
Other explanations:
(2) Explanations on overseas operating entities including for important overseas operating entities
disclosure of their main overseas operating location recording currency and selection basis. Reasons for
changes in the recording currency should also be disclosed.□Applicable □ Not applicable
Name Registered place of business Recording currency Basis for adopting recording currency
Sales and procurement are mainly
ZKTECO CO. LIMITED Hong Kong US Dollar
priced in USD
Armatura Tech Co.Ltd. Thailand THB Currency used in the place of operation
ZKTECO SECURITY L.L.C Dubai AED Currency used in the place of operation
ZKTECO EUROPE SL Spain EUR Currency used in the place of operation
ZK TECHNOLOGY LLC America US Dollar Currency used in the place of operation
ZKTECO USA LLC America US Dollar Currency used in the place of operation
ZKTECO BIOMETRICS
India INR Currency used in the place of operation
INDIA PRIVATE LIMITED
Sales and procurement are mainly
ZKTECO PANAMA S.A. Panama US Dollar
priced in USD
ZKTECO LATAM S.A DE
Mexico MXN Currency used in the place of operation
C.V.ZK INTELLIGENT
South Africa ZAR Currency used in the place of operation
SOLUTIONS (PTY) LTD
Sales and procurement are mainly
NGTECO CO.LIMITED Hong Kong US Dollar
priced in USD
62. Lease
(1) The Company as lessee
□Applicable □ Not applicable
Variable lease payments not included in the measurement of lease liabilities
□ Applicable □Not applicable
Simplified rental fees for short-term leases or low value asset leases
□Applicable □ Not applicable
(a) Interest expenses on lease liabilities
297ZKTeco 2024 Annual Report
Item Amount in the Current Period
Interest on lease liabilities included in financial
3598354.76
expenses
Total 3598354.76
(b) Simplified rental fees for short-term leases or low value asset leases
Item Amount in the Current Period
Short-term lease fee 4340776.00
Low-value asset lease fee 149063.86
Total 4489839.86
(c) Total cash outflows related to the lease
Item Amount in the Current Period
Cash paid for repayment of principal and
32270943.96
interest on lease liabilities
Simplified short-term lease payments and low-
4489839.86
value asset lease payments made
Total 36760783.82
Sale and leaseback transactions
None
(2) The Company as lessor
Operating lease as the lessor
□Applicable □ Not applicable
Unit: RMB
Including: revenue related to variable
Item Rental income lease payments not included in lease
receivables
Houses and buildings 3857793.07
Total 3857793.07
Financing lease as the lessor
□ Applicable □Not applicable
Undiscounted lease receivables for each of the next five years
□Applicable □ Not applicable
Unit: RMB
Annual undiscounted lease receivables
Item
Closing amount Opening amount
1st year 3007244.72 3206391.95
298ZKTeco 2024 Annual Report
2nd year 2861997.32 3235643.17
3rd year 2906646.62 3092534.84
4th year 2836497.96 3146244.84
5th year 2786532.77 1573122.40
Total undiscounted lease receivables
6966331.93
after five years
Total 21365251.32 14253937.20
Reconciliation table of undiscounted lease receivables and net investment in leases
(3) Gains or losses from finance lease sales recognized as a manufacturer or dealer
□ Applicable □Not applicable
63. Others
VIII. R&D expenditures
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 155949981.78 158052507.71
Depreciation and amortization 5655928.84 4429001.99
Office allowance 1538982.93 735318.39
Travel expenses 3765461.40 5013751.62
R&D material costs 9453472.80 5516851.51
Software and technical service fees 18927297.70 10305794.57
Depreciation and amortization of right-
2766889.141914549.28
of-use assets
Share-based payments 4171987.22 14172736.25
Others 13240989.59 13472903.24
Total 215470991.40 213613414.56
Including: Expensed R&D expenditures 215470991.40 213613414.56
Capitalized R&D expenditures 0.00 0.00
IX. Changes to the scope of consolidation
1. Disposal of subsidiaries
Were there any transactions or events during this period that resulted in the loss of control over subsidiaries
□Yes □ No
Unit: RMB
Disposal Disposal Disposal The difference Proportion Book value Fair value of Recalculation Determination Amount of
Determination
price at ratio at method at Lost time between the of of the the of the profit method and other
Name of basis at the
the point the point the point of of the right disposal price remaining remaining remaining or loss main comprehensive
Subsidiaries point of losing
of losing of losing losing of control and the share equity on equity at the equity at the generated assumptions of income related
control
control control control of net assets of the date of consolidated consolidated from the the fair value to the equity
299ZKTeco 2024 Annual Report
the subsidiary loss of financial financial remaining of the investment in
at the level of control statement statement equities remaining the original
consolidated level on the level on the pursuant to equity at the subsidiary that
financial date of loss date of loss the fair value consolidated is transferred to
statements of control of control financial investment
corresponding statement level profits and
to the disposal on the date of losses or
of investment loss of control retained
earnings
ZKTeco
November
Latam R&D 67.94 98.09% Assignment Note 67.94
212024
S.A.Other explanations:
Note: Explanations on the situation where the sale of equity leads to the reduction of subsidiaries: On July 12 2024 the Company's
subsidiary ZKTECO CO. LIMITED held a board meeting and approved the equity transfer matter. On November 21 2024 ZKTECO
CO. LIMITED signed an equity transfer agreement with Mr. Marcelo Alfredo Sosa transferring its 95.22% equity in ZKTeco Latam
R&D S.A. to Mr. Marcelo Alfredo Sosa for ARS 10000.00. On the same day ZKTECO ARGENTINA S.A. signed an equity transfer
agreement with Mr. Marcelo Alfredo Sosa transferring its 4.78% equity in ZKTeco Latam R&D S.A. to Mr. Marcelo Alfredo Sosa
for ARS 502.51. The above equity transfers have been registered in the Company's shareholder register and the equity transfer
payments were received in November 2024. Since November 2024 ZKTECO CO. LIMITED has no longer included ZKTeco Latam
R&D S.A. in its consolidated financial statements.Is there a situation where the Company has disposed of its investment in a subsidiary through multiple transactions in steps and lost
control over the subsidiary during the current period
□ Yes No□
2. Changes in consolidation scope for other reasons
Explanations on changes in the scope of consolidation caused by other reasons (for example establishing new subsidiaries
liquidating subsidiaries etc.) and their related situations:
Percentage
Establishment Reason for
S/N Company Name Registered Capital of shares
Date Change
（%）
ZKTeco Huayun (Xiamen) Integrated Cancellation
1 2017-07-05 RMB 3.69388 million 51.00
Circuit Co. Ltd. (Note 1)
Taken over
by the
Shenzhen Zhongjiang Intelligent
2 2017-04-26 RMB 10 million 51.00 liquidation
Technology Co. Ltd.group (Note
2)
ZKTeco Cloud Brain-Computer
3 2024-10-29 RMB 20 million 100.00 Establishment
(Hangzhou) Technology Co. Ltd.ZKTECO BUSINESS SOLUTIONS
4 2024-05-15 SAR 1 million 100.00 Establishment
COMPANY
5 ZKTeco Polska Sp. z o.o. 2024-08-2 PLN 400000 75.69 Establishment
6 ZKTeco Egypt LLC 2024-01-04 USD 120000 100.00 Establishment
Note 1: On April 23 2024 the registered capital of ZKTeco Huayun (Xiamen) Integrated Circuit Co. Ltd. was reduced from
RMB 10 million to RMB 3.69388 million and the Company was deregistered on December 20 2024.Note 2: The subsidiary of the Company Shenzhen Zhongjiang Intelligent Technology Co. Ltd. is not included in the consolidated
scope for this year as it has entered compulsory liquidation due to poor operation. The court appointed Shenzhen Zhongtianzheng
300ZKTeco 2024 Annual Report
Clearing Affairs Co. Ltd. to form a liquidation group to take over the Company starting from April 10 2024. As of December 31
2024 the Company is still in the process of liquidation.
X. Equity in other entities
1. Equity in subsidiaries
(1) Composition of the enterprise group
Unit: RMB
Main Percentage of shares
Registered Registration Nature of Acquisition
Name of Subsidiaries business
Capital place business Direct Indirect method
place
1. Xiamen Zkteco Biometric
Software 100.00
Identification Technology Co. 38500000.00 Xiamen Xiamen 0.00% Acquisition
development %
Ltd.
2. Shenzhen ZKTeco Biometric
100.00
Identification Technology Co. 1000000.00 Shenzhen Shenzhen Sales of goods 0.00% Acquisition
%
Ltd.
2.1.ZK INVESTMENTS INC. 100.001 America America Established 0.00% 100.00% Establishment
2.1.1.ZK TECHNOLOGY LLC Not applicable America America Sales of goods 0.00% 76.92% Establishment
100.00
3. ZKTeco Sales Co. Ltd. 50000000.00 Dongguan Dongguan Sales of goods 0.00% Establishment
%
4. Hangzhou ZKTeco Hanlian E- 100.00
2000000.00 Hangzhou Hangzhou E-commerce 0.00% Establishment
commerce Co. Ltd. %
5. ZKCserv Technology Limited Software
1000000.00 Shenzhen Shenzhen 51.00% 0.00% Establishment
Co. Ltd. development
Software
100.00
6. Dalian ZKTeo CO. Ltd. 3000000.00 Dalian Dalian development 0.00% Establishment
%
and sales
Software
7. XIAMEN ZKTECO CO. 100000000.0 100.00
Xiamen Xiamen development 0.00% Establishment
LTD. 0 %
and sales
7.1.ZKTECO VIETNAM
4550000000.
TECHNOLOGY COMPANY Vietnam Vietnam Sales of goods 0.00% 100.00% Establishment
0023
LIMITED
8. ZKTECO (GUANGDONG) 800000000.0 Production and 100.00
Dongguan Dongguan 0.00% Establishment
CO. LTD 0 sales of goods %
100.00
9. Xi'an ZKTeco Co. Ltd. 1060000.00 Xi'an Xi'an Sales of goods 0.00% Acquisition
%
10. ZKTeco Cloud Brain-
Software 100.00
Computer (Hangzhou) 20000000.00 Hangzhou Hangzhou 0.00% Establishment
development %
Technology Co. Ltd.Hong
Hong Kong 100.00
11. ZKTECO CO. LIMITED 15000000.001 Kong Sales of goods 0.00% Establishment
China %
China
11.1.ZKTECO TURKEY
ELEKTRONIK SANAYI VE 1200000.0017 Turkey Turkey Sales of goods 0.00% 88.09% Establishment
TICARET LIMITED SIRKETI.
11.2.ZKTECO LATAM S.A. DE
4426000.008 Mexico Mexico Sales services 0.00% 100.00% Establishment
C.V.
11.3.ZK SOFTWARE DE
3748688.008 Mexico Mexico R&D services 0.00% 100.00% Establishment
MEXICO S.A. DE C.V.
11.4.ZKTECO COLOMBIA 1500000000. Columbia Columbia Sales services 0.00% 100.00% Establishment
301ZKTeco 2024 Annual Report
SAS 007
11.5.ZKTECO（M）
646000.0020 Malaysia Malaysia Sales of goods 0.00% 51.00% Acquisition
SDN.BHD.
11.6.ZKTECO BIOMETRICS 132765240.0
India India Sales of goods 0.00% 99.15% Establishment
INDIA PRIVATE LIMITED 016
11.7.ZKTECO EUROPE SL 538500.002 Spain Spain Sales of goods 0.00% 75.69% Acquisition
11.7.1.ZKTECO IRELAND
60000.002 Ireland Ireland Sales services 0.00% 75.69% Establishment
LIMITED
11.7.2.ZKTeco Deutschland
100000.002 Germany Germany Sales of goods 0.00% 75.69% Establishment
GmbH
11.7.3.ZKTECO ITALIAS.R.L. 350000.002 Italy Italy Sales of goods 0.00% 71.37% Establishment
11.7.4.ZKTECO UK LTD 1500000.003 UK UK Sales of goods 0.00% 75.69% Establishment
11.7.5.ZKTeco Polska Sp. z o.o. 400000.0011 Poland Poland Sales of goods 0.00% 75.69% Establishment
11.8.ZKTECO PERU
SOCIEDAD ANONIMA 1274336.0022 Peru Peru Sales services 0.00% 100.00% Acquisition
CERRADA
11.9.ZKTECO THAICO.LTD. 10000000.005 Thailand Thailand Sales of goods 0.00% 99.80% Acquisition
146370000.0
11.10.ZKTeco Chile SpA Chile Chile Sales services 0.00% 100.00% Establishment
09
11.10.1.SOLUCIONES
INTEGRALES Y SISTEMAS 60000000.009 Chile Chile Sales services 0.00% 100.00% Establishment
SpA
11.11.ZKTECO SECURITY
300000.0014 Dubai Dubai Sales of goods 0.00% 100.00% Acquisition
L.L.C
11.12.ZKTECO
4000000.0026 Argentina Argentina Sales of goods 0.00% 60.00% Acquisition
ARGENTINAS.A.
11.13. Limited Liability
17850554.801
Company "ZKTeco biometrics Russia Russia Sales of goods 0.00% 100.00% Establishment
8
and security"
11.14.ZKTECO Investment Inc. 80000.001 America America Established 0.00% 100.00% Establishment
11.14.1.ZKTECO USA LLC Not applicable America America Sales of goods 0.00% 80.00% Establishment
118960000.00
11.14.2.Armatura Co.Ltd. Korea Korea Sales of goods 0.00% 90.00% Acquisition
24
100000000.0
11.14.3.ZKTeco Japan Co.Ltd. Japan Japan Sales of goods 0.00% 100.00% Establishment
025
11.14.4.ARMATURA LLC. Not applicable America America Sales of goods 0.00% 100.00% Establishment
11.14.5.RALVIE AI INC. 10000.001 Canada Canada Sales of goods 0.00% 100.00% Establishment
11.15. PT. ZKTECO 2657200000.
Indonesia Indonesia Sales of goods 0.00% 95.00% Establishment
BIOMETRICS INDONESIA 006
11.16. ZK INVESTIMENTOS
611440.0010 Brazil Brazil Established 0.00% 99.68% Acquisition
DO BRASIL LTDA.
11.16.1 ZKTECO DO BRASIL
1085403.0610 Brazil Brazil Sales of goods 0.00% 74.76% Acquisition
S.A.Hong
Hong Kong
11.17.NGTECO CO.LIMITED 10000.004 Kong Sales of goods 0.00% 100.00% Establishment
China
China
11.18. ZKTECO BIOMETRIC 100000000.0
Nigeria Nigeria Sales of goods 0.00% 60.00% Establishment
LIMITED 015
11.19. ZKTECO PANAMA
360000.001 Panama Panama Sales of goods 0.00% 99.86% Establishment
S.A.
11.20. ZK INTELLIGENT South
Not applicable South Africa Sales of goods 0.00% 100.00% Establishment
SOLUTIONS (PTY) LTD Africa
11.21. ZKTECO BIOMETRICS 10910000.001
Kenya Kenya Sales of goods 0.00% 100.00% Establishment
KENYA LIMITED 2
11.22.ZKTECO
250.0021 Romania Romania Sales of goods 0.00% 100.00% Establishment
ROMANIAS.R.L
11.23 ZKTECO BUSINESS 1000000.0019 Saudi Saudi Arabia Sales services 0.00% 100.00% Establishment
302ZKTeco 2024 Annual Report
SOLUTIONS COMPANY Arabia
100.00
12. Hubei ZKTeco Co. Ltd. 10000000.00 Wuhan Wuhan Sales of goods 0.00% Establishment
%
13. Wuhan ZKTeco Perception
1000000.00 Wuhan Wuhan Sales of goods 0.00% 51.00% Establishment
Technology Co. Ltd.
14. ZKTECO SG 100.00
1000000.001 Singapore Singapore Sales of goods 0.00% Establishment
INVESTMENT PTE. LTD. %
14.1. ZKTECO SINGAPORE
500000.0027 Singapore Singapore Sales of goods 0.00% 100.00% Establishment
PTE. LTD.
14.2. ARMATURA TECH 602983200.0 Production and
Thailand Thailand 0.00% 99.99% Acquisition
CO.LTD. 05 sales of goods
14.3. ZKDIGIMAX PTE. LTD. 20000000.001 Singapore Singapore Sales of goods 0.00% 80.00% Establishment
14.3.1. ZKDIGIMAX
10000.001 Panama Panama Sales of goods 0.00% 80.00% Establishment
PANAMA S.A.
14.3.2. ZKDIGIMAX
10000000.007 Columbia Columbia Sales of goods 0.00% 80.00% Establishment
COLOMBIA SAS
South
14.3.3.ZKDIGIMAX(PTY)LTD 0.00 South Africa Sales of goods 0.00% 80.00% Establishment
Africa
14.3.4. PT. ZKDIGIMAX 1001000000
Indonesia Indonesia Sales of goods 0.00% 56.00% Establishment
EXCEL NOBLE 0.006
14.3.5 ZKDIGIMAX CHINA
300000.001 Xiamen Xiamen Sales of goods 20.00% 80.00% Establishment
CO. LTD.
14.3.6. ZK TECHNOLOGY
1515000.0013 Morocco Morocco Sales of goods 0.00% 100.00% Establishment
MOROCCO
14.3.7 ZKTECO EGYPT LLC 120000.001 Egypt Egypt Sales of goods 0.00% 100.00% Establishment
Note: 1. USD
2. EUR
3. GBP
4. HKD
5. THB
6. IDR
7. COP
8. MXN
9. CLP
10. BRL
11. PLN
12. KES
13. MAD
14. AED
15. NGN
16. Rs
17. TRL
18. RUB
19. SAR
20. MYR
21. RON
22. PEN
23. VND
24. KRW
25. JPY
303ZKTeco 2024 Annual Report
26. ARS
27. SGD
Explanations on the fact that shareholding percentage is different from the proportion of voting rights in the subsidiaries:
None
Basis for holding half or less of the voting rights but still controlling the investee and holding more than half of the voting rights but
not controlling the investee:
None
For important structured entities included in the consolidation scope the basis for control is:
None
Basis for determining whether the Company is an agent or principal:
None
(2) Important partly-owned subsidiaries
Unit: RMB
Profit and loss Dividends declared for
Minority shareholding attributable to minority distribution to minority Closing balance of
Name of Subsidiaries
percentage shareholders in current shareholders in the minority interest
period current period
ZK TECHNOLOGY
23.08%20701538.2420275031.547397734.26
LLC
Explanations on the fact that shareholding percentage is different from the proportion of voting rights for minority shareholders in the
subsidiaries:
None
Other explanations:
(3) Main financial information of important partly-owned subsidiaries
Unit: RMB
Ending Balance Beginning Balance
Name of
Non- Non- Non- Non-
Subsidiar Current Total Current Total Current Total Current Total
current current current current
ies assets assets liabilities liabilities assets assets liabilities liabilities
assets liabilities assets liabilities
ZK
TECHN 7029729 1700956 71998 44197796. 390771.0 4458856 6169843 440329.4 6213876 3659058 3659058
0.00
OLOGY 0.30 .02 246.32 74 6 7.80 9.58 8 9.06 8.71 8.71
LLC
Unit: RMB
Name of Amount incurred in the current period Amount incurred in the previous period
304ZKTeco 2024 Annual Report
Subsidiaries Cash flow Cash flow
Total Total
Operating from Operating from
Net profit comprehensi Net profit comprehensi
revenue operating revenue operating
ve income ve income
activities activities
ZK
142360759.69005127.669401711.476067028.4150842020.71852073.373257606.275770624.1
TECHNOL
6106931851
OGY LLC
Other explanations:
2. Transactions resulting in change of owners' equity in subsidiaries and the subsidiaries still being under
control
(1) Change of owners' equity in subsidiaries
None
(2) Effect of transactions on minority equity and owners' equity attributable to the parent company
Unit: RMB
Acquisition cost/disposal consideration
--Cash
-- Fair value of non-cash assets
Total cost/disposal consideration
Less: Net assets of the subsidiaries calculated based on the
proportion of assets acquired/disposed
Difference
Including: Adjustment to the capital reserves
Adjustment to surplus reserve
Adjustment to undistributed profit
Other explanations:
3. Equity in joint arrangements or associates
(1) Important joint ventures or associates
Percentage of shares Accounting
treatment
Name of joint
Main business Registration Nature of methods for
venture or
place place business Direct Indirect investments in associate
joint ventures
or associates
Xinhuaxin Xi'an Xi'an Software and Long-term
19.89%-
(Xi'an) information equity
305ZKTeco 2024 Annual Report
Information technology investment
Technology services
Co. Ltd. industry
Explanations on the fact that shareholding percentage is different from the proportion of voting rights in the joint ventures or associates:
Xinhuaxin (Xi'an) Information Technology Co. Ltd. completed its industrial and commercial deregistration on August 21 2024.There were no significant joint ventures or associates at the end of the period.Basis for holding less than 20% of voting rights but having significant impact or holding 20% or more of voting rights but not having
significant impact:
(2) Main financial information of important joint ventures
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Current assets
Including: Cash and cash equivalents
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority interests
Shareholders' equity attributable to the
parent company
Net asset share calculated based on
shareholding ratio
Adjustment matters
--Goodwill
--Unrealized profits from internal
transactions
--Others
Book value of equity investment in joint
ventures
Fair value of equity investment in joint
ventures with public offer
Operating revenue
Financial expenses
Income tax expenses
Net profit
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
306ZKTeco 2024 Annual Report
Dividends received from joint ventures
of current year
Other explanations:
(3) Main financial information of important associates
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Current assets 0.00 7510080.96
Non-current assets 0.00 307582.52
Total assets 0.00 7817663.48
Current liabilities 0.00 20381375.86
Non-current liabilities
Total liabilities 0.00 20381375.86
Minority interests
Shareholders' equity attributable to the
0.00-12563712.38
parent company
Net asset share calculated based on
0.00-2498470.10
shareholding ratio
Adjustment matters
--Goodwill
--Unrealized profits from internal
transactions
--Others
Book value of equity investment in
associates
Fair value of equity investments in
associates with public offers
Operating revenue 1143428.23 13220558.96
Net profit 12563712.38 -4282521.88
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income 12563712.38 -4282521.88
Dividends received from associates this
year
Other explanations:
(4) Summary financial information of unimportant joint ventures and associated enterprises
Unit: RMB
307ZKTeco 2024 Annual Report
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Joint venture:
The total number of the following items
calculated based on shareholding ratio
Associates:
Total investment book value 28982092.23 29781888.62
The total number of the following items
calculated based on shareholding ratio
-- Net profit -603848.55 -356119.58
--Total comprehensive incomes -603848.55 -356119.58
Other explanations:
(5) Explanations on significant limitations on the ability of joint ventures or associates to transfer
funds to the Company
None
(6) Excess losses incurred by joint ventures or associates
Unit: RMB
Accumulated unrecognized Unrecognized losses in the
Name of joint venture or Accumulated unrecognized
losses accumulated in the current period (or net profit
associate losses at the end of this period
previous period shared in the current period)
ZKTECO SOLUTIONS INC. -716468.40 -154811.46 -871279.86
PT. ZKTECO SECURITY
-427490.18-45825.42-473315.60
INDONESIA
Other explanations:
Xinhuaxin (Xi'an) Information Technology Co. Ltd. completed its industrial and commercial deregistration on August 21 2024.
(7) Unrecognized commitments related to joint venture investments
None
(8) Contingent liabilities related to investments in joint ventures or associates
None
XI. Government Subsidies
1. Government subsidies recognized by accounts receivable at the end of the reporting period
□ Applicable □Not applicable
308ZKTeco 2024 Annual Report
Reasons for not receiving the expected amount of government subsidies at the expected time point
□ Applicable □Not applicable
2. Liability items involving government subsidies
□Applicable □ Not applicable
Unit: RMB
Amount
Newly added included in Amount of
Other
subsidy non- other income
Accounting Beginning changes in Ending Assets/Incom
amount in operating transferred in
Subject Balance the current Balance e-related
current revenue for the current
period
period the current period
period
Deferred Assets-
1853549.62433508.181420041.44
income related
Total 1853549.62 433508.18 1420041.44
3. Government subsidies included in current profits and losses
□Applicable □ Not applicable
Unit: RMB
Accounting Subject Amount incurred in the current period Amount incurred in the previous period
Other income 6728971.26 6117310.30
Other explanations:
None
XII. Risks Related to Financial Instruments
1. Various risks arising from financial instruments
1. Various risks arising from financial instruments
(I) Various risks arising from financial instruments
The Company faces various risks related to financial instruments during its operation mainly including credit risk market risk
and liquidity risk. The Company's main financial instruments include cash and cash equivalents equity investments debt investments
borrowings accounts receivable accounts payable etc. For detailed information on each type of financial instrument please refer to
the relevant items in Note VII. The risks associated with these financial instruments and the risk management policies adopted by the
Company to mitigate these risks are as follows:
The Board of Directors is responsible for planning and establishing the Company's risk management framework specifying the
Company's risk management policies and relevant guidelines and supervising the implementation of risk management measures. The
Company has formulated risk management policies to identify and analyze the risks faced by the Company. These risk management
policies specify specific risks and cover many aspects such as market risk credit risk and liquidity risk management. The Company
regularly evaluates changes in the market environment and the Company's operating activities to decide whether to update the risk
management policies and systems. The risk management of the Company is carried out in accordance with the policies approved by
309ZKTeco 2024 Annual Report
the Board of Directors. Our internal audit department conducts regular audits on risk management controls and procedures and reports
the audit results to the Company's Audit Committee.The Company diversifies its exposure to financial instruments through an appropriately diversified portfolio of investments and
businesses and reduces the risk of concentration in a single industry a specific region or a specific counterparty by formulating
corresponding risk management policies.
1. Market risk
Market risk associated with financial instruments refers to the risk that fair value or future cash flows of financial instruments
fluctuate due to variations in market prices and it includes foreign exchange rate risk interest rate risk and other price risks.
(1) Exchange rate risk
Exchange rate risk refers to the risk that fair value or future cash flows of financial instruments fluctuates due to variations in
foreign exchange rate. The main business of the Company is operated within the territory of China which is settled in RMB. However
there are still foreign exchange risks in the foreign currency assets and liabilities recognized and future foreign currency transactions
of the Company (the valuation currency for foreign currency assets and liabilities as well as foreign currency transactions is mainly
USD). The relevant foreign currency assets and liabilities include: monetary funds denominated in foreign currencies accounts
receivable other receivables accounts payable other payables non-current liabilities due within one year and long-term loans. The
amounts of foreign currency financial assets and foreign currency financial liabilities converted into RMB are presented in Note VII
(61) "Foreign currency monetary items".
The Company closely monitors the impact of exchange rate fluctuations on our exchange rate risk. The Company has not taken
any measures to hedge against exchange rate risks at present. However the management is responsible for monitoring such risks and
will consider hedging significant exchange rate risks when necessary. At the end of this period the foreign exchange risks faced by the
Company mainly arise from financial assets and financial liabilities denominated in foreign currencies. The amounts of foreign currency
financial assets and foreign currency financial liabilities converted into RMB are presented in Note VII (61) "Foreign currency
monetary items".Assuming all other variables remain unchanged if the RMB appreciates or depreciates by 5% against foreign currencies the
Company's total profit for the current year will increase or decrease by RMB 48.4551 million.
(2) Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments due to changes in
market interest rates. The risk of changes in market interest rates faced by the Company is mainly related to the borrowings of the
Company that are interest-bearing at floating rates. The interest rate risk of the Company mainly arises from long-term bank borrowings
and other long-term interest-bearing debts. Floating-rate financial liabilities expose the Company to cash flow interest rate risk while
fixed-rate financial liabilities expose the Company to fair value interest rate risk. The Company determines the relative proportion of
fixed-rate and floating-rate contracts based on the prevailing market conditions at that time and maintains an appropriate mix of fixed-
and floating-rate instruments through regular review and monitoring.The Finance Department of the Company continuously monitors the Company's interest rate level. The increases in interest rate
will increase the costs of the new interest-bearing debts and the interest expenses of interest-bearing debts failing to be paid up by the
Company and subject to the interest calculation at floating interest rate and will significantly and adversely affect the Company's
financial results; the management will make an adjustment according to the latest market conditions to reduce the interest rate risks.
(3) Other price risks
The Company does not hold equity investments in other listed companies and is not exposed to other price risks.
2. Credit risk
Credit risk refers to the risk of financial losses incurred to the Company due to the counterparty's failure to fulfill contract
obligations. Credit risk of the Company mainly arises from bank deposits and accounts receivable.The Company has adopted a policy of only trading with reputable counterparties. In addition the Company evaluates the credit
qualifications of customers based on their financial position the possibility of obtaining guarantees from third parties credit records
310ZKTeco 2024 Annual Report
and other factors such as current market conditions and sets corresponding credit periods. The Company continuously monitors the
notes receivable accounts receivable balance and collection. For customers with poor credit records the Company will use written
reminders shorten or cancel credit periods etc. to ensure that the Company does not face significant credit losses. In addition the
Company reviews the recovery of financial assets on each balance sheet date to ensure that sufficient provisions for expected credit
losses have been made for the relevant financial assets.The credit risk of other financial assets of the Company including monetary funds other receivables debt investments etc. arises
from counterparty defaults and the maximum credit risk exposure is the carrying amount of each financial asset on the balance sheet.The Company has not provided any other guarantee that may expose the Company to credit risk.The monetary funds held by the Company are mainly deposited in state-owned holding banks and other large and medium-sized
commercial banks and other financial institutions. The management believes that these commercial banks have a high reputation and
good asset status there is no significant credit risk and there will be no significant losses caused by the default of the counterparty.The Company's policy is to control the amount of deposits held in deposits based on the market reputation business scale and financial
background of well-known financial institutions in order to limit the credit risk amount to any individual financial institution.As part of the Company's credit risk asset management the Company uses aging to assess impairment losses on accounts
receivable and other receivables. The Company's accounts receivable and other receivables involve a large number of customers and
the aging information can reflect the solvency and bad debt risk of these customers for accounts receivable and other receivables. The
Company calculates the historical actual bad debt rate for different aging periods based on historical data and takes into account current
and future economic forecasts such as forward-looking information like national GDP growth rate total infrastructure investment and
national monetary policy to adjust the expected loss rate. For long-term receivables the Company takes into account the settlement
period payment period stipulated in the contract the financial position of the debtor and the economic situation of the debtor's industry
and adjusts the expected credit loss based on the forward-looking information mentioned above.The Company's maximum credit risk exposure is the book value of each financial asset in the balance sheet.For the bank financial products invested by the Company the counterparty must have a credit rating higher than or equal to that
of the Company. Given the good credit rating of the counterparty the Company's management does not anticipate that the counterparty
will be unable to fulfill its obligations.
3. Liquidity risk
The liquidity risk refers to the risk of capital shortage of an enterprise taking place in the course of cash payment or settlement via
other financial assets. The policy of the Company is to ensure that there is sufficient cash for the payment of the matured debts. Each
member enterprise of the Company is responsible for its cash flow forecast. The Finance Department under the Company continuously
monitors the Company's short-term and long-term funding needs at the company level based on the cash flow forecast results of each
member enterprise to ensure the maintenance of sufficient cash reserves; simultaneously the Finance Department continuously
monitors whether it complies with the provisions of the loan agreement and obtains commitments from major financial institutions to
provide sufficient reserve funds to meet short-term and long-term funding needs. In addition the Company has entered into financing
and credit agreements with major correspondent banks to provide support for the Company's obligations related to commercial bills.The financial liabilities and off-balance sheet guarantee items held by the Company are analyzed by the maturity of the remaining
undiscounted contractual cash flows as follows (in RMB):
Ending balance
Item
Within 1 year 1-5 years Over 5 years Total
Notes payable 134784219.75 - - 134784219.75
Accounts payable 225414642.83 - - 225414642.83
Other payables 45821035.19 - - 45821035.19
Non-current
liabilities due 22822648.87 - - 22822648.87
within one year
Other current
10022833.77--10022833.77
liabilities
311ZKTeco 2024 Annual Report
Lease liabilities - 35667036.05 - 35667036.05
Long-term loan - 7246091.36 - 7246091.36
Total 438865380.41 42913127.41 - 481778507.82
Continued:
Beginning balance
Item
Within 1 year 1-5 years Over 5 years Total
Notes payable 122573544.09 - - 122573544.09
Accounts payable 245084182.32 - - 245084182.32
Other payables 36735314.36 - - 36735314.36
Non-current
liabilities due 21094682.36 - - 21094682.36
within one year
Other current
15007767.78-
-15007767.78
liabilities
Lease liabilities - 19713286.21 - 19713286.21
Long-term loan - 7810405.04 - 7810405.04
Total 440495490.91 27523691.25 - 468019182.16
4. Capital management
The objective of the Company's capital management policy is to ensure the Company's sustainable operation thereby providing
returns to shareholders and benefiting other stakeholders while maintaining an optimal capital structure to minimize the cost of capital.To maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders return capital to
shareholders issue new shares or sell assets to reduce debt. The Company monitors the capital structure based on the asset liability
ratio (that is total liabilities divided by total assets). As of December 31 2024 the Company's asset liability ratio was 15.86%
(December 31 2023: 16.13%).
XIII. Disclosure of Fair Value
1. Ending fair value of assets and liabilities measured at fair value
Unit: RMB
Fair value at the end of the period
Item First level fair value Second level fair value Third level fair value
Total
measurement measurement measurement
I. Continuous fair value
--------
measurement
(I) Trading financial
491331815.79491331815.79
assets
1. Financial assets
measured at fair value
and whose changes are 491331815.79 491331815.79
included in the current
profits and losses
(1) Debt instrument
491331815.79491331815.79
investment
II. Continuous fair
--------
value measurement
312ZKTeco 2024 Annual Report
2. Qualitative and quantitative information on valuation techniques and important parameters used
for continuous and non-continuous second level fair value measurement items
The Company divides its bank financial products into financial assets measured at fair value and whose changes are included in
the current profits and losses and subsequently measures them at fair value. At the end of the period the expected income is calculated
based on the expected return rate of the bank financial products and it is used as the fair value with the principal at the end of the
period.
3. Fair value of financial assets and liabilities not measured at fair value
Financial assets and liabilities measured at the amortized cost of the Company mainly include: monetary funds notes receivable
accounts receivable other receivables notes payable accounts payable other payables etc. The book values of the Company's financial
assets and financial liabilities that are not measured at fair value are not materially different from their fair values.
4. Other
None
XIV. Related Parties and Related Party Transactions
1. Information of the parent company of the enterprise
Share proportion Proportion of
Name of the parent held by parent voting rights of the
Registration place Nature of business Registered Capital
company company in the parent company to
enterprise the Company
Shenzhen ZKTeco
Times Investment Shenzhen Established RMB 9 million 30.05% 30.05%
Co. Ltd.Explanations on the parent company of the enterprise
The ultimate controller of this enterprise is Che Quanhong.Other explanations:
2. Subsidiaries of the enterprise
The situation of the Company's subsidiaries is detailed in Note X (1) Equity in subsidiaries.
3. Information of joint ventures and associates of the enterprise
For important joint ventures or associates of the enterprise please refer to Note X (3) Equity in joint venture arrangements or associates.Related party transactions with the Company occurred in the current period the information of other joint ventures or associates that
have formed balances through related party transactions with the Company in the early stage is as follows:
Name of joint venture or associate Relationship with the enterprise
ZKTECO SMART CITY (THAILAND) CO. LTD. Joint venture
313ZKTeco 2024 Annual Report
PT. ZKTECO SECURITY INDONESIA Joint venture
ZKTECO SOLUTIONS INC. Joint venture
CV Squared Inc. Joint venture
Guizhou Zhongjiang Intelligent Technology Co. Ltd. Joint venture
Xinhuaxin (Xi'an) Information Technology Co. Ltd. Joint venture
Silk ID Systems Inc. Joint venture
Xiamen Xingniu Yunyu Venture Capital Partnership Enterprise
Joint venture
(Limited Partnership)
Other explanations:
1. Xinhuaxin (Xi'an) Information Technology Co. Ltd. completed its industrial and commercial deregistration on August 21
2024.
2. Due to changes in market demand the shareholders' meeting of Silk ID Systems Inc. has decided to liquidate and deregister the
Company. The Company completed its investment registration deregistration with the Bureau of Commerce in China in May 2024.
3. The subsidiary Shenzhen Zhongjiang Intelligent Technology Co. Ltd. has entered into compulsory liquidation due to poor
business performance and was taken over by the liquidation group in April 2024. Shenzhen Zhongjiang Intelligent Technology Co.Ltd. holds a 38.75% equity stake in its associate Guizhou Zhongjiang Intelligent Technology Co. Ltd.
4. Conditions of other affiliated parties
Names of other related parties Relationship between other related parties and the enterprise
An enterprise controlled by the minority shareholder Fernando
Ducay Real of subsidiary ZKTECO EUROPE SL; Fernando
PSD SECURITY S.L. Ducay Real held a 25.2225% stake in Shenzhen JYLX
Consulting Enterprise (limited Partnership) which in turn held
1.84% of the Company's shares as of December 31 2024.
Sibolan (Xiamen) Life Science and Technology Co. Ltd. A company controlled by the actual controller
Che Quanzhong Younger brother of Chairman Che Quanhong
A shareholder holding 49.00% equity in subsidiary Shenzhen
Shenzhen Huijiang Industrial Group Co. Ltd.Zhongjiang Intelligent Technology Co. Ltd.Shenzhen Zhongjiang Intelligent Technology Co. Ltd. Subsidiaries in the process of compulsory liquidation
Wu Xinke Former supervisor
Wu Xiongxiong Supervisor of the controlling shareholder ZKTeco Times
Yang Xianfeng Supervisor
Other explanations:
The Company acquired all the minority shareholders' equity of subsidiary ZK SOFTWARE DE MEXICO S.A. DE C.V. in
August 2023. TVCENLINEA.COM SA DE CV was a company controlled by minority shareholders. According to the relevant
provisions of the "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange" from August 2023 to
August 2024 TVCENLINEA.COM SA DE CV was still be considered as a related party of the listed company. During this period
the transactions between TVCENLINEA.COM SA DE CV and the listed company still constitute related party transactions. Therefore
the transactions between the Company and TVCENLINEA.COM SA DE CV from January to August 2024 constitute related party
transactions.
5. Related party transactions
(1) Related party transactions for purchasing and selling goods providing and receiving labor services
Table of Purchasing Goods/Accepting Labor Services
Unit: RMB
314ZKTeco 2024 Annual Report
Amount incurred Amount incurred
Content of related Approved Does it exceed the
Related party in the current in the previous
party transaction transaction limit transaction limit
period period
TVCENLINEA.C
Purchasing goods 2093526.92 3500000.00 No 2666620.76
OM SA DE CV
PSD SECURITY
Purchasing goods 0.00 10000.00 No 9065.71
S.L.ZKTECO SMART
CITY
Purchasing goods 107587.16 0.00 Yes 109591.55
(THAILAND)
CO. LTD.Xinhuaxin (Xi'an)
Information
Service fee 0.00 0.00 No 1240186.51
Technology Co.Ltd.PT. ZKTECO
Marketing
SECURITY 451840.72 0.00 Yes 511976.96
expenses
INDONESIA
Selling goods/rendering labor service
Unit: RMB
Content of related party Amount incurred in the Amount incurred in the
Related party
transaction current period previous period
Xinhuaxin (Xi'an)
Information Technology Co. Selling goods 0.00 24333.04
Ltd.PT. ZKTECO SECURITY
Selling goods 1900109.71 1316828.08
INDONESIA
ZKTECO SMART CITY
Selling goods 1046058.61 1964067.81
(THAILAND) CO. LTD.TVCENLINEA.COM SA DE
Selling goods 54000420.58 69479326.72
CV
PSD SECURITY S.L. Selling goods 3456201.63 3505729.15
ZKTECO SOLUTIONS INC. Selling goods 11344309.84 7940059.21
Silk ID Systems Inc. Selling goods 47378.56 0.00
Explanations on related party transactions for purchasing and selling goods providing and receiving labor services
Note 1: The expected daily related party transaction limit of the Company is the maximum amount that both parties may sign a
contract and the actual amount incurred is determined based on the business development of both parties resulting in a certain
difference between the actual amount incurred and the expected amount. The difference in amount is relatively small and does not meet
the criteria for review by the Board of Directors. The daily related party transactions of the Company in 2024 were based on the normal
production and operation needs of the Company. The related party transactions comply with the principles of fairness openness and
impartiality and there is a certain difference between the actual amount incurred and the expected amount. This is mainly due to the
Company's appropriate adjustments based on business conditions and there is no situation that damages the Company and shareholders'
rights and interests which will not affect the independence of the Company.
(2) Related entrusted management/contracting and entrusted management/outsourcing situation
Table of entrusted management/contracting situation of the Company:
Unit: RMB
Name of Name of Type of Start Date of Termination Date Pricing Basis for Custody Income/
Principal/ Trustee/Contractor Entrusted/Contra Entrusting/ of Custody Contracting
315ZKTeco 2024 Annual Report
Outsourcer cted Assets Contracting Entrusting/Contra Income/Contracti Income
cting ng Income Recognized in
Current Period
Explanations on related custody/contracting situation
The Company's Entrusted Management/Outsourcing Situation:
Unit: RMB
Termination Date Pricing Basis for Custody
Name of Start Date of
Name of Entrusted/Outsou of Custody Fee/Contracting
Principal/ Entrusting/
Trustee/Contractor rced Asset Type Entrusting/Outso Fee/Outsourcing Fee Recognized
Outsourcer Outsourcing
urcing Fee in Current Period
Explanations on related management/outsourcing situation
(3) Related leasing
The Company as lessor:
Unit: RMB
Confirmed rental income in Rental income recognized in
Name of leasee Types of leased assets
the current period the previous period
PT. ZKTECO SECURITY
Houses and buildings 190872.39 278516.50
INDONESIA
Sibolan (Xiamen) Life
Science and Technology Co. Houses and buildings 1834.86 0.00
Ltd.The Company as lessee:
Unit: RMB
Simplified rental fees for Variable lease payments
short-term leases and low not included in the Interest expenses on lease Increased right-of-use
Rent paid
value asset leases (if measurement of lease liabilities assumed assets
Types of applicable) liabilities (if applicable)
Name of
leased Amount Amount Amount Amount Amount
lessor Amount Amount Amount Amount Amount
assets incurred in incurred in incurred in incurred in incurred in
incurred in incurred in incurred in incurred in incurred in
the the the the the
the current the current the current the current the current
previous previous previous previous previous
period period period period period
period period period period period
Houses -
Che 1282566. 2481817.and 106089.40 762372.46 12249.36 71065.13 2481817.Quanzhong 12 75
buildings 75
Xinhuaxin
(Xi'an) Houses
-
Information and 22935.78 25000.00 168256.20 2461.24
189265.21
Technology buildings
Co. Ltd.Information of related leasing situation
316ZKTeco 2024 Annual Report
(4) Related guarantee
As the guarantor the Company
Unit: RMB
Guarantee expiration Has the guarantee been
Guaranteed party Guarantee amount Guarantee start date
date fulfilled
As the guarantor the Company
Unit: RMB
Guarantee expiration Has the guarantee been
Guarantor Guarantee amount Guarantee start date
date fulfilled
Explanations on related party guarantees
(5) Related party fund borrowing and lending
Unit: RMB
Related party Lending amount Start Date Due Date Remarks
Borrowing
Lending
(6) Asset transfer and debt restructuring of related parties
Unit: RMB
Content of related party Amount incurred in the Amount incurred in the
Related party
transaction current period previous period
(7) Compensation for key management personnel
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Remuneration of key management
6722979.737509402.60
personnel
(8) Other related party transactions
On August 16 2024 the Company released an announcement titled "Announcement of ZKTECO CO. LTD. on Establishing
Ecological Innovation Fund and Related Party Transactions through Cooperation with Professional Investment Institutions" based
on the latest investment situation. The Company has contributed RMB 24 million and Mr. Che Quanhong a related party has
contributed RMB 6 million. The total contribution to the fund amounts to RMB 120 million. As of December 31 2024 the Company
has actually contributed RMB 24 million.
317ZKTeco 2024 Annual Report
6. Accounts receivable and payable to related parties
(1) Accounts receivable
Unit: RMB
Ending Balance Beginning Balance
Project Name Related party
Book balance Bad debt reserve Book balance Bad debt reserve
PT. ZKTECO
Accounts
SECURITY 6058310.39 781857.75 4972664.59 499062.11
receivable
INDONESIA
ZKTECO SMART
Accounts CITY
1301360.1365713.171377973.6168898.68
receivable (THAILAND)CO.LTD.ZKTECO
Accounts
SOLUTIONS 19486553.08 1051921.51 15485450.49 859347.75
receivable
INC.Guizhou
Zhongjiang
Accounts
Intelligent 334800.21 334800.21
receivable
Technology Co.Ltd.Accounts PSD
1406173.5870308.681196725.7359836.29
receivable SECURITYS.L.Other receivables Che Quanhong 767631.62 131771.27
Guizhou
Zhongjiang
Other receivables Intelligent 397428.70 397428.70
Technology Co.Ltd.Xinhuaxin (Xi'an)
Information
Other receivables 31395.00
Technology Co.Ltd.Other receivables Yang Xianfeng 27771.62 28208.34
(2) Accounts payable
Unit: RMB
Project Name Related party Closing book balance Opening book balance
ZKTECO SMART CITY
Accounts payable 1709.19 26708.72
(THAILAND)CO.LTD.Other payables PSD SECURITYS.L. 8079.96
Shenzhen Huijiang Industrial
Other payables 1800000.00
Group Co. Ltd.Other payables Wu Xinke 61071.16
Other payables Wu Xiongxiong 62109.13
PT. ZKTECO SECURITY
Other payables 87475.64
INDONESIA
Contract liabilities CV SquaredInc. 1275140.00 1275140.00
Contract liabilities Silk ID Systems Inc. 53387.06
318ZKTeco 2024 Annual Report
7. Commitments of related parties
None
8. Others
None
XV. Share-based Payment
1. Overall information of share-based payment
□Applicable □ Not applicable
Unit: RMB
Grant object Current grant Current exercise Unlocked in current period Expired in current period
category Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Directors
senior
managers
middle
managers
and core
technology
(business)
1632817.0022320608.391632817.0022320608.39298044.004074261.48
backbone
employees
of the
Company
(including
branches
and
subsidiaries)
Total 1632817.00 22320608.39 1632817.00 22320608.39 298044.00 4074261.48
Outstanding stock options or other equity instruments at the end of the period
□Applicable □ Not applicable
Outstanding other equity instruments at the period
Outstanding stock options at the period end
end
Grant object category
Remaining term of the Remaining term of the
Range of exercise price Range of exercise price
contract contract
The Company's
outstanding Class II
Directors senior
The grant price of the restricted shares
managers middle
Company's outstanding granted for the first
managers and core
Class II restricted time in 2022 have all
technology (business)
shares granted for the been fully vested.backbone employees of
first time and reserved According to the
the Company
in 2022 is RMB 13.67 Company's outstanding
(including branches
per share (adjusted). share option contracts
and subsidiaries)
for the reserved grants
in 2022 all the
319ZKTeco 2024 Annual Report
restricted shares that
had been granted but
not yet vested during
the second vesting
period were cancelled
due to the unfulfilled
vesting conditions of
the second vesting
period. As of the end of
the period there were
no outstanding share
options.Other explanations:
On October 17 2022 the Company held the second extraordinary general meeting of 2022 deliberated and approved the "Proposal
on the Company's Restricted Share Incentive Plan 2022 (Draft) and its Abstract" the "Proposal on the Company's Restricted Share
Incentive Plan Implementation Assessment Management Measures 2022" and the "Proposal on Submitting to the Shareholders'
Meeting to Authorize the Board of Directors to Handle Matters Related to Equity Incentive". On November 16 2022 the Company
held the 21st Session of the Second Board Meeting and the 15th Session of the Second Supervisory Board Meeting and deliberated
and approved the "Proposal on Adjusting the List of Incentive Objects of Restricted Share Incentive Plan in 2022 and the Number of
Granted Objects" and the "Proposal on Granting Restricted Share to Incentive Objects of 2022 Restricted Share Incentive Plan for the
First Time". The number of incentive objects for the first grant under the incentive plan was adjusted from 525 to 508 and the number
of restricted shares to be granted was adjusted from 2689972 shares to 2655900 shares. The grant price was set at RMB 18.70 per
share. The grant objects included directors senior managers and core technical (business) personnel (excluding independent directors
and supervisors) who were employed by the Company (including its branches and subsidiaries) at the time of the announcement of the
incentive plan.On June 21 2023 the Company held the Third Session of the Third Board Meeting and deliberated and approved the "Proposal
on Adjusting the Granting Price and Quantity of 2022 Restricted Share Incentive Plan" "Proposal on Cancelling Some Granted but
Not Affiliated Restricted Shares" and "Proposal on Granting Reserved Restricted Shares to the Incentive Objects of 2022 Restricted
Share Incentive Plan". Considering that the Company has announced the implementation of the 2022 annual equity distribution
corresponding adjustments have been made to the grant price and number of restricted shares in the 2022 Restricted Share Incentive
Plan. The initial and reserved grant prices have been adjusted from RMB 18.70 per share to RMB 14.12 per share and the number of
restricted shares granted for the first time has been adjusted from 2.6559 million shares to 3.45267 million shares. The number of
reserved restricted shares that are granted has been adjusted from 210028 shares to 273036 shares. At the same time the reserved
grant conditions stipulated in the 2022 Restricted Share Incentive Plan of the Company have been met. The Board of Directors has
agreed to determine June 21 2023 as the reserved grant date and has agreed to grant 273036 restricted shares to 46 incentive objects
who meet the grant conditions.On November 10 2023 the Company held the 7th Session of the Third Board Meeting and the 7th Session of the Third
Supervisory Board Meeting and deliberated and approved the "Proposal on the Achievement of the Attribution Conditions for the First
Attribution Period of the 2022 Restricted Share Incentive Plan". To handle the attribution related matters for 466 eligible incentive
objects 1639842 restricted shares can be attributed.On November 21 2024 the Company held the 13th Session of the Third Board Meeting and the 12th Session of the Third
Supervisory Board Meeting and deliberated and approved the "Proposal on the Achievement of the Attribution Conditions for the
Second Attribution Period of the 2022 Restricted Share Incentive Plan" the "Proposal on Adjusting the Granting Price of 2022
Restricted Share Incentive Plan" and the "Proposal on Cancelling Some Granted but Not Affiliated Restricted Shares". In light of the
Company's announcement of implementing the 2023 annual equity distribution the grant price of restricted shares has been adjusted
from RMB 14.12 per share to RMB 13.67 per share. To handle the attribution related matters for 436 eligible incentive objects
1557855 restricted shares can be attributed.
320ZKTeco 2024 Annual Report
Given that 30 of the objects of the initial grant have resigned and no longer meet the qualifications of incentive objects the 79430
restricted shares they have been granted but have not yet vested shall not be vested and shall be invalidated by the Company. In the
2023 individual-level performance assessment the assessment results for 10 incentive objects were "D - Unqualified". As a result the
total of 17550 restricted shares corresponding to them for that year were all not eligible for vesting and were invalidated by the
Company. Three of the incentive objects voluntarily gave up all the restricted share rights granted by the Company due to personal
reasons. The 2990 restricted shares that have been granted but have not yet vested shall not be vested and shall be invalidated by the
Company.On December 31 2024 the Company held the 14th Session of the Third Board Meeting and the 13th Session of the Third
Supervisory Board Meeting and deliberated and approved the "Proposal on Adjusting the Names of the Incentive Objects for the
Reserved Grant Portion of the 2022 Restricted Share Incentive Plan" the "Proposal on Cancelling Some Granted but Not Affiliated
Restricted Shares" and the "Proposal on the Achievement of the Attribution Conditions for the First Attribution Period of the Reserved
Grant in the 2022 Restricted Share Incentive Plan". The Company processed the vesting-related matters for 26 eligible incentive objects
with a total of 74962 restricted shares eligible for vesting. The Board of Supervisors conducted a verification of the list of attributions
and issued verification opinions.Given that 3 of the objects of the reserved grant in the Incentive Plan have resigned and no longer meet the qualifications of
incentive objects the 14300 restricted shares they have been granted but have not yet vested shall not be vested and shall be invalidated
by the Company. In the 2023 individual-level performance assessment the assessment results for two incentive objects were "D -
Unqualified". As a result the total of 5525 restricted shares corresponding to them for that year were all not eligible for vesting and
were invalidated by the Company. Fifteen of the incentive objects voluntarily gave up some restricted share rights granted by the
Company due to personal reasons. The 48879 restricted shares that have been granted but have not yet vested shall not be vested and
shall be invalidated by the Company.On April 21 2025 the Company held the 17th Session of the Third Board Meeting and the 16th Session of the Third Supervisory
Board Meeting and deliberated and approved the "Proposal on the Failure to Meet the Attribution Conditions for the Second Attribution
Period of the Reserved Grant in the 2022 Restricted Share Incentive Plan and Cancellation of Granted but Not Affiliated Restricted
Shares" agreeing to invalidate a total of 129370 shares of Class II restricted shares that had been granted but not yet vested.In conclusion a total of 298044 restricted shares have been invalidated as mentioned above.
2. Equity settled share-based payments
□Applicable □ Not applicable
Unit: RMB
Method for determining the fair value of equity instruments on
Determination of Fair Value Based on the Black Scholes Model
the grant date
Important parameters of the fair value of equity instruments on
-
the grant date
On each balance sheet date during the waiting period the
Basis for Determining the Number of Exercisable Equity Company predicts based on the latest number of exercisable
Instruments rights completion of performance indicators personal
assessment status and other subsequent information
Reasons for significant differences between the current
None
estimate and the previous estimate
Accumulated amount of equity settled share-based payments
53130548.33
recognized in capital reserve
The total amount of expenses recognized for equity settled
11211302.24
share-based payments in this period
Other explanations:
321ZKTeco 2024 Annual Report
3. Cash settled share-based payments
□ Applicable □Not applicable
4. Share-based payment fees in the current period
□Applicable □ Not applicable
Unit: RMB
Grant object category Equity settled share-based payment fees Cash settled share-based payment fees
Directors senior managers middle
managers and core technology (business)
11211302.24
backbone employees of the Company
(including branches and subsidiaries)
Total 11211302.24
Other explanations:
5. Modification and termination of share-based payment
In light of the Company's announcement of the implementation of the 2022 and 2023 annual equity distributions corresponding
adjustments are made to the grant price and quantity of the restricted shares under the 2022 Restricted Share Incentive Plan. The initial
and reserved grant prices were adjusted from RMB 18.70 per share to RMB 13.67 per share.
6. Others
None
XVI. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
The Company professional investment institutions and related parties registered and established ecological innovation fund
Xiamen Xingniu Yunyu Venture Capital Partnership Enterprise (Limited Partnership) in August 2023. The Company as a limited
partner contributes RMB 48 million of its own funds with a subscribed capital ratio of 40%. According to the partnership agreement
the fund will make its capital contribution in two installments unless the executive partner decides otherwise. In principle each
installment of the capital contribution shall be fifty percent (50%) of the committed capital contribution. If the first installment of the
capital contribution is actually used up by more than fifty percent (including this number) the general partner has the right to require
each partner to make the second installment of the capital contribution.The Company made a paid-in capital contribution of RMB 24 million in September 2023. As of December 31 2024 there is still
RMB 24 million to be injected upon the fulfillment of certain conditions.Apart from the matters mentioned above as of the balance sheet date the Company has no other significant commitment matters
that need to be disclosed.
322ZKTeco 2024 Annual Report
2. Contingencies
(1) Significant contingencies on the balance sheet date
None
(2) The Company shall also provide a description if there are no important contingencies that need to
be disclosed
There are no significant contingencies that need to be disclosed by the Company.
3. Others
None
XVII. Events after the Balance Sheet Date
1. Important non adjustment matters
On February 11 2025 the Company held the first extraordinary general meeting of 2025 and deliberated and approved the
"Proposal on the Company's Restricted Share Incentive Plan 2025 (Draft) and its Abstract" the "Proposal on the Company's Restricted
Share Incentive Plan Implementation Assessment Management Measures 2025" and the "Proposal on Submitting to the Shareholders'
Meeting to Authorize the Board of Directors to Handle Matters Related to the 2025 Restricted Share Incentive Plan". This incentive
plan intends to grant 2144570 restricted shares to 359 incentive objects which accounts for approximately 1.09% of the Company's
total share capital at the time of the announcement of the draft incentive plan. The grant price of restricted shares is RMB 13.25 per
share.
2. Profit distribution
Proposed distribution of dividends per 10 shares (RMB) 5
Proposed distribution of bonus shares per 10 shares (share) 0
Proposed distribution of additional shares converted from
capital reserves per 10 shares (share)
The Company plans to distribute cash dividends of RMB 5
(including tax) per 10 shares to all shareholders based on the
total share capital deducted from the repurchased shares in the
Company's repurchase special account on the registration date
of equity distribution. At the same time capital reserve will be
used to increase share capital with a bonus of 2 shares for
every 10 shares to all shareholders and no bonus shares will be
distributed. The latest total share capital of the Company is
196312325 shares. After deducting 2230000 shares that have
Profit distribution plan been repurchased in the Company's repurchase account the
total amount of cash dividends planned to be distributed for
2024 is RMB 97041162.50 (including tax). The share capital
increased by 38816465 shares.The proposal still needs to be reviewed and approved by the
Board of Shareholders. If there is any change in the total share
capital of the Company or the number of shares in the
repurchase account from the date of approval of this profit
distribution plan to the date of equity registration for the
implementation of the rights distribution the Company will
323ZKTeco 2024 Annual Report
adjust the total amount of distribution and the total amount of
capital increase based on the total share capital on the equity
registration date for the implementation of the distribution plan
excluding the shares already repurchased in the repurchase
account while maintaining the principle that the cash dividend
per share and the ratio of capital increase remain unchanged.
3. Sales return
None
4. Explanations on other events after the balance sheet date
None
XVIII. Other Important Events
1. Other important transactions and matters that have an impact on investors' decisions
None
2. Others
None
XIX. Notes to Main Items in the Financial Statements of the Parent Company
1. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 471787442.13 561799833.99
1-2 years 35016611.18 119294578.24
2-3 years 19976746.03 2319840.33
Over 3 years 3550379.93 2226726.86
3-4 years 1814634.08 919305.45
4-5 years 631687.17 59185.72
Over 5 years 1104058.68 1248235.69
Total 530331179.27 685640979.42
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Category
Book balance Bad debt reserve Book Book balance Bad debt reserve Book
324ZKTeco 2024 Annual Report
Accrual value Accrual value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable
with
4702784702784.5262403.4246403.1016000.
individual 0.89% 100.00% 0.00 0.77% 80.69%
4.1212888800
provision
for bad
debts
Including:
Accounts
receivable
with
insignificant
single 470278 4702784. 5262403. 4246403. 1016000.
0.89%100.00%0.000.77%80.69%
amount and 4.12 12 88 88 00
bad debt
reserve
withdrawn
separately
Receivable
with
combined 525628 9191334. 5164370 6803785 6625955. 6737526
99.11%1.75%99.23%0.97%
provision 395.15 34 60.81 75.54 69 19.85
for bad debt
reserve
Including:
Related
390141390141356600065660006
party 73.56% 0.00% 82.55%
325.0025.0072.0572.05
portfolio
Aging 135487 9191334. 1262957 1143779 6625955. 1077519
25.55%6.78%16.68%5.79%
portfolio 070.15 34 35.81 03.49 69 47.80
53033113894115164370685640910872356747686
Total 100.00% 2.62% 100.00% 1.59%
179.278.4660.8179.429.5719.85
Bad debt reserve made individually: 4702784.12
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Hainan Jialing
Digital Expected non-
2032000.001016000.002032000.002032000.00100.00%
Technology recoverable
Co. Ltd.Noble IT
Expected non-
Solutions Co. 415485.70 415485.70 421686.28 421686.28 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 371452.20 371452.20 376995.64 376995.64 100.00%
recoverable
Securit
Shenzhen
Xuhui
Expected non-
Information 326350.00 326350.00 270358.32 270358.32 100.00%
recoverable
Technology
Co. Ltd.
325ZKTeco 2024 Annual Report
Shanghai Leqi
Automation Expected non-
521950.00521950.00261950.00261950.00100.00%
Technology recoverable
Co. Ltd.Gansu Fourth
Expected non-
Construction 224676.00 224676.00 224676.00 224676.00 100.00%
recoverable
Group Co. Ltd.VENDEMMIA
COMERCIO Expected non-
201017.79201017.79204017.72204017.72100.00%
INTERNACIO recoverable
NAL LTDA
Wanqiao
Information Expected non-
165900.00165900.00165900.00165900.00100.00%
Technology recoverable
Co.Ltd.Tianjin Eagle
Eye Expected non-
178130.00178130.00162281.00162281.00100.00%
Biotechnology recoverable
Co. Ltd.Baoneng Urban
Development
Expected non-
and 155292.00 155292.00 155292.00 155292.00 100.00%
recoverable
Construction
Group Co. Ltd.PONTO RHJ Expected non-
100061.62100061.62101554.91101554.91100.00%
EIRELI - ME recoverable
Hainan
Zhongkong
Expected non-
IOT 176689.00 176689.00 98773.74 98773.74 100.00%
recoverable
Technology
Co. Ltd.INTELLISMA
RT Expected non-
74495.8474495.8475607.5975607.59100.00%
TECHNOLOG recoverable
Y INC.Qianxinan
Mengku
Expected non-
Business 74672.00 74672.00 74672.00 74672.00 100.00%
recoverable
Service Co.Ltd.KWK
CELLPHONE
Expected non-
AND 37505.80 37505.80 38065.52 38065.52 100.00%
recoverable
ACCESSORIE
S
ELECTRONIC
Expected non-
A GHANA 22911.47 22911.47 23253.40 23253.40 100.00%
recoverable
LIMITED
Nanjing Xianji
Expected non-
Technology 15570.00 15570.00 15570.00 15570.00 100.00%
recoverable
Co. Ltd.Guizhou
Zhongjiang
Intelligent 77919.46 77919.46
Technology
Co. Ltd.Dongguan 53703.00 53703.00
326ZKTeco 2024 Annual Report
Yukong
Security
Technology
Co. Ltd.Iss Facility
Services 28152.00 28152.00
(Shanghai) Ltd.Gansu Liujiaxia
Construction
and Installation
6490.006490.00
Engineering
Co. Ltd. Linxia
Branch
Guangdong
Pinjun Express 1980.00 1980.00
Co. Ltd.Expected non-
Others 130.00 130.00 100.00%
recoverable
Subtotal 5262403.88 4246403.88 4702784.12 4702784.12
Total 5262403.88 4246403.88 4702784.12 4702784.12
Bad debt reserve made by portfolio: 9191334.34
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 390141325.00 0.00%
Aging portfolio 135487070.15 9191334.34 6.78%
Total 525628395.15 9191334.34
Explanations on the basis for determining the portfolio:
Provision for bad debts by combination: 9191334.34
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year (including 1
119265784.625963289.335.00%
year)
1-2 years 11270743.68 1127074.37 10.00%
2-3 years 4070816.04 1221244.83 30.00%
Over 3 years 879725.81 879725.81 100.00%
Total 135487070.15 9191334.34
Explanations on the basis for determining the portfolio:
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
327ZKTeco 2024 Annual Report
Unit: RMB
Current period change amount
Beginning
Category Return or Redeem/redem Ending Balance Balance Provision Others
reversal ption
Withdrawing
bad debt
4246403.881742158.45409755.94876022.270.004702784.12
reserves by
individual item
Bad debt
reserve
6625955.692565378.650.000.000.009191334.34
withdrawn by
portfolio
Total 10872359.57 4307537.10 409755.94 876022.27 0.00 13894118.46
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 876022.27
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanations on accounts receivable verification:
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending
balance
Unit: RMB
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
328ZKTeco 2024 Annual Report
No. 1 221918570.69 221918570.69 41.82%
No. 2 36988067.78 36988067.78 6.97%
No. 3 29693621.10 29693621.10 5.60%
No. 4 20423717.79 20423717.79 3.85%
No. 5 19366964.13 19366964.13 3.65% 1045942.06
Total 328390941.49 328390941.49 61.89% 1045942.06
2. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Interest receivable 46922.03 192033.24
Other receivables 28421132.37 58943385.98
Total 28468054.40 59135419.22
(1) Interest receivable
1) Classification of interest receivable
Unit: RMB
Item Ending Balance Beginning Balance
Interest on related party loans 46922.03 192033.24
Total 46922.03 192033.24
2) Significant overdue interest
Unit: RMB
Whether impairment
Borrower Ending Balance Overdue time Overdue reason occurred and its
judgment basis
Other explanations:
3) Disclosure by bad debt accrual method
□ Applicable □Not applicable
4) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category
Balance Return or Write-off or
Ending Balance
Provision Other changes
reversal cancellation
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
Accounts recovered or The basis and
Company name Reason for reversal Recovery method
transferred back rationality for
329ZKTeco 2024 Annual Report
determining the
provision ratio of
original bad debt
reserves
Other explanations:
5) Interests receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important interests receivable verification
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanations on writing off:
Other explanations:
(2) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 15954593.23 55874629.32
Guarantee deposit 2035338.71 1865135.74
Reserve funds and loans 1572655.42 3250242.13
Collection and payment on behalf of
2180706.911863217.32
others
Withholding and paying social security
723607.471032014.38
and provident fund on behalf of others
Export tax refund 5921725.86 3537610.99
Others 51379.06 477297.03
Total 28440006.66 67900146.91
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 16527198.43 41743089.72
1-2 years 920284.48 13945238.29
2-3 years 8880717.85 715606.32
330ZKTeco 2024 Annual Report
Over 3 years 2111805.90 11496212.58
3-4 years 388876.50 257284.30
4-5 years 249210.72 2637357.00
Over 5 years 1473718.68 8601571.28
Total 28440006.66 67900146.91
3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Withdrawing
bad debt 1064512 8884636. 1760489.
0.000.00%0.000.00%0.0015.68%83.46%
reserves by 6.37 88 49
individual item
Including:
Bad debt
reserve 28440 18874. 28421 5725502 5718289
100.00%0.07%84.32%72124.050.13%
withdrawn by 006.66 29 132.37 0.54 6.49
portfolio
Including:
Including:
155771557745178884517888
related party 54.77% 66.54%
107.52107.529.619.61
portfolio
Portfolio of
deposits
security
deposits 12485 12485 1164064 1164064
43.90%17.14%
employee 413.43 413.43 9.93 9.93
loans export
tax refunds
etc.Aging 377485 18874. 358611 435481.0 363356.9
1.33%5.00%0.64%72124.0516.56%
portfolio .71 29 .42 0 5
2844018874.2842167900148956760.5894338
Total 100.00% 0.07% 100.00% 13.19%
006.6629132.376.91935.98
Bad debt reserve made by portfolio: 18874.29
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 15577107.52
Portfolio of deposits security
deposits employee loans 12485413.43
export tax refunds etc.Aging portfolio 377485.71 18874.29 5.00%
Total 28440006.66 18874.29
Explanations on the basis for determining the portfolio:
331ZKTeco 2024 Annual Report
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
19124.0553000.008884636.888956760.93
12024
Balance as of January
1 2024 in the current
period
Provision in current
-249.76-53000.003631540.713578290.95
period
Write-off in current
12516177.5912516177.59
period
Balance as of
18874.2918874.29
December 31 2024
Classification basis and bad debt reserve provision ratio for each stage
Changes in book balance with major changes in loss reserves during the current period
□ Applicable □Not applicable
4) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category
Balance Return or Write-off or
Ending Balance
Provision Others
reversal cancellation
Withdrawing
bad debt
8884636.883631540.7112516177.590.00
reserves by
individual item
Bad debt
reserve
72124.05-53249.760.0018874.29
withdrawn by
portfolio
Total 8956760.93 3578290.95 12516177.59 18874.29
The significant amount of bad debt reserves reversed or recovered in the current period:
Unit: RMB
The basis and
Accounts recovered or rationality for
Company name Reason for reversal Recovery method
transferred back determining the
provision ratio of
332ZKTeco 2024 Annual Report
original bad debt
reserves
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Other receivables actually written off 12516177.59
Other major receivable written off:
Unit: RMB
Whether the
Verification and
Nature of other payment is
cancellation
Company name accounts Write-off amount Write-off reason incurred due to
programs that have
receivable related
been performed
transactions
Shenzhen Zhongan
Intelligent Control Reserve funds and Bad debt write off
6052062.77 Nonrecoverable No
Technology Co. loans process
Ltd.Shenzhen
Zhikongtaike
Reserve funds and Bad debt write off
Biometric 2500000.00 Nonrecoverable No
loans process
Technology Co.Ltd.Shenzhen
Zhongjiang
Bad debt write off
Intelligent Current account 1941963.89 Nonrecoverable Yes
process
Technology Co.Ltd.ZKTeco Huayun
(Xiamen) Bad debt write off
Current account 1600000.00 Nonrecoverable Yes
Integrated Circuit process
Co. Ltd.Total 12094026.66
Explanations on writing off other receivables:
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
No. 1 Current account 6580000.00 2-3 years 23.14%
No. 2 Export tax refund 5921725.86 Within 1 year 20.82%
No. 3 Current account 5199133.48 Within 1 year 18.28%
No. 4 Current account 1780000.00 2-3 years 6.26%
No. 5 Current account 503901.75 Over 3 years 1.77%
333ZKTeco 2024 Annual Report
Total 19984761.09 70.27%
7) Being reported as other receivables due to centralized fund management
Other explanations:
3. Long-term equity investment
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Investment in
1336607464.411336607464.411249046481.871249046481.87
subsidiaries
Investment in
affiliated and 23760577.92 23760577.92 24000000.00 24000000.00
joint ventures
Total 1360368042.33 1360368042.33 1273046481.87 1273046481.87
(1) Investment in subsidiaries
Unit: RMB
Beginning Increase or decrease in the current period Ending
Beginning
balance of Ending balance balance of
Investee balance (book Additional Reduced Impairmen Other
impairment (book value) impairmen
value) investment investment t provision s
provision t provision
Shenzhen
ZKTeco
Biometric
12608518.1412608518.14
Identification
Technology Co.Ltd.Hangzhou
ZKTeco Hanlian
2079297.9224050.482103348.40
E-commerce Co.Ltd.ZKTECO CO. 28028779.8
169798644.35700768.17197126656.03
LIMITED 5
XIAMEN
ZKTECO CO. 105554987.20 1520325.49 107075312.69
LTD.ZKTECO
(GUANGDONG 803657033.72 2502895.07 806159928.79
) CO. LTD
ZKTeco Sales
21173920.26349435.1821523355.44
Co. Ltd.Xiamen Zkteco
Biometric 38986734.80 38986734.80
Identification
334ZKTeco 2024 Annual Report
Technology Co.Ltd.ZKCserv
Technology 510000.00 510000.00
Limited Co. Ltd.Dalian ZKTeo
4008987.32223919.584232906.90
CO. Ltd.Xi'an ZKTeco
406449.24112235.57518684.81
Co. Ltd.Shenzhen
Zhongjiang
5100000.0
Intelligent 5100000.00
0
Technology Co.Ltd.Hubei ZKTeco
3516219.441886.323518105.76
Co. Ltd.ZKTECO SG
56298223.1
INVESTMENT 81645689.48 137943912.65
7
PTE.LTD.ZKTeco Cloud
Brain-Computer
(Hangzhou) 4300000.00 4300000.00
Technology Co.Ltd.
1249046481.93361750.75800768.11336607464.4
Total
87171
(2) Investment in affiliated and joint ventures
Unit: RMB
Increase or decrease in the current period
Investment
Beginning
Beginning profit or Cash
balance of Other
Investee balance (book loss Changes dividends
impairment Additional Reduced comprehensive Impairment
value) recognized in other or profits Others
provision investment investment income provision under equities declared
adjustments
equity to pay
method
I. Joint ventures
II. Joint venture
1) Xiamen
Xingniu
Yunyu
Venture
-
Capital 24000000.00
239422.08
Partnership
Enterprise
(Limited
Partnership)
-
Subtotal 24000000.00
239422.08
-
Total 24000000.00
239422.08
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
335ZKTeco 2024 Annual Report
□ Applicable □Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
(3) Other descriptions
In the current period the Company increased its investment in its subsidiary ZKTECO CO. LIMITED by RMB 28028779.85
in its subsidiary ZKTECO SG INVESTMENT PTE. LTD. by RMB 56298223.17 and in its subsidiary ZKTeco Cloud Brain-Computer
(Hangzhou) Technology Co. Ltd. by RMB 4300000.00. Additionally it granted Class II restricted share equity incentives worth RMB
4970536.69 to the incentive objects of its subsidiaries. The Company reduced the capital of the subsidiary ZKTECO CO. LIMITED
by RMB 700768.17. Due to the takeover by the liquidation group it lost control over Shenzhen Zhongjiang Intelligent Technology
Co. Ltd. and reduced the long-term equity investment by RMB 5100000.00.
4. Operating revenue and operating cost
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Revenue Cost Revenue Cost
Main business 1331085325.63 1020838497.53 1432704035.86 1039693858.09
Other businesses 12818559.01 10164768.69 1332035.05 0.00
Total 1343903884.64 1031003266.22 1434036070.91 1039693858.09
Breakdown information of operating revenue and operating costs:
Unit: RMB
Division 1 Division 2 Total
Contract
Operating Operating Operating Operating Operating Operating
classification Operating cost Operating cost
revenue cost revenue cost revenue revenue
Business type
Including:
Smart office
104325360.7480029715.05104325360.7480029715.05
products
Smart space
1062500049.41795473007.291062500049.41795473007.29
products
Digital
identity
101859515.9194206879.28101859515.9194206879.28
authentication
products
Smart
business 62400399.57 51128895.91 62400399.57 51128895.91
products
Others 12818559.01 10164768.69 12818559.01 10164768.69
Total 1343903884.64 1031003266.22 1343903884.64 1031003266.22
Classification
336ZKTeco 2024 Annual Report
by region of
operation
Including:
Domestic
713420952.19647819798.61713420952.19647819798.61
sales
Overseas
630482932.45383183467.61630482932.45383183467.61
sales
Total 1343903884.64 1031003266.22 1343903884.64 1031003266.22
Market or
customer type
Including:
Distribution 314918396.81 189333431.06 314918396.81 189333431.06
Direct sales 1016166928.82 831505066.47 1016166928.82 831505066.47
Others 12818559.01 10164768.69 12818559.01 10164768.69
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total
Information related to performance obligations:
Types of
Nature of goods Expected quality
Time for
that the Is it the main refunds to assurance
fulfilling Important
Item Company responsible customers provided by the
performance payment terms
promises to person borne by the Company and
obligations
transfer Company related
obligations
Other explanations:
The expected contract terms of the Company's revenue are all no more than one year. Therefore the simplified practical approach
allowed by the new revenue standard has been adopted and the information on the remaining performance obligations has not been
disclosed.
337ZKTeco 2024 Annual Report
Information related to the transaction price allocated to the remaining performance obligations:
The corresponding income amount for performance obligations that have been signed but have not yet been fulfilled or completed at
the end of this reporting period is RMB 0.00.Significant contract changes or significant transaction price adjustments
Unit: RMB
Item Accounting treatment method Amount of impact on income
Other explanations:
5. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Income from long-term equity
16000000.0024000000.00
investment accounted with cost method
Long-term equity investment income
-239422.08
accounted by equity method
Investment income during the holding of
442077.811274435.30
transactional financial assets
Gains from remeasuring the remaining
-5100000.00
equity at fair value after loss of control
Forward foreign exchange settlement and
68155.00-8690555.00
sales contract
Total 11170810.73 16583880.30
6. Others
XX. Supplementary Information
1. Detailed statement of non-recurring profits and losses in the current period
□Applicable □ Not applicable
Unit: RMB
Item Amount Remarks
Losses and gains from disposal of non-
-1122946.12
current assets
Government subsidies included in
current profits and losses (except those
closely related to the normal business of
the Company which are in line with
6728971.26
national policies and regulations enjoyed
according to determined standards and
have a continuous impact on the
Company's profits and losses)
338ZKTeco 2024 Annual Report
Profits and losses from fair value
changes arising from the holding of
financial assets and financial liabilities
by non-financial enterprises as well as Mainly due to investment income and
the gains and losses arising from the 16131575.37 fair value changes generated by financial
disposal of financial assets and financial products
liabilities except for effective hedging
business related to the normal operation
of the Company
Capital occupancy fees charged to non-
financial enterprises included in current 42684.28
profits and losses
Reversal of the provision on receivables
with impairment test conducted on an 409755.94
individual basis
Other non-operating income and Mainly due to the changes in non-
-715235.85
expenses other than the above items payable amounts and material losses.Less: income tax impact 2042311.18
Minority interest impact (after tax) 1669795.07
Total 17762698.63 --
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable □Not applicable
The Company does not have other specific conditions of profit and loss items that meet the definition of non-recurring profits and
losses.Explanations on classifying any non-recurring gain/loss item mentioned in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Gains and Losses" as recurring gain/loss item
□ Applicable □Not applicable
2. Net return on assets and EPS
Profit during the reporting Weighted average return on EPS
period net assets Basic EPS (RMB/share) Diluted EPS (RMB/share)
Net profit attributable to
common shareholders of the 5.60% 0.9496 0.9496
Company
Net profit attributable to
common shareholders of the
Company after deducting 5.06% 0.8574 0.8574
non-recurring profits and
losses
3. Differences in accounting data under domestic and foreign accounting standards
(1) Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
339ZKTeco 2024 Annual Report
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
(3) Explanations on the reasons for differences in accounting data between domestic and foreign
accounting standards. If differences in data audited by an overseas audit institution have already been
adjusted the name of the overseas institution shall be indicated
□ Applicable □Not applicable
4. Others
None
340
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