ZKTeco 2025 Half Year Report
ZKTECO CO. LTD.2025 Half Year Report
Announcement No.: 2025-073
August 2025
1ZKTeco 2025 Half Year Report
Section I Important Notes Contents and Definitions
The Board of Directors the Board of Supervisors directors supervisors and
senior management 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.Should this report contain any forward-looking statements involving future
plans etc. they do not constitute a commitment by the Company to any investors
or related parties. Investors and related parties shall maintain sufficient
awareness of the risks involved and understand the differences among plans
forecasts and commitments. Investors are kindly requested to make prudent
decisions and be aware of investment risks.The Company has elaborated in detail on the potential risk factors that may
occur in the future in this report. Investors are advised to refer to the full text of
this report and pay special attention to the content of "Section III Management
Discussion and Analysis" - "X. Risks Faced by the Company and
Countermeasures".The Company will not distribute cash dividends distribute bonus shares or
distribute shares from capital reserve during the current reporting period.
2ZKTeco 2025 Half Year Report
Table of Contents
Section I Important Notes Contents and Definitions... 2
Section II Company Profile and Key Financial Indic... 8
Section III Management Discussion and Analysis ..... 12
Section IV Corporate Governance Environment and So. 101
Section V Significant Events ...................... 107
Section VI Changes in Shares and Information about. 113
Section VII Bonds ................................. 123
Section VIII Financial Report ..................... 124
3ZKTeco 2025 Half Year Report
Documents Available for Inspection
I. The original text of the 2025 Half Year Report signed by the Company's legal representative and stamped by the Company;
II. Financial statements affixed with official stamps and the signatures of the Company's legal representative the person in charge of
the accounting work and the person in charge of accounting institution (accounting supervisor) of the Company.III. All original copies of the Company's documents and the original drafts of the Company's announcements as disclosed on websites
designated by the CSRC during the reporting period.Place for document inspection: Office of the Company's Board of Directors
4ZKTeco 2025 Half Year 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 and Consulting Enterprise (Limited Partnership) a shareholder
JYQL Refers to
of the 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 ZKTECO Refers to XIAMEN ZKTECO CO. LTD. a wholly-owned subsidiary of the Company
Zokon Industry Refers to Shenzhen Zokon Industry Development Co. Ltd.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 January to June 2025
End of Reporting
Refers to June 30 2025
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
Computer Vision Refers to
scene by using optical systems and image processing tools understand and command
specific devices to execute decisions
Radio Frequency Identification (RFID) a wireless communication technology that can
identify specific targets and read and write relevant data through radio signals 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
SaaS Refers to Software as a Service a software application model that provides software services through
5ZKTeco 2025 Half Year Report
the Internet
Platform as a Service (PaaS) a cloud computing-based service that provides a complete
platform including operating systems database management systems middleware
development tools and runtime environments allowing developers to develop test deploy
PaaS Refers to
and manage applications on this platform without having to worry about the setup and
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
PCBA Refers to
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
asmag Refers to
forecasting etc. for practitioners in smart security smart life smart transportation smart
buildings IT communication and networking
AI Refers to Artificial Intelligence
AIoT Refers to The Artificial Intelligence of Things
IoT Refers to Internet of Things
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).
6ZKTeco 2025 Half Year Report
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.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 Report it is due to
rounding reasons.
7ZKTeco 2025 Half Year Report
Section II Company Profile and Key Financial Indicators
I. Company Information
Stock Abbreviation ZKTECO Stock code 301330
Stock listing exchange Shenzhen Stock Exchange
Chinese name of the Company 熵基科技股份有限公司
Chinese abbreviation of the熵基科技
Company (if any)
English name of the Company (if
ZKTECO CO. LTD.any)
English abbreviation of the
ZKTeco
Company (if any)
Legal representative of the
Jin Hairong
Company
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. Other Information
1. Company's Contact Information
Whether the registered address office address postal code website email address etc. of the Company changed during the reporting
period
□ Applicable □Not applicable
The registered address office address postal code website email address etc. of the Company have not changed during the reporting
period as detailed in the 2024 Annual Report.
2. Information Disclosure and Place of the Report
Whether the information disclosure and place of the report changed during the reporting period
□ Applicable □Not applicable
The website and media name and website of the stock exchange where the Company disclosed its Half Year Report. The filing location
of the Company's Half Year Report remains unchanged during the reporting period as detailed in the 2024 Annual Report.
8ZKTeco 2025 Half Year Report
3. Registration Change
Whether the registration changed during the reporting period
□ Applicable □Not applicable
The Company's registration remained unchanged during the reporting period as detailed in the 2024 Annual Report.
4. Other Relevant Information
Whether other relevant information changed during the reporting period
□Applicable □ Not applicable
During the reporting period due to the completion of vesting of shares granted under the first vesting period of the Company's 2022
Restricted Share Incentive Plan (reserved grant) the Company's registered capital changed from RMB 196237363 to RMB
196312325. Due to the Company's implementation of the 2024 annual equity distribution the Company's registered capital changed
from RMB 196312325 to RMB 235351550.IV. Main Accounting Data and Financial Indicators
Does the Company need to retroactively adjust or restate accounting data from previous years
□ Yes □No
YoY change during the
Current reporting period The same period last year
reporting period
Operating revenue (RMB) 929258759.50 903103158.77 2.90%
Net profit attributable to
shareholders of listed 93235556.28 78637727.33 18.56%
companies (RMB)
Net profit attributable to
shareholders of listed
companies after deducting 84430913.49 67172205.06 25.69%
non-recurring profits and
losses (RMB)
Net cash flows from operating
169183153.5666632321.85153.91%
activities (RMB)
Basic earnings per share
0.39990.338618.10%
(RMB/share)
Diluted earnings per share
0.39960.337218.51%
(RMB/share)
Weighted average return on
2.75%2.42%0.33%
net assets
Increase or decrease at the
At the end of this reporting end of this reporting period
At the end of 2024
period compared to the end of the
previous year
Total assets (RMB) 4212927418.94 4014623523.49 4.94%
Net assets attributable to
shareholders of listed 3359482568.32 3350349704.08 0.27%
companies (RMB)
Net profit excluding the impact of share-based payment
9ZKTeco 2025 Half Year Report
Current reporting period
Net profit excluding the impact of share-based payment (RMB) 116462323.17
V. Differences in Accounting Data between Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
During the reporting period there were no differences in net profit and net assets between the financial reports disclosed in accordance
with international accounting standards and Chinese accounting standards.
2. Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting
standards and Chinese accounting standards
□ Applicable □Not applicable
During the reporting period there were no differences in net profit and net assets between the financial reports disclosed in accordance
with foreign accounting standards and Chinese accounting standards.VI. Items and Amounts of Non-recurring Gains and Losses
□Applicable □ Not applicable
Unit: RMB
Item Amount Remarks
Losses and gains from disposal of non-
current assets (including the offsetting
-156798.86
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
1606387.41
national policies and regulations enjoyed
according to determined standards and
have a continuous impact on the
Company's profits and losses)
Profits and losses from fair value
changes arising from the holding of
financial assets and financial liabilities
by non-financial enterprises as well as Mainly due to investment income and
the gains and losses arising from the 9451208.11 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
Reversal of the provision on receivables
with impairment test conducted on an 97177.50
individual basis
Other non-operating income and -1139074.93
10ZKTeco 2025 Half Year Report
expenses other than the above items
Less: income tax impact 832560.81
Minority interest impact (after tax) 221695.63
Total 8804642.79
Details of other profit and loss items that meet the definition of non-recurring profits and losses:
□ Applicable □Not applicable
The Company has no specific situation of other profit and loss items that meet the definition of non-recurring profits and losses.Description on defining the non-recurring profit and loss items listed in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" as recurring profit and loss items
□ Applicable □Not applicable
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.
11ZKTeco 2025 Half Year Report
Section III Management Discussion and Analysis
I. Main Businesses Engaged by the Company During the Reporting Period
(I) Basic situation of the Company's main businesses and products
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 businesses of the Company during the reporting period is as follows:
Unit: RMB '0000
January to June 2025 January to June 2024
Item
Amount Proportion Amount Proportion
I. Smart space
68617.1474.13%69844.4777.67%
products
II. Smart office
17035.1418.40%13023.6614.48%
products
III. Digital identity
authentication 4016.31 4.34% 4590.20 5.10%
products
IV. Smart
business 2894.13 3.13% 2471.48 2.75%
products
Total 92562.71 100.00% 89929.81 100.00%
(2) Core businesses
12ZKTeco 2025 Half Year Report
* Smart space: 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: 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: 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: 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
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 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
13ZKTeco 2025 Half Year Report
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 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.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.* Brain-Computer Interface (BCI) Business
With the vision of "Reshaping New Realms of Life" the Company deeply integrates multimodal AI technology with Brain-
Computer Interface (BCI) technology beginning to strategically deploy in education healthcare and elderly care sectors further
exploring the application of BCI technology in areas such as education and rehabilitation training.The BCI business will adopt a hybrid model combining distribution and direct sales fully leveraging the Company's existing
distribution channels while expanding direct sales channels to target the global market.The sustainability of the BCI business is built upon technological iteration demand support and policy backing: On one hand
continuous breakthroughs in BCI technology and the demand from core scenarios such as an aging population and medical
rehabilitation provide a foundation for the BCI business's development; on the other hand global policy support and capital investment
14ZKTeco 2025 Half Year Report
are accelerating its commercialization. In August 2025 the "Implementation Opinions of the Ministry of Industry and Information
Technology the National Development and Reform Commission the Ministry of Education the National Health Commission the
State-owned Assets Supervision and Administration Commission of the State Council the Chinese Academy of Sciences and the
National Medical Products Administration on Promoting the Innovative Development of the Brain-Computer Interface Industry"
(hereinafter referred to as the "Implementation Opinions on Promoting the Innovative Development of the Brain-Computer Interface
Industry") was released. The release of this document signifies that BCI has officially elevated from a cutting-edge laboratory
technology to a national strategic future industry providing strong support for the development of the BCI industry.The BCI business is currently in the early R&D stage and does not have a significant impact on the Company's current operating
data. At the same time the expansion of the BCI business also faces challenges from multiple dimensions: Firstly at the technical level
signal recognition accuracy and speed still need improvement and issues such as biocompatibility and signal interference persist.Secondly at the market level the substantial R&D investment and long cycle of this business coupled with unpredictable demand
changes lead to increased challenges in product commercialization and cost control. Finally in the talent domain the scarcity of
interdisciplinary professionals in this field may to some extent restrict the further development of this business. The contribution of
this business segment to the Company's future operating revenue and operating performance remains uncertain. The Company advises
investors to be aware of the aforementioned investment risks and make prudent decisions.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
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 palm face 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.
15ZKTeco 2025 Half Year Report
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
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 Level 3 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 ZKBio 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
16ZKTeco 2025 Half Year Report
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:
* 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:
17ZKTeco 2025 Half Year Report
The architecture diagram of the ZKBio Intelligent Integrated Management Platform is as follows:
18ZKTeco 2025 Half Year Report
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
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 verification
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:
19ZKTeco 2025 Half Year 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:
Fingerprint/Facial
RF card controller recognition controller Rack mounted controller Elevator controller
C3 series ZTHCAM series INBIO640 series InBioP3000 series EC16
Expansion board InBio series Controller magic box EC300
* 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
20ZKTeco 2025 Half Year 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:
Three roller
Wing gates Swing gates Full height gates Periphery products
gates
* Smart parking
To build a smart space operation ecosystem with smart parking and smart charging as important business components 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
21ZKTeco 2025 Half Year Report
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.During the reporting period the Company successively released ZKTeco Cloud Parking V1.1 IoT cloud parking management
platform LPR100-Y-LCD LPR8800-Y-LCD series LCD screen License plate recognition all-in-one machines PBH6000-Y series DC
brushless barrier gates PBG600 series advertising barrier gate products and LPR-PB5000-M5V series license plate recognition barrier
gate all-in-one machines among other smart parking products. This makes the Company's products and solutions more competitive in
the smart parking market 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.The product topology diagram of the Company's integrated management of charging and parking is as follows:
Mobile kiosk Remote opening of Manual checkout Manual entry and Fixed vehicle
the gate exit 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 Order management Data dashboard
Management Smart charging parking with Parking space management Statistical analysis
system discount
Charging
equipment
Service provider Operation group Pmarakniange lmote nt Charging pile Parking space Profit sharing
management management management management management management
Capability
layer Cloud device Cloud call Merchant Billing
management Rate management management Electronic invoice management management
Network
layer
License plate recognition all-in- Intelligent barrier Charging pile
one machine
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
22
Integrated management series for charging and parkingZKTeco 2025 Half Year Report
specific fields.The Company's main smart security inspection products are as follows:
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:
23ZKTeco 2025 Half Year Report
IP Network Power IP Network Intercom
IP Network Speaker Integrated Player
Amplifier Terminal Terminal
IP Network Paging
Control Panel IP Audio Recorder POE Horn Speaker
Microphone
* 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:
24ZKTeco 2025 Half Year Report
Bus Alarm Host
Management
Software Platform
Alarm keypad
Wired Detector Defence area module Alarm Assistance
* 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:
25ZKTeco 2025 Half Year 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.With the rapid development of AI technology during the reporting period the Company innovatively leveraged BioCV
multimodal technology BioCV computer vision perception technology and its independently developed BioCV TinyML architecture
to successfully launch the "super brain" for smart spaces—the Mars Wisdom AI platform. By fully integrating the Mars Wisdom AI
platform with the smart video subsystem the Company officially launched the RS Swiss Army Knife series AI edge servers. Multiple
versions are available including RS1 RS2 and RS3. This series of AI edge servers not only supports the Company's independently
developed BioCV TinyML models but also supports DeepSeek models with small parameters. It is capable of simultaneously
processing multimodal data such as video images audio and text achieving full-element perception of "people vehicles objects
roads and environment". This provides real-time decision support for the management of comprehensive security solutions for IoT
perception in smart space environments thereby promoting the expansion of smart space business boundaries.Mars Wisdom System's Functional Diagram:
26ZKTeco 2025 Half Year Report
Semantic Search by Trajectory Image and Text
Understanding Image Positioning Understanding
Speech Object Object Re- Text Retrieval Behavior
Recognition Structuring identification Recognition
The Company's main smart video product matrix is as follows:
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 follow:
27ZKTeco 2025 Half Year Report
* 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
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:
28ZKTeco 2025 Half Year Report
* 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
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:
29ZKTeco 2025 Half Year Report
Main entrance and exit
(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:
30ZKTeco 2025 Half Year Report
ZKTeco Interconnection: AIoT Cloud Scene
Ecosystem Platform
Equipment display
Mobile Clock-in and
Clock-in Reminder
Field Check-in and
Record Query
Leave & Retroactive
Cloud Check-in and Report
attendance Export ZQ1 ZQ2
Cloud attendance machCinleo ud attendance machine
Cloud access control
Mobile Access Control and Permission Management
Remote Door Opening and Event Log
Dynamic Password and Event Linkage
ZQ3 ZQ102-HL
Cloud attendance machiCnleo ud attendance machine
Cloud video
Motion Detection and AI
Analysis
Area Management and
Cloud alarm
Record Inquiry
ZFace1702-HL XFace600-HL
Burglar Alarm and Gas Alarm Status Monitoring and Cloud attendance machine Cloud access control
Smoke Alarm and Water Leak Alarm Event Alerting
Fire Alarm and Emergency Alarm
Visitor Invitation and Visitor Records
Visitor Approval and Trajectory Tracking
Visitor Access Control and Report Export
Cloud
visitor
XFace320-HL NFace260-HL
Cloud access control Cloud access 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.In addition the Company's ZKTeco Cloud IoT Platform Minerva IoT+ ZKTeco Interconnection can work with ecosystem partner
platforms to build a new digital-intelligent IoT model of "smart office + smart space". The Company's business cooperation model with
31ZKTeco 2025 Half Year Report
WeCom and Lark is shown below:
The cooperation between ZKTECO and WeCom has a long history. Since 2019 both parties have collaborated for many years in
the field of enterprise digital transformation accumulating rich experience in collaboration. This upgraded "Cloud-to-Cloud Direct
Connection" mode represents a major breakthrough in the technological and ecological integration of both parties. Through "Cloud-
to-Cloud Direct Connection" terminal devices can flexibly support binding to either the ZKTeco Interconnection APP or WeCom
greatly enhancing device compatibility and usage flexibility.The characteristics of this business are detailed below:
Universal Models Flexible Adaptation: ZKTECO's universal attendance and access control cloud devices fully support a "dual-
version" mode. Users can freely choose their binding method whether through the ZKTeco Interconnection APP or WeCom
significantly enhancing device compatibility and adapting to a wider range of scenarios.Business Enhancement Market Expansion: Dual-version support not only boosts the market competitiveness of the devices but
also significantly expands the customer base through WeCom's vast user base and ZKTeco Cloud's industry coverage creating double
market opportunities for businesses.Synergistic Complementarity Jointly Serving Premium Customers: Both parties serve the same customer based on their respective
areas of expertise providing extensive value-added opportunities throughout the customer lifecycle.Product value of ZKTeco Interconnection Cloud Scene Solution:
A. Product value provided to partners
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
32ZKTeco 2025 Half Year Report
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.E. Ecosystem partners
Through various flexible methods such as "Cloud-to-Cloud Interconnection" "Cloud API" and "Application Availability"
ZKTECO leveraging smart office scenarios can both partner with ecosystem partners to serve key accounts or vertical industry
customers and also address the vast SMB customer base with "nimble efficient refined and accurate" small-scenario solutions
accumulating large-scale user data to provide data assets for future commercialization and monetization.* 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:
33ZKTeco 2025 Half Year Report
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.[Services]: 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
34ZKTeco 2025 Half Year Report
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.The functional diagram of Ralvie AI is as follows:
Ralvie Ralvie Al March 23 - March 29 2025 All Departments All Members
Dashboard App Categories Project Time Most Frequently Used Apps
Timesheets
Google Chrome
Item Project 01
Tasks
Project 02
Design
Members Total Hours Browsing
Project 03
09h20m
Workod
Tags Creative Cloud
Communication Project 04
Integration
Project 05 Microsoft excel
Report
Billing Outlook
Settings Weekly Active Time Weekly Free Time
Adobe illustrator
Adobe photoshop
AI Assistant
Mozilla firefox
Notification
ZKTeco
James
Sunday MondayT uesdayW ednesdayT hursday FridayS aturday Sunday MondayT uesday WednesdayT hursday Friday Saturday
Light Mode
Ralvie AI's 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:
35
Hour
HourZKTeco 2025 Half Year Report
Ralvie AI continuously focuses on efficiency scenarios centered around "employee productivity enhancement" integrating agents
required for various work environments. This enables users to flexibly select multiple independent agents based on their actual work
needs to complete different events and tasks forming a collaborative network to solve complex problems and ultimately boost work
efficiency.Ralvie AI can integrate the following functional agents:
Ralvie AI Integrates the Following
Agents
Email Assistant Agent Work Report Agent Memory Assistant Agent
Smart Email Reply & Email Automated Dashboard Generation Remember Preferences &
Summary & Performance Tracking Contextual Information
Time Tracking Assistant Agent Productivity Assistant Agent Meeting Assistant Agent
Auto-record Time Entries & Voice-create Tasks & Centrally Auto-schedule Agenda & Send
Time Zone Adjustments Manage Updates Schedule Reminders
Project Management Agent Marketing Assistant Agent Knowledge Base Agent
Manage Tasks Set Priorities & Stay on Generate SEO Content & Plan Get Instant Answers from
Track Marketing Campaigns Enterprise Documents
HR Process Agent Recruitment AI Agent CRM Integration AI Agent
Automate Payroll Onboarding Automatically Screen Resumes & Automatically Follow up with
& Attendance Schedule Interviews Customers & Manage Leads
Database Query AI Agent Customer Service Agent
Query SQL Data with Natural Greet Visitors & Schedule
Language Appointments 24/7
Core functions of Ralvie AI:
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.
36ZKTeco 2025 Half Year Report
? 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.F. AI agent aggregation platform
? Offer quickly subscribable and usable AI agent tools for managers or individual users based on work
scenarios and efficiency improvement needs.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.? 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
37ZKTeco 2025 Half Year Report
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:
38ZKTeco 2025 Half Year 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
39ZKTeco 2025 Half Year 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:
* Biowhois CTID Platform
40ZKTeco 2025 Half Year Report
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
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 of the Biowhois CTID Platform is as follows:
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
41ZKTeco 2025 Half Year Report
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.
(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 Company's smart business topology diagram is as follows:
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:
42ZKTeco 2025 Half Year Report
* Smart business terminal products
Horizontal screen Desktop digital Conference all-in-
digital signage signage LCD splicing screen one machine
LED products Vertical advertising machine Welcome digital signage Mobile screen Shelf screen
COB module Flexible module Magic cube screen COB cabinet
LED products Crystal film screen Grille screen Poster screen LED AI all-in-one
machine
15.6-inch AI Vertical AI
10.1-inch AI interactive display interactive display interactive signage AI passenger flow camera
AI products
Communication
E-ink screen Color screen price tag base station PDA handheld terminal
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.
43ZKTeco 2025 Half Year Report
The application scenario diagram of the digital marketing solution for chain retail scenarios is as follows:
3. Vertical digital
signage
In-store floor-standing
6. Electronic price tag
colored screen
4. Shelf digital signage
10.1-inch color display suspended
1. LCD splicing screen Above store shelves above the wall
LCD ultra-narrow bezel 5. Electronic price tag e-
video wall ink screen
Shelves in black white
2. Show window digital and a third color 7. Smart shopping cart
signage for customer
attraction
Shop window position
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:
44ZKTeco 2025 Half Year 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 as well as ecosystem products that need to be externally sourced 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 determining procurement prices and controlling procurement costs. 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
45ZKTeco 2025 Half Year Report
the product. For some general materials the Company has set up a minimum safe stocking point for inventory warning and
replenishment.
(2) Supplier selection and management
The Company has established strict supplier selection and management measures. For newly introduced suppliers who need to
develop new products expand supply resources and reduce costs after the supplier submits basic information the Resource
Development Department of the Company's Procurement Center will organize the Material Certification Department the Executive
Procurement Department and the Quality Department 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 who fail the monthly assessment will
undergo interviews and on-site guidance. For suppliers who show no quality improvement after three consecutive months of guidance
new project quotations and prototyping will be stopped their cooperation share will be reduced or they will be included in the backup
and elimination supplier management program.
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
46ZKTeco 2025 Half Year Report
which can integrate or include the aforementioned products in products systems or engineering services sold to downstream end users.On the other hand the Company can also directly sell to end users through offline direct sales or online self operated platforms.Normally the Company's direct sales business can be divided into two categories based on whether installation and O&M are
required: product sales and project implementation. For project implementation related businesses the Company will customize its
own smart terminals and application software platforms based on different engineering project requirements and provide O&M services.(III) Market position of the Company's products during the reporting period
The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for 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. 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 In 2024 the Company joined the China Construction Industry Association the Fujian Society of Artificial
Intelligence Science and Education (FSAISE) and the CHINA SECURITY & PROTECTION INDUSTRY ASSOCIATION (CSPIA).It was honored to be ranked 71st among the "Top 100 Digital Economy Manufacturing Enterprises in Guangdong Province in 2024"
and 7th among the "Innovative and Typical Digital Economy Manufacturing Enterprises in Guangdong Province in 2024" by entities
such as the GUANGDONG INFORMATION ASSOCIATION (GDIIA). The Company was awarded the "2024 4th China Security
Innovation Enterprise" by the China Shenzhen Security & Protection Industry Association (SZSDPA). Its "Public Service Security
Inspection Solution" received the "2024 7th Smart Security Excellent Solution Award" from the SZSDPA. Guangdong Zkteco was
rated as an "SRDI SME" by the Department of Industry and Information Technology of Guangdong Province and 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)".During the reporting period the Company's "Smart Human Certificate Verification Terminal ID900" was recognized as a 2024
Guangdong Provincial Famous and Excellent High-tech Product by the GUANGDONG HIGH-TECH ENTERPRISE ASSOCIATION
(GDHTEA). The Company's "Facial Recognition Terminal TDB09" product was selected as a 2024 Dongguan High-tech Product by
the Dongguan High-Tech Industry Association (DGHTIA). The Company was awarded the "Top 30 Intelligent Transportation
Enterprises in ITSMRS 2024" by the China Intelligent Transportation Systems Association and the China Top 30 Intelligent
Transportation Organizing Committee. The Company received the "2024 Top 10 Standardized Enterprises" and "2024 Industry
Advanced Brand Award" from entities such as the Smart Security Industry Association of Shenzhen (SSIA). The Company was awarded
by the Dongguan Private Enterprises and Entrepreneurs Selection Working Committee as one of the "Top 100 Private Enterprises in
Dongguan in 2024" and "Top 100 Private Industrial Enterprises in Dongguan in 2024". The Company's "ZKTeco Longhu" series of
47ZKTeco 2025 Half Year Report
smart access gates was selected by the DC World Organizing Committee as the "2024 DC World - Cutting-Edge Technology Award".The Company's "ZKTeco Mars Wisdom Platform" received the "a&s TOP Digital Products & Solutions" award. The Company was
awarded by the World AI and Internet of Things Innovation Alliance and other entities as one of the "Top 100 Chinese IoT Enterprises
of 2024". Guangdong Zkteco's "Multi-spectral Smart Facial Recognition Terminal xFace100" product and "Cloud Attendance Access
Control Smart Terminal ix601" product were selected by the Dongguan High-Tech Industry Association (DGHTIA) as "Dongguan
High-Tech Products of 2024". XIAMEN ZKTECO's intellectual property compliance management system in relevant business areas
complies with standard GB/T29490-2023 and obtained the intellectual property compliance management system certification.XIAMEN ZKTECO was recognized by the Xiamen Municipal Bureau of Industry and Information Technology as a key software and
information technology service enterprise in Xiamen.(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.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
48ZKTeco 2025 Half Year Report
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.II. Analysis of Core Competitiveness
1. Technological and R&D advantages
(1) Mastering the core algorithms of biometrics leading the industry in multimodal technology
After years of in-depth R&D the Company has established a technology system centered on single biometric recognition and
multimodal biometrics. In the field of single biometric recognition the Company has successfully developed various recognition
technologies such as fingerprint palm vein palmprint face finger vein and iris. Among them the fingerprint recognition algorithm
for resident identity cards has been recognized by regulatory agencies and included in the "Qualified List of Quality Consistency
Evaluation and Inspection of Resident ID Card Fingerprint Application Algorithms" ranking among the seven qualified manufacturers.In the field of multimodal biometrics the Company has continuously innovated and launched multiple technology combinations such
as "fingerprint + face" "face + palm vein" "palm + finger vein" "fingerprint + finger vein" "face + iris" and "fingerprint + palm +
face" accumulating 21 related invention and utility model patents. 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 not only masters the core algorithms of biometric recognition but also has the ability to deeply integrate technology
with multiple industry applications providing strong technical support for smart retail finance security and other fields. As of June
30 2025 the Company has accumulated 982 patents including 177 invention patents; 768 computer software copyrights and 85 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 a breakthrough solution for the deployment of
biometric recognition in edge and terminal devices featuring three major advantages:
Stability: The technology supports edge and terminal deployment is not limited by network quality and ensures the efficient and
stable operation of applications;
Low cost: It can run on medium and low-frequency chips (such as 1GHz ARM9) reducing power consumption and hardware
costs avoiding reliance on high-end manufacturing processes and enhancing the flexibility of independent R&D;
49ZKTeco 2025 Half Year Report
Security: It reduces the transmission and centralized storage of sensitive data effectively avoiding leakage and attack risks 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 become an industry pioneer in moving from single biometric recognition technology to multimodal BioCV
(biometrics and computer vision integration) AI technology. The application of technology has evolved from simple identity
verification ("who are you") to multimodal intelligent services ("who are you and what can I provide for you") and has integrated
empathetic experiences in 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 focuses only on the passage control of people and vehicles limited to basic operations
in physical space. ZKBio 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"
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) Multimodal AI + Smart retail scenarios
In retail scenarios the Company achieves refined store operation management customer behavior analysis and digital precise
marketing through the application of Vision-Language Model (VLM) and Large Language Model (LLM). By integrating remote audio
and video technology it realizes a cloud-based remote guarding mode. The Company can provide edge-side smart devices such as
smart shopping guide robots and terminal AI computing devices etc. supporting core applications like smart product recommendations
and shelf monitoring. The Company will continuously improve its overall retail solutions providing the industry with a richer array of
application services including content online service systems product price management services information release services
business data analysis services cloud-based remote guarding services and more.
50ZKTeco 2025 Half Year Report
(7) R&D team and external cooperation advantages
The biometric industry is technology-intensive and R&D strength is of vital importance. As of June 30 2025 the Company has
1022 global R&D and engineering personnel with R&D centers in Dongguan Shenzhen Xiamen Dalian Hangzhou 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
As of the end of the reporting period the Company has actively participated in the formulation of 40 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
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
51ZKTeco 2025 Half Year Report
shopping malls. The integration and complementarity of international domestic online and offline channels have formed a strong
marketing service network advantage.As of June 30 2025 the Company has established 27 branches 14 subsidiaries and 217 service outlets across China mainland
with a sales and service system covering the whole country. The Company has established a total of 48 controlling subsidiaries overseas
located in 33 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) Fully integrated production process system
With a highly integrated production process system and high-quality production facilities at the forefront of the industry the
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 possesses the capability to rapidly respond to customized demands for 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) Lean production model
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
52ZKTeco 2025 Half Year Report
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 continuously promotes and enhances the automation and informatization of its production processes. During the
production process multiple procedures have introduced robotic arms 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 Brands Award" by China Intelligent Building and other entities. 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 In 2024 the Company joined the China Construction Industry Association the Fujian Society of Artificial
Intelligence Science and Education (FSAISE) and the CHINA SECURITY & PROTECTION INDUSTRY ASSOCIATION (CSPIA).It was honored to be ranked 71st among the "Top 100 Digital Economy Manufacturing Enterprises in Guangdong Province in 2024"
and 7th among the "Innovative and Typical Digital Economy Manufacturing Enterprises in Guangdong Province in 2024" by entities
such as the GUANGDONG INFORMATION ASSOCIATION (GDIIA). The Company was awarded the "2024 4th China Security
Innovation Enterprise" by the China Shenzhen Security & Protection Industry Association (SZSDPA). Its "Public Service Security
Inspection Solution" received the "2024 7th Smart Security Excellent Solution Award" from the SZSDPA. Guangdong Zkteco was
rated as an "SRDI SME" by the Department of Industry and Information Technology of Guangdong Province and 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)".During the reporting period the Company's "Smart Human Certificate Verification Terminal ID900" was recognized as a 2024
Guangdong Provincial Famous and Excellent High-tech Product by the GUANGDONG HIGH-TECH ENTERPRISE ASSOCIATION
(GDHTEA). The Company's "Facial Recognition Terminal TDB09" product was selected as a 2024 Dongguan High-tech Product by
53ZKTeco 2025 Half Year Report
the Dongguan High-Tech Industry Association (DGHTIA). The Company was awarded the "Top 30 Intelligent Transportation
Enterprises in ITSMRS 2024" by the China Intelligent Transportation Systems Association and the China Top 30 Intelligent
Transportation Organizing Committee. The Company received the "2024 Top 10 Standardized Enterprises" and "2024 Industry
Advanced Brand Award" from entities such as the Smart Security Industry Association of Shenzhen (SSIA). The Company was
awarded by the Dongguan Private Enterprises and Entrepreneurs Selection Working Committee as one of the "Top 100 Private
Enterprises in Dongguan in 2024" and "Top 100 Private Industrial Enterprises in Dongguan in 2024". The Company's "ZKTeco
Longhu" series of smart access gates was selected by the DC World Organizing Committee as the "2024 DC World - Cutting-Edge
Technology Award". The Company's "ZKTeco Mars Wisdom Platform" received the "a&s TOP Digital Products & Solutions" award.The Company was awarded by the World AI and Internet of Things Innovation Alliance and other entities as one of the "Top 100
Chinese IoT Enterprises of 2024". Guangdong Zkteco's "Multi-spectral Smart Facial Recognition Terminal xFace100" product and
"Cloud Attendance Access Control Smart Terminal ix601" product were selected by the Dongguan High-Tech Industry Association
(DGHTIA) as "Dongguan High-Tech Products of 2024". XIAMEN ZKTECO's intellectual property compliance management system
in relevant business areas complies with standard GB/T29490-2023 and has obtained the intellectual property compliance management
system certification. Furthermore XIAMEN ZKTECO was recognized by the Xiamen Bureau of Industry and Information Technology
as a Key Software and Information Technology Service Enterprise of Xiamen City.
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. Currently the core management team and key employees of the Company also directly
or indirectly hold shares of 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.III. Main Business Analysis
Overview
54ZKTeco 2025 Half Year Report
See relevant contents of "I. Main Businesses Engaged by the Company During the Reporting Period".YoY Changes in Major Financial Data
Unit: RMB
Current reporting The same period last
YoY change Reasons for changes
period year
Operating revenue 929258759.50 903103158.77 2.90% No major change
Operating cost 454165899.16 456172112.83 -0.44% No major change
Selling expenses 209649741.81 214636210.94 -2.32% No major change
Administrative
57337406.90 53529882.13 7.11% No major change
expenses
Mainly due to an
increase in exchange
gains for the current
Financial expenses -26916455.19 -18782120.79 -43.31%
period (compared to
exchange losses in the
same period last year)
Mainly due to the
increase in current
income tax recognized
Income tax expenses 10696749.06 4902747.31 118.18%
by some overseas
subsidiaries in the
current period
R&D investment 104067183.21 105650008.20 -1.50% No major change
Mainly due to the
decrease in cash flow
Net cash flows from from the purchase of
169183153.5666632321.85153.91%
operating activities goods and acceptance
of services in the
current period
Mainly due to the
increase in the
acquisition of financial
Net cash flows from products and structured
-454974965.27-246130434.93-84.85%
investing activities deposits in the current
period compared with
the same period of the
previous year
Mainly due to the
proceeds from
Net cash flows from
-29847665.57 -173208004.79 82.77% discounting notes
financing activities
receivable received in
the current period
Net increase in cash
-310175901.73 -350550464.30 11.52% No major change
and cash equivalents
Mainly due to the
increase in the
Cash received from
934811362.57 522835114.48 78.80% redemption of fixed-
disinvestment
term financial products
in the current period
Mainly due to the
increase in investment
Cash received from
4289144.22 3280492.40 30.75% income from financial
investment income
products and structured
deposits in the current
55ZKTeco 2025 Half Year Report
period
Mainly due to the
Cash paid to acquire
payment of relevant
and construct fixed
engineering costs and
assets intangible assets 79189512.48 122974400.98 -35.60%
the decrease in fixed
and other long-term
asset investment in the
assets
current period
Mainly due to the
increase in the
Cash paid for acquisition of financial
1315253169.16649403947.08102.53%
investments products and structured
deposits in the current
period
Major changes in the composition or source of profits of the Company during the reporting period
□ Applicable □Not applicable
There have been no major changes in the composition or source of profits of the Company during the reporting period.Products or services accounting for more than 10%
□Applicable □ Not applicable
Unit: RMB
YoY change of YoY change of
Operating Gross profit YoY change of
Operating cost operating gross profit
revenue margin operating costs
revenue margin
By products or services
1. Smart office
170351364.9449955004.7770.68%30.80%25.99%1.12%
products
Including:
attendance 103630704.14 40758977.58 60.67% 28.67% 25.58% 0.97%
products
Other
66720660.809196027.1986.22%34.26%27.82%0.70%
products
2. Smart space
686171421.87354954954.6248.27%-1.76%-2.83%0.57%
products
Including:
access control 444559697.54 219170325.46 50.70% -1.75% -1.37% -0.19%
products
Other
241611724.33135784629.1643.80%-1.77%-5.09%1.97%
products
3. Digital
identity
40163072.5726311868.1334.49%-12.50%-17.22%3.73%
authentication
products
Including:
biometrics 14998773.35 6430805.35 57.12% -6.86% -7.39% 0.24%
sensor products
Including:
20547049.4818866347.688.18%-22.33%-20.76%-1.82%
card products
Other 4617249.74 1014715.10 78.02% 38.13% -1.56% 8.86%
56ZKTeco 2025 Half Year Report
products
4. Smart
business 28941286.89 22123485.60 23.56% 17.10% 18.79% -1.09%
products
Including:
commercial 14363004.00 10611929.09 26.12% -4.30% 4.63% -6.30%
products
Including:
digital signage 11492824.77 8929999.41 22.30% 193.66% 142.18% 16.52%
products
Other
3085458.122581557.1016.33%-46.73%-46.14%-0.91%
products
5. Other
3631613.23820586.0477.40%-4.56%0.00%-1.03%
products
By region
Domestic sales 225526933.68 155150552.06 31.21% -18.88% -17.45% -1.18%
Overseas sales 703731825.82 299015347.10 57.51% 12.58% 11.48% 0.42%
By sales model
Distribution 606844149.80 334230434.97 44.92% -3.03% -4.15% 0.64%
Direct sales 318782996.47 119114878.15 62.63% 16.57% 11.70% 1.62%
Others 3631613.23 820586.04 77.40% -4.56% 0.00% -1.03%
R&D investment
1. R&D investment table
Amount in the Current Amount in the Same Period of
Change
Period Previous Year
R&D investment amount
104067183.21105650008.20-1.50%
(RMB)
Ratio of R&D investment to
11.20%11.70%-0.50%
operating revenue
Amount of R&D expenditure
---
capitalization (RMB)
Ratio of capitalized R&D
expenditure to R&D 0.00% 0.00% -
investment
Proportion of capitalized R&D
expenditure to current net 0.00% 0.00% -
profit
2. Status of ongoing projects
57ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
1. To ensure that the Company remains at
the forefront of multimodal visual model
technology we will continue to track the
latest technological developments in this
With the rapid development of computer vision field and continuously optimize and 1. Enhancing the Company's
and natural language processing multimodal improve BioCV VLM 4.0. Advance technological strength in the field of
vision model has become a research direction research on Mars AI multimodal computer computer vision improving the
of great concern and one of the most promising vision models and their application intelligence level of products providing
and potential fields in recent years. technologies. customers with better and more efficient
The innovative model combines computer solutions and consolidating the 2. Establish R&D for edge-end multimodal
Research on vision and natural language processing Company's competitive advantage in the language model technology and a private
Application capabilities and can process images videos industry. corpus providing voice interaction
Technologies and text information at the same time to capabilities for terminal devices. 2. Promoting the Company's innovation
Based on BioCV achieve more efficient and intelligent image Project in
1 and development in the field of AI and
Mars Multimodal and video recognition and understanding. initiation phase 3. We will explore the application of providing strong technical support for the
Computer Vision multimodal vision models in various fields
Model and Edge The goal of this project is to further enhance
Company's long-term strategic goals.such as security monitoring smart home
Language Model the intelligent understanding and reasoning office automation etc. to provide technical 3. Accelerating the Company's
capabilities of multimodal computer vision support for the Company to expand into technological iteration and innovation in
models build more powerful vision-language new business areas. the field of computer vision improving
joint representations and improve the model's the application ability of computer vision
ability to understand complex scenes. 4. Empower the next-generation Mars algorithms in various scenarios and
Wisdom AI Cognitive Space Platform.Improve inference efficiency and optimize the laying a solid foundation for business
model's deployment capability on edge devices. 5. Develop more efficient model expansion in the global market.compression and acceleration strategies
optimize edge-side deployment solutions
and achieve cloud-edge-end collaborative
computing.Research on Edge Break through the bottleneck of traditional 1. Building technical barriers and a
Computing-driven detection technologies being limited to specific 1. Enhance SDK processing speed and business moat:
All-Object domains and build a cross-domain highly Project in reduce resource consumption enabling it to 2
Detection generalizable intelligent detection system. initiation phase run efficiently on edge devices (e.g. A380) The cross-domain generality of all-object
Computer Vision Traditional methods are typically customized and expand application scenarios. detection algorithms will transform the
Algorithms and for single scenarios relying on manually Company's "one-solution-per-case"
58ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
Application designed features and limited data for training 2. Rapid algorithm expansion based on service model. Through a self-developed
Technologies which makes them difficult to adapt to the small samples: By building a small sample unified detection framework it can cover
diverse object forms environmental conditions incremental learning framework we break 20+ industry scenarios such as industrial
and detection targets in the physical world. through the limitations of traditional security and agriculture reducing
algorithms that rely on massive annotated algorithm development costs by 50%.With the initiation of this project we adopt a data. Users only need to provide 10-20 Core patents can form a technical moat
dynamic feature extraction network to learn target images to generate a highly making it difficult for competitors to
cross-domain general representations through discriminative feature space. Combined achieve the same level of cross-scenario
self-supervised pre-training. Combined with a with a data augmentation engine it generalization capability within 3-5 years.spatial-semantic dual attention mechanism this automatically synthesizes extended samples
enables the system to automatically focus on for complex scenarios such as lighting 2. Enriching the algorithm product matrix:
key regions and analyze complex spatial variations occlusions and multiple
relationships achieving comprehensive The all-object detection algorithm viewpoints. Utilizing transfer learning
detection of various objects in the physical continuously enriches its algorithm technology it can quickly complete model
world (e.g. objects organisms environments). product matrix through dynamic adaptation for new target categories architecture upgrades and multi-modal
It is capable of precisely locating various significantly reducing algorithm iteration compatible design deriving other vertical
objects in complex scenes providing costs and deployment cycles. Customers product lines based on a unified
standardized solutions for multi-object can add new detection categories underlying detection engine. Through
detection in complex environments and themselves via a web interface fostering a lightweight models and scene-adaptive
promoting the evolution of detection user co-creation ecosystem. interfaces customers can freely combine
technology from "single-function" to "general detection modules. For instance smart
intelligence". It can be applied in scenarios park solutions can concurrently run
such as industrial quality inspection algorithms such as facial recognition
environmental monitoring and security vehicle trajectory tracking and
surveillance. environmental anomaly early warning.The innovatively R&D-driven interactive
annotation toolchain combined with
small sample transfer learning technology
can significantly shorten the development
cycle for new scene algorithms. This
technology system is applicable to
strategic emerging industries such as
smart manufacturing and smart cities.
59ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
1. Promoting Cloud Platform Technology
Innovation: Vehicle-Road-Cloud
Vehicle-Road-Cloud Integration as a core 1. By leveraging next-generation Integration places higher demands on
architecture for intelligent transportation information and communication cloud platform performance reliability
achieves the comprehensive digitalization and technologies it integrates the physical and security driving cloud service
intelligentization of transportation systems by space and cyberspace of people vehicles providers to continuously innovate and
integrating vehicles road infrastructure and
Vehicle-Road- roads and clouds into a unified entity. upgrade their technologies thereby
cloud computing resources. ZKTECO
3 Cloud Integration Ongoing projects
enhancing cloud platform service
leveraging its core products such as edge 2. A cyber-physical system is realized
System Platform capabilities and competitiveness.computing NVRs video AI analysis and the which based on system-level collaborative
Mars Wisdom Platform provides efficient data perception decision-making and control 2. Vehicle-Road-Cloud Integration will
collection real-time analysis and intelligent enables safe energy-efficient comfortable generate a large volume of data which
decision support for vehicle-road-cloud and highly efficient operation of intelligent can meet enterprises' data management
scenarios. connected vehicle transportation systems. needs thereby expanding their business
scope and increasing revenue from data
services.
1. Through intelligent upgrades and
ZKTeco Cloud Brain-Computer Interface 1. Development of Foundational Smart empowerment enhancing the real-time
(BCI) specializes in Brain-Computer Interface Brain-Computer Interface Technology processing and decision-making
(BCI) technology and related research (BioCV Brain++ Technology): Integrated capabilities of ZKTeco's entrance and exit
committed to exploring interaction application of retinal and iris recognition management products.technologies between the brain and external technologies which enables early
ZKTeco Cloud devices. Main researches include neural signal
prevention of Alzheimer's disease through 2. Actively exploring innovative research
retinal imaging AI analysis multimodal and industrial transformation empowered
Brain-Computer acquisition and processing brain-computer
interface technology R&D neurofeedback and data fusion and behavioral and linguistic by Vehicle-to-Everything (V2X) Interface
4
Foundational rehabilitation therapy as well as brain function
Ongoing projects feature analysis. It will also integrate with collaboration cloud-edge integration and
Technology and cognitive science research. It enables early
ZKTeco NGTeco's "elderly care" product brain-computer interface (BCI) human-
prevention of Alzheimer's disease through series leveraging precise biometric machine "wet computing" by leveraging Development
retinal imaging AI analysis multimodal data technology to provide higher quality life the technological advantages of BioCV
fusion and behavioral and linguistic feature support and health monitoring for the and TinyML.analysis. It will also integrate with ZKTeco elderly while simultaneously protecting 3. Enriching the technology ecosystem
NGTeco's "elderly care" product series their data privacy. and application scenarios leading the
leveraging precise biometric technology to 2. ZKTeco Glasses eye tracker accessory integration of intelligent technology and
provide higher quality life support and health suitable for multiple scenarios records eye biocomputing and opening a new chapter.
60ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
monitoring for the elderly while movement data and provides behavioral
simultaneously protecting their data privacy. research and analysis tools.
3. Algorithm development: optimize video
structuring algorithms for various
platforms port the latest open-source
models and continuously enhance
algorithm performance on low-compute
platforms.
1. Unified Device Access Standard 1. Technological leadership
This project is dedicated to building a cutting- - Relying on the advanced Tiny protocol - The successful implementation of this
edge general device management platform designed with device models it can project will position the Company firmly
based on device model and smart edge precisely extract common device features at the technological forefront in the IoT
integration. It innovatively designs an ultra- and establish a set of highly universal and domain especially in device access and
lightweight Tiny protocol deeply applying the compatible standardized access management establishing a unique
concept of device models to comprehensively specifications strongly supporting the rapid competitive advantage and becoming a
revolutionize device access management and and stable access of various complex leader in industry technological
data interaction processes achieving end-to- devices to the platform. innovation.General Device end standardization and ultimate efficiency.Management The core of this project is to establish a highly - Leveraging the powerful flexibility of - The groundbreaking design of the Tiny
Platform Based on flexible and high-performance protocol device models it easily adapts to diverse protocol will become a core technological
5 Ongoing projects
Device Model and architecture with the device model as its device types including but not limited to asset for the company providing a
Smart Edge cornerstone. This architecture seamlessly high-precision sensors smart controllers powerful technical engine for the R&D of
Integration adapts to complex and diverse online and and multi-functional smart terminals a series of subsequent products and
offline business scenarios significantly effectively resolving complex challenges services continuously driving the
reducing the cumbersome workload of device arising from device differences and Company's technological innovation and
access and comprehensively improving device achieving convenient and efficient device upgrading.management efficiency. This lays a solid access.
2. Business growth potential
foundation for the Company's long-term
2. Support seamless switching between
strategic layout in the IoT field helping it to be
online and offline scenarios - By significantly lowering the barrier to
the first to seize new heights in industry device access and substantially improving
development. - From its initial design the Tiny protocol management efficiency it will attract
deeply considers the differentiated needs of more partners and customers to integrate
devices in various scenarios. Whether into the platform ecosystem rapidly
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
deployed in demanding offline industrial expand market share and achieve
environments or in large-scale elastic cloud explosive growth in business scale.deployments it ensures consistent and
smooth interaction logic guaranteeing the - The platform's powerful versatility and
stability and reliability of device operation. flexibility enable the Company to rapidly
respond to changes in market demand
- Devices can intelligently adapt to online customize and develop various innovative
and offline scenarios without needing to solutions meet the personalized needs of
switch modes completely avoiding different customers and further enhance
compatibility risks caused by frequent market competitiveness.switching in traditional solutions and
significantly enhancing user experience and 3. Ecosystem construction
system operational efficiency. - The next-generation general device
3. Lower device access costs management platform based on object
models will attract a large number of
- By ingeniously simplifying protocol third-party developers to actively
design and deeply optimizing the access participate jointly building a prosperous
process it significantly lowers the technical and open IoT ecosystem and promoting
barrier and learning cost for device technological innovation and application
developers making device access more expansion.convenient and efficient.- The vigorous development of the
- General SDKs and toolchains are ecosystem will further consolidate the
provided supporting rapid generation of Company's core position in the industry
device drivers shortening development promote deep collaboration between
cycles and reducing access workload. upstream and downstream of the industry
chain and achieve a win-win situation for
4. Enhance device management efficiency mutual benefit.
- The platform based on the device model 4. Operating cost optimization
achieves dynamic management of device
status and real-time data synchronization - Unified protocol standards and efficient
providing visualized monitoring and O&M management tools will significantly
capabilities. reduce device access and maintenance
costs substantially improve overall
- Support full device lifecycle management operational efficiency and achieve
including functions such as registration
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
configuration upgrades and fault optimized allocation and efficient
diagnosis thereby enhancing overall utilization of resources.management efficiency.- Effectively reduce resource waste caused
5. Enhance system scalability and by diverse equipment types and complex
compatibility scenarios achieve refined operational
management and enhance the Company's
- The Tiny protocol boasts excellent profitability and sustainable development
scalability capable of proactively capabilities.addressing future new device types and
complex functional requirements ensuring 5. Strategic layout support
the platform always maintains leading
technological adaptability. - The successful implementation of the
project will provide strong support for the
- Compatible with mainstream IoT Company's development in strategic areas
communication protocols (e.g. MQTT) such as smart cities industrial internet
ensuring interoperability with other and intelligent transportation helping the
systems. Company seize opportunities in emerging
markets.- By accumulating massive device data
and rich operational experience a solid
foundation will be laid for future
intelligent decision-making and
innovative applications promoting the
Company's transformation towards
digitalization and intelligence.Implement the Company's strategic goals With smart devices based on video
Development of integrate the Company's technological intercom technology and large model AI
intelligent devices Based on video intercom technology and large accumulation in areas such as video technology innovatively offering a
based on video model AI technology develop intelligent intercom capabilities large model combination of services such as
6 intercom devices integrating attendance access control Ongoing projects intelligent agents professional attendance professional time attendance and access
technology and and video intercom expanding new modes of access control management and edge-side control professional video intercom and
large model AI multi-modal AI access control management. intelligent analysis to create a forward- AI agents to meet the business needs of
technology looking multi-modal AI entrance and exit the market and customers. The launch of
access control solution and release the new product series positions the
63ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
intelligent devices based on video intercom Company at the forefront of industry
technology and large model AI technology. development enriches its product matrix
and provides competitive and cost-
effective smart devices contributing to
the Company's performance growth.
1. Leverage intelligent agent technology
and the SaaS model to profoundly
ZKBioTime Cloud is a time attendance transform traditional workforce
management platform powered by LLM management approaches empowering them 1. The widespread application of the
applications focusing on the Workforce with intelligent analytical capabilities. By platform will help the Company provide
Management (WFM) domain. Built on a SaaS optimizing processes with intelligent more comprehensive and intelligent
platform it aims to provide enterprises with agents achieve efficient human resource workforce management solutions in
flexible and intelligent scheduling optimize management operations and enable precise medium and large enterprise service
workforce allocation monitor employee digital control over workforce costs and projects precisely meeting customers'
workload in real time reasonably adjust and performance fully meeting the diverse and diverse human resource management
balance the work of overloaded/underloaded dynamic application scenario requirements
Enterprise-grade needs thereby significantly enhancing the
employees and integrate TinyML agent of enterprises.Time Attendance Company's market competitiveness in the
interaction features to achieve real-time
Cloud SaaS 2. Focusing on data-driven and intelligent enterprise service sector.
7 localized intelligent interaction. Facilitate more Ongoing projects
Platform Powered empowerment leverage technological
convenient and seamless communication 2. By successfully addressing the
by LLM innovation and an integrated design
between employees and systems enabling workforce management challenges of
Applications philosophy to build a standardized
managers to promptly collect employee cross-regional multi-organizational
powerful workforce management platform
feedback and perform flexible workforce enterprises the Company will be able to
continuously leading the innovative
scheduling and task adjustments. Enterprises integrate internal and external resources
development trend of industry applications.can more accurately plan their workforce more efficiently significantly improving
reduce operating costs enhance employee 3. Continuously strengthen the platform's operational efficiency and management
satisfaction and work efficiency thereby underlying capabilities deeply integrate levels and creating more economic
providing robust human resource support and them into various industry sectors and benefits and brand value for the
decision-making insights for enterprises in provide high-quality customized services Company.fierce market competition. to partners consistently refining
outstanding industry solutions to meet the
evolving demands of the market.
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Project Name Progress Future Development
4. Built upon an advanced cloud
architecture foundation it effectively
resolves the conflict between autonomous
management of branch offices and unified
supervision by headquarters in cross-
regional multi-organizational enterprises
providing robust support for enterprises'
digital transformation and scaled
development.
5. By deeply mining and accumulating
value from enterprise workforce scenario
data it provides high-value-added services
to existing users and future project clients
maximizing the conversion of business
value and opening up more business
opportunities for enterprises.The Spatial Digital Integration Platform is built 1. Build a new benchmark for intelligent 1. Enhancing market competitiveness:
around ZKTECO's independently developed security protection: The application of the Spatial Digital
BioCV multimodal model deeply integrating Integration Platform will enable the
cutting-edge technologies such as AI large - Leverage AI and large model technologies Company to provide more comprehensive
model algorithms large-capacity facial to achieve intelligent perception real-time and intelligent solutions in medium to
recognition intelligent broadcasting systems monitoring and in-depth analysis of entry large-scale security projects precisely
and exit scenarios thereby building a
intrusion alarms intelligent agent interaction meeting diverse customer needs and
Spatial Digital image retrieval and knowledge base Q&A to comprehensive and intelligent security significantly enhancing the Company's
8 Integration comprehensively create an intelligent and Ongoing projects
protection system. market competitiveness in the security
Platform efficient entrance and exit management and - By utilizing large-capacity facial sector.security protection system. recognition capabilities provide efficient 2. Improving operational efficiency: By
A major highlight of this phase is that the and accurate identity verification services effectively addressing management
platform deeply integrates AI and large model ensuring the security and convenience of challenges in cross-regional multi-
technologies achieving millisecond-level personnel access. organizational projects the Company will
response for large-capacity facial recognition 2. Develop an efficient emergency response be able to more efficiently integrate
ensuring efficient and precise personnel and intelligent broadcasting system: internal and external resources improving
identity verification. This capability not only operational efficiency and management
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
enhances security levels but also achieves a - Integrate an intelligent broadcasting levels and creating more value for the
qualitative leap in user experience. Through system to enable instant notifications and Company.seamless integration with the broadcasting command dissemination enhancing the
system the platform can instantly issue flexibility and efficiency of emergency 3. Expanding business scope: Newly
notifications or commands enhancing the response. added features such as AI intelligent
flexibility of emergency response and daily agents million-face comparison and local
management. - In emergencies it can quickly convey large model retrieval will enable the
critical information ensuring personnel Company to expand into more business
The platform's built-in intelligent agents utilize evacuation and order maintenance. areas such as smart city and smart
advanced AI algorithms to intelligently analyze security achieving diversified business
business big data such as attendance reports 3. Drive the intelligent upgrade of image development.supporting the output of precise business data retrieval and data analysis:
based on dynamic user needs truly achieving 4. Promoting localization process: Fully - Provide image retrieval functionality
intelligent interaction and zero-code supporting system and hardware enabling users to quickly locate and review
development capabilities. Furthermore by localization not only complies with key event videos thereby offering robust
integrating image retrieval functionality users national information security strategic support for decision-making.can quickly locate and review key events requirements but will also win the trust
providing robust support for decision-making. - By leveraging big data analysis and AI and cooperation of more government and
algorithms deeply mine the value of state-owned enterprise customers for the
Moreover the platform's integrated knowledge entrance and exit data providing users with company driving the Company's
base Q&A system can instantly answer user valuable insights and recommendations. continuous and healthy business
queries regarding system operations feature development.applications and more further enhancing user 4. Build a knowledge base Q&A system to
satisfaction and self-service capabilities. enhance user experience:
- Offer a built-in knowledge base Q&A
system which can instantly answer user
queries regarding system operations
feature applications and more.- Reduce user learning costs enhance user
satisfaction and loyalty and create an
excellent entrance and exit management
service experience.
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
5. Achieve comprehensive intelligence and
efficiency in entrance and exit
management:
- Deeply integrate multiple business
subsystems such as HR access control
attendance consumption visitor
management parking elevator control and
patrol to achieve one-stop management.- Achieve seamless integration with various
devices through IoT technology enhancing
the intelligence and automation level of
entrance and exit management.- Significantly improve the operational
efficiency and convenience of entrance and
exit bringing users an unprecedented
intelligent efficient and convenient new
entrance and exit management experience.
6. Lead innovation and development in the
entrance and exit management industry:
- As an industry-leading intelligent entrance
and exit management platform
continuously drive technological
innovation and application upgrades.Provide high-quality services and excellent
solutions to ecosystem partners jointly
promoting the innovation and development
of the entrance and exit management
industry.
67ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
1. Intelligent transformation of traditional
systems: Through the technological
empowerment of Mars Wisdom AI
Cognitive Space Platform we drive
Mars Wisdom AI Cognitive Space Platform as traditional business systems to achieve
a leading intelligent agent visual analysis architectural upgrades and functional
platform derives its core competitiveness from evolution deeply integrating an AI
an innovative dual-model technical Mars Wisdom AI Cognitive Space Platform capability matrix building intelligent
architecture: The front-end is equipped with deeply integrates a multi-dimensional agent applications with multi-modal
BioCV TinyML lightweight small model cutting-edge AI technology matrix perception autonomous decision-making
technology which with extremely low building a comprehensive technical system and continuous learning capabilities and
computing power requirements and efficient that covers voice interaction multimodal significantly enhancing the automation
real-time processing capabilities can quickly image and text analysis intelligent visual and intelligence level of business
complete basic visual analysis at the edge; analysis autonomous decision-making scenarios.while the back-end relies on a powerful large intelligent agents high-precision vector 2. Edge computing product matrix
model analysis engine and through deep retrieval full lifecycle model governance
Mars Wisdom AI innovation: Based on the hardware
learning and multimodal fusion technology and dynamic workflow orchestration. This
9 Cognitive Space Ongoing projects encapsulation of the AI technology stack
achieves accurate cognition and decision- innovative architecture equips the platform
Platform from Mars Wisdom AI Cognitive Space
making in complex scenarios. This with core capabilities such as cross-modal Platform we are launching a series of
collaborative "small front-end + large back- perception complex task decoupling and edge intelligent devices for vertical
end" architecture not only ensures millisecond- adaptive decision-making efficiently scenarios: smart NVR RS1: focusing on
level response speed and low-power operation addressing full-scenario demands from video structured analysis achieving real-
of terminal devices but also empowers the structured data processing to unstructured time event detection and early warning;
platform with exceptional capabilities for scene understanding providing users with large model smart brain RS2: integrating
processing high-dimensional visual data and end-to-end customizable intelligent hundreds of billions of parameters for
can flexibly adapt to diverse scenario solutions and redefining the performance semantic understanding capabilities
requirements such as smart office smart retail boundaries of intelligent services. supporting complex scenario decision-
and smart campus setting a dual benchmark for making; training-inference super brain
efficiency and accuracy in the industry's RS3: creating a lightweight model
intelligent transformation. training-inference integrated terminal
lowering the threshold for AI application.Forming a full-link hardware ecosystem
covering data collection processing and
decision-making.
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Main R&D Project Expected Impact on the Company's
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Project Name Progress Future Development
3. Implementation of dual mode
collaborative technology architecture:
pioneering a "front-end lightweight small
model + back-end cognitive large model"
double engine driven system relying on
BioCV TinyML to achieve millisecond-
level response and privacy computing at
the edge utilizing the back-end large
model to complete complex task parsing
and knowledge accumulation achieving
the optimal solution for computing power-
efficiency through a dynamic model
scheduling mechanism and accelerating
the large-scale deployment of AI
technology in fragmented scenarios.Product technology innovation: Market share growth: By launching the
This project aims to address the usage Successfully develop and launch the BioCV X60 Edge Analysis Controller the
scenarios of access control and video BioCV X60 Edge Analysis Controller Company will be able to more effectively
integration developing and launching an which supports 1 door by default and can capture the access control and video
innovative edge analysis controller—BioCV flexibly expand the number of doors via fusion controller market especially the
X60. This controller integrates advanced TCP/IP and RS485 protocols to meet the SME market thereby expanding market
BioCV TinyML lightweight small model needs of enterprises of different scales. share and enhancing brand influence.technology aiming to provide through its
extremely low computing power requirements Efficient real-time processing: By Driving technological innovation: The
BioCV X60 Edge
10 and efficient real-time processing capabilities Ongoing projects leveraging BioCV TinyML lightweight application of BioCV TinyML lightweight
Analysis Controller
an efficient convenient and powerful access small model technology we ensure that the small model technology will provide the
control and video integration solution for BioCV X60 Edge Analysis Controller can Company with a competitive edge in
SMEs. Through the implementation of this quickly complete basic visual analysis at technological innovation solidifying its
project we expect to enhance the Company's the edge achieving efficient linkage technological leadership in the smart
competitiveness in the access control and video between access control and video analysis. access control domain.fusion controller market and meet the urgent
Rich functionality: Ensure that the BioCV Enhanced customer satisfaction: The
market demand for intelligent and efficient
X60 Edge Analysis Controller possesses BioCV X60 Edge Analysis Controller's
access control management systems.two core functions: access control and efficient real-time processing rich
visual analysis and achieves ultra-high functionality and ease of installation will
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
real-time linkage at the firmware level. significantly boost customer satisfaction
Access control events can be linked with and foster greater customer loyalty to the
video for clip capture pre-recording and Company.video feature extraction while also
supporting intelligent video analysis Business expansion opportunities: With
functions such as line crossing detection the successful launch of the BioCV X60
region detection target structuring (gender Edge Analysis Controller the Company
age group clothing color eyes hat) and will have the opportunity to further
people counting to assist access control in expand its business into related fields
making more accurate entry and exit such as smart security smart cities etc.judgments. laying a solid foundation for the
company's long-term development.Convenience and compatibility: Replace
the previous generation Atlas offline mode Enhanced competitive advantage: By
controller products meeting the quick enhancing key competitive capabilities
installation needs of SMEs. Additionally such as PoE power supply and video
ensure that the BioCV X60 Edge Analysis storage functions as well as product
Controller offers higher cost-effectiveness design that complies with international
and competitiveness compared to major standards the Company will be able to
competitors. stand out in fierce market competition
thereby strengthening its competitive
Enhanced key competitiveness: By advantage.integrating PoE power supply and video
storage functions enhance the capabilities
of inBio providing customers with more
convenient and efficient access control and
video fusion solutions.Compliance with international standards:
Provide miniaturized controllers that
comply with European installation
standards meeting DIN35 specifications
and featuring an enclosed design to
enhance product market acceptance and
competitiveness.
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Main R&D Project Expected Impact on the Company's
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Project Name Progress Future Development
1. Diversified business expansion: The
Company will take smart retail scenarios
as its core extending its services to more
related market segments and customer
groups. It can not only provide services to
small and medium-sized retail enterprises
and brand owners but also leveraging
accumulated technology and experience
As a comprehensive digital marketing solution it can expand into other related industries
specifically designed for small and medium- such as large chain retail enterprises and
sized retail enterprises and brand owners the fast-moving consumer goods (FMCG)
main R&D direction is to innovate in the companies achieving diversified business
Leveraging the Company's MinervaIoT
interactive value between people and scenarios development.platform as a foundational capability and
Full-domain Smart and the value of scenario empowerment
focusing on smart retail scenarios the 2. Enhanced market competitiveness:
Retail Scenario through technologies such as IoT machine
solution combines large models with edge- Compared with competitors the
Solution Platform vision big data analysis and AIoT integration.side AI application technology to lower the Company relying on advanced
based on the Deep The solution performs multi-dimensional data
11 Ongoing projects barrier to using AI technology enabling technology one-stop services and a
Integration of AIoT AI business analysis based on front-end
more retail enterprises to quickly deploy precise understanding of customer needs
(Formerly: intelligent sensing devices and back-end data
and apply AI technology and providing coupled with the integration of AI
ZKDIGIMAX L3 warehouses providing retailers and brand
users with one-stop AI solutions based on technology applications will occupy a
V4.0) owners with one-stop services such as precision
different market segments and customer leading position in the smart retail sector
marketing intelligent store analysis and
groups. consolidating and increasing market
operational optimization aiming to enhance share and further enhancing the
customer experience optimize operational Company's reputation and influence
efficiency and boost the business growth of within the industry.retailers and brand owners.
3. Enhanced technical strength: Through
the R&D of this comprehensive digital
marketing solution the Company will
deeply explore and practice in cutting-
edge technology fields such as IoT
machine vision big data analysis AIoT
integration and large model + edge-side
AI applications continuously
accumulating technical experience and
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
talent reserves significantly enhancing
the Company's overall technical strength
and laying a solid foundation for the
Company's technological innovation and
business expansion in other areas.Providing high-tech products for
commercial scenarios offering
Apply computer vision and Tiny Model to experiential value to customers
products provide high-quality services to enhancing spatial management cognitive
Provide mobile service robots for offices
customers using intelligent technologies and capabilities providing users with highly
Mobile Service shopping malls and supermarkets with
12 collect multi-dimensional data through more Ongoing projects competitive products and high-quality
Robots functions including product and advertising
sensors to provide a basis for operational services thereby boosting the core
promotion and intelligent interaction.decisions saving user resources and improving competitiveness of the Company's smart
operational efficiency of users. commercial solutions and offering strong
support for expanding market share and
optimizing user operating costs.
1. Perform automated management to
reduce labor requirements combining Cloud parking contributes to the
cloud computing IoT and big data Company's enhanced core
technologies. competitiveness expanded market share
Cloud Parking This project aims to research and develop
optimized operational efficiency
Smart Connected cloud-based parking solutions creating greater 2. Provide convenient booking and
13 Ongoing projects improved user experience driven business
Space Management business value for customers in overseas payment services.model innovation fostered cooperation
Platform markets.
3. Global adaptability: Support multiple and ecosystem building addressed market
languages currencies and payment challenges and achieved sustainable
methods to meet the needs of different development.countries and regions.This project centered on the Company's "End- Device connection and communication: This project will be a key pillar of the
Cloud-Edge-End Edge-Cloud" strategy continuously develops Support multi-protocol (MQTT HTTP Company's IoT strategy driving the
14 AIoT Platform the Cloud IoT Platform. It provides efficient Ongoing projects WebSocket etc.) access achieving upgrade of an end-edge-cloud integrated
V2.0 intelligent and secure Cloud IoT foundational efficient and stable connectivity for IoT platform and by combining AI
capabilities and services to the Company and massive devices. multimodal and data analysis capabilities
enterprise-level customers thereby facilitating it will enhance market competitiveness
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Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
the construction of a cloud-edge-end integrated Payment and subscription system: Support and business value. In the future the
ecosystem. subscription-based business models for IoT Company will leverage this platform to
devices providing flexible billing and expand into more AIoT application
settlement capabilities. scenarios forming core advantages of
technological barriers business model
Multi-company multi-tenant architecture: innovation and deep industry integration
Support multiple enterprises sharing the thereby contributing to the development
platform ensuring tenant data isolation and of the global IoT ecosystem.enhancing the adaptability of enterprise-
grade IoT solutions.Identity authentication and permission
management: Based on security protocols
such as OAuth and JWT build a
comprehensive user identity authentication
and permission control system.Organizational structure management:
Support hierarchical management of
enterprise users optimizing permission
allocation for IoT devices and
organizational collaboration.Message notification and push: Provide
multiple methods such as Web App SMS
and Email achieving efficient event
notification and alert mechanisms.Video and multi-modal processing
capabilities:
Support real-time audio and video stream
processing storage and analysis
enhancing IoT business capabilities such as
video surveillance and remote control.Integrate AI for multimodal data analysis
(image voice text) to enhance the
73ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
intelligent processing capability of IoT
data.- Intelligent driven: Based on Large As the complexity of modern enterprise
Ralvie AI leverages Large Language Models Language Models (LLM) it possesses operations increases employees and
(LLM) and AI Agents to provide enterprises capabilities in natural language management require more efficient time
and individuals with automated time understanding pattern recognition and task management and intelligent data analysis
management intelligent data analysis and automation facilitating intelligent decision- tools. Traditional time tracking methods
business optimization. Its core functions making and efficient execution. fail to provide sufficient business insights
include:
while cumbersome manual work logs and
- Smart Knowledge Base: Build exclusive
* Smart Time Recording: Automatically track reporting processes waste a significant knowledge bases for enterprises and
and categorize user work activities without amount of valuable time. Ralvie AI as an individuals automatically organize store
manual input. intelligent agent system for time and extract key information enhancing the
management and analysis tools is
* Personalized Work Reports: AI generates intelligence level of work. dedicated to helping enterprises and
LLM and AI detailed time management reports helping - Efficient AI Agents: Deploy various types individuals optimize work efficiency
Agents-based users optimize their work methods and improve of AI agents that precisely adapt to enhance productivity and support
Automated Time efficiency. different scenario requirements facilitating business decisions. Addressing the
15 Management and * Data-Driven Optimization: Utilize cloud Ongoing projects task execution and efficiency improvement.
shortcomings of traditional time
Business management which only records clock-computing and machine learning for in-depth
Optimization - Automated Work Logging: Intelligently in/out times and work durations it analysis providing precise recommendations
System V1.0 track user work activities automatically provides more granular work insights for productivity improvement. classify and organize them eliminating the helping managers and employees adjust
* Privacy Protection: Data is for the user's sole need for manual input and ensuring data strategies in real-time promoting internal
use and does not record keyboard input or integrity and usability. data sharing within enterprises and
screen content avoiding monitoring risks. optimizing overall workflows. Utilizing - Data-Driven Optimization: Combining
AI for business trend analysis provides
* Smart Project Management: Realize real-time cloud computing and machine learning enterprises with more precise strategic
progress monitoring optimizing resource deeply analyze user data and provide planning. Ralvie AI aims to enhance the
allocation reducing operational costs and intelligent optimization suggestions time management capabilities of
enhancing decision-making efficiency. facilitating productivity enhancement. enterprises and individuals through AI
- Personalized Learning: Realize adaptive technology while simultaneously offering * Personalized Growth Support: Provide
dashboard data intelligent planning learning based on user habits continuously
intelligent data analysis to optimize
decision-making processes. It is not only
suggestions and career growth analysis to help optimize time management strategies and
provide more precise work suggestions an efficient time management tool but
74ZKTeco 2025 Half Year Report
Main R&D Project Expected Impact on the Company's
S/N Project Objective Proposed Objective
Project Name Progress Future Development
employees continuously optimize their work enhancing individual and enterprise also an intelligent decision support
methods. efficiency. system helping users break free from
inefficient manual operations focus on
Ralvie AI makes time management more truly important work tasks and create
efficient empowering enterprises and greater value for the Company in the field
individuals to unleash maximum productivity. of AI intelligent agents.This project aims to develop a multimodal 1. Leading the industry to gradually
high-precision payment grade security promote the application of new biometrics
This project develops a multimodal non-contact level palm recognition solution. This device in payment smart access control smart
palm acquisition and recognition system which adopts palmprint and palm vein multiple attendance smart channels and other
can achieve multi-angle close range high- fusion recognition to improve recognition industries through the further update of
R&D of Non-
precision hybrid palmprint and palm vein accuracy and live recognition ability solve palm recognition technology;
contact Palm
recognition. It simultaneously supports RFID the problems of user height compatibility
Recognition
and QR codes etc. It realizes cross platform and twin misidentification and greatly
2. Enriching the usage scenarios of
16 Technology Based Ongoing projects product line of biometric modules and
system registration and application and adapts improve safety stability and usability.on Multimodal panel machines and improving the core
to indoor semi-outdoor and outdoor
Palm Acquisition competitiveness of the products;
application environments mainly used for non-
and Recognition
contact identity recognition in various entrance 3. Responding to the Company's strategic
and exit scenarios such as smart attendance and plan and launching a strategic
smart access control. deployment of intelligent recognition
terminals that meet market demand based
on new platforms and technologies.
75ZKTeco 2025 Half Year Report
IV. Non-main Business
□Applicable □ Not applicable
Unit: RMB
Proportion to Total
Amount Description of Reason Sustainable or Not
Profit
Mainly due to the
profit and loss
generated during the
Investment income 2885464.65 2.36% holding period of the No
financial products
purchased in the
current period
Mainly due to the
profit and loss
generated during the
Profits and losses from
7977831.68 6.53% holding period of the No
fair value changes
financial products
purchased in the
current period
Mainly due to the
provision for inventory
Asset impairment -9329887.04 -7.64% No
impairment in the
current period
Mainly due to expenses
such as the disposal of
Non-operating
1737567.87 1.42% obsolete materials and No
expenditure
charitable donations in
the current period
Mainly due to other
income arising from
government subsidies
Other income 6937337.84 5.68% additional VAT No
deductions and similar
items in the current
period
Mainly due to the
provision of bad debt
Losses from credit
-3853667.85 -3.15% reserves for accounts No
impairment
receivable in the
current period
V. Analysis of Assets and Liabilities
1. Significant changes of asset items
Unit: RMB
At the end of this reporting period At the end of 2024 Proportion Note of
Proportion to Proportion to increase or significant
Amount Amount
total assets total assets decrease change
Mainly due to
Monetary
1303913618.46 30.95% 1473334905.97 36.70% -5.75% the purchase of
funds
financial
76ZKTeco 2025 Half Year Report
products and
distribution of
profits (cash
dividends)
from the
previous year
in the current
period
Accounts No major
528788174.8912.55%519014337.8912.93%-0.38%
receivable change
No major
Contract assets 33581.84 0.00% 212795.14 0.01% -0.01%
change
No major
Inventories 355595477.00 8.44% 335306397.14 8.35% 0.09%
change
Investment real No major
20683730.730.49%21504316.770.54%-0.05%
estate change
Long-term
No major
equity 29216116.25 0.69% 28982092.23 0.72% -0.03%
change
investment
Mainly due to
the Thai
factory
carrying
Fixed assets 599912936.02 14.24% 535337384.82 13.33% 0.91% forward fixed
assets in the
construction
project in the
current period
Construction in No major
208311207.774.94%226445932.025.64%-0.70%
progress change
Right-of-use No major
51425459.621.22%48352214.141.20%0.02%
assets change
Mainly due to
the receipt of
discounted
Short-term proceeds from
74552050.161.77%0.000.00%1.77%
loan bank
acceptance
bills in the
current period
Contract No major
76175981.931.81%71168318.911.77%0.04%
liabilities change
Long-term No major
6448024.170.15%7021328.890.17%-0.02%
loan change
Lease No major
29522243.800.70%29108076.760.73%-0.03%
liabilities change
Mainly due to
the increase in
Trading the purchase of
781091002.9618.54%491331815.7912.24%6.30%
financial assets financial
products in the
current period
77ZKTeco 2025 Half Year Report
2. Information on main overseas assets
□Applicable □ Not applicable
Proportion
Control
of overseas Is there a
Specific measures to
Cause of Operation assets to significant
content of Asset size Location ensure Income
formation mode the impairment
assets asset
Company's risk
security
net assets
ZKTECO Wholly-
Overseas Control by
CO. owned 51689.96 Hong Kong 443.98 15.19% No
sales subsidiary
LIMITED subsidiary
ZKTECO Wholly-
Overseas Control by
SECURITY owned 12576.74 Dubai 1193.04 3.70% No
sales subsidiary
L.L.C subsidiary
ZK
Controlling Overseas Control by
TECHNOL 11520.09 America 6290.00 3.38% No
subsidiary sales subsidiary
OGY LLC
Armatura
Controlling Overseas Control by
Tech 25310.18 Thailand 1267.91 7.44% No
subsidiary sales subsidiary
Co.Ltd.Note: Main overseas assets mean that the assets of overseas individual companies exceed 10% of the consolidated
Other
assets or the net profit of overseas individual companies exceeds 10% of the consolidated net profit of the Group
explanations
Unit: RMB '0000
3. Assets and liabilities measured at fair value
□Applicable □ Not applicable
Unit: RMB
Profits and
Cumulative
losses from Impairment
changes in Purchase amount Sales amount
Beginning fair value accrued in Other
Item fair value in the current in current Ending balance
balance changes in the current changes
recognized period period
the current period
in equity
period
Financial assets
1. Trading
financial
assets
(excluding 491331815.79 7977831.68 0.00 0.00 1185221503.49 903839747.78 399599.78 781091002.96
derivative
financial
assets)
2.
Derivative
0.000.000.000.0025167850.0025496603.23328753.230.00
financial
assets
Subtotal
of
491331815.797977831.680.000.001210389353.49929336351.01728353.01781091002.96
financial
assets
Total 491331815.79 7977831.68 0.00 0.00 1210389353.49 929336351.01 728353.01 781091002.96
78ZKTeco 2025 Half Year Report
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
4. Assets right restrictions as of the end of the reporting period
Please refer to "Section VIII Financial Report VII. Notes to Consolidated Financial Statements 23. Assets with Restricted Ownership
or Use Rights" in this report for details
VI. Investment Analysis
1. Overall
□Applicable □ Not applicable
Investment in the reporting period Investment in the same period of the
YoY
(RMB) previous year (RMB)
1221756775.36580797590.58110.36%
2. Significant equity investments obtained during the reporting period
□ Applicable □Not applicable
79ZKTeco 2025 Half Year Report
3. Significant non-equity investments during the reporting period
□Applicable □ Not applicable
Unit: RMB
Reasons for
Accumulated Accumulated Not
Investment
Fixed Asset Actual Investment Realized Income Achieving Disclosure Disclosure
Investment Investment Project Amount During Source of Expected
Project Name Assessment or Amount As of the Project Progress As of the End of Planned Date (if Index (if
Mode Industry the Reporting Funds Income
Not End of the the Reporting Progress and any) any)
Period
Reporting Period Period Expected
Benefits
Hybrid Biometrics IoT Own funds
Plant and supporting Under Not Not
Intelligent Industrial Base Self-built Yes 0.00 226519519.55 bank loans and 49847910.26
facilities construction applicable applicable
Project raised funds
Multimodal Biometrics
Plant and supporting Own funds and Under Not Not
Digitalization Industrial Base Self-built Yes 9691607.44 198019825.45 Not applicable
facilities raised funds construction applicable applicable
Construction Project
Thai factory construction and Plant and supporting Not Not
Self-built Yes 1675814.43 81543001.80 Own funds Completed Not applicable
office buildings facilities applicable applicable
Not
Total -- -- -- 11367421.87 506082346.80 -- -- 49847910.26 -- -- --
applicable
80ZKTeco 2025 Half Year Report
4. Financial assets measured at fair value
□Applicable □ Not applicable
Unit: RMB
Profits and
Cumulative
losses from Sales amount
Initial changes in Purchase amount Accumulated Source
Asset fair value during the Other Closing
investment fair value during the investment of
Category changes in reporting changes amount
outlay recognized reporting period income Funds
the current period
in equity
period
Own
funds
Others 491331815.79 7977831.68 0.00 1185221503.49 903839747.78 0.00 399599.78 781091002.96 and
raised
funds
Total 491331815.79 7977831.68 0.00 1185221503.49 903839747.78 0.00 399599.78 781091002.96 --
81ZKTeco 2025 Half Year Report
5. Use of raised funds
□Applicable □ Not applicable
(1) Overall use of raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Total
Proportio
amount Amoun
Total n of Proportion The purpose
of raised Accumulate t of
amount raised of and
Accumulate funds d total Total raised
Listing Total Net of funds accumulate destination
Year of d total with amount of amount funds
Fundraisin date of amount of amount of raised utilized at d total of the raised
fundraisin amount of changed raised funds of unused idle for
g method securitie raised raised funds the end of amount of funds that
g raised funds purposes with raised more
s funds funds (1) used in the raised funds have not
used (2) during changed funds than
this reporting with change been used
the purposes two
period period (3) purposes yet
reportin years
=(2)/(1)
g period
Stored in
the bank's
special
Initial
August 160816.8 145729.8 4276.5 84627.1 account for
2022 public 67277.90 46.17% 0 32085.41 22.02% 0.00
17 2022 9 4 9 5 fundraising
offering
and wealth
managemen
t
160816.8145729.84276.584627.1
Total -- -- 67277.90 46.17% 0 32085.41 22.02% -- 0.00
9495
Description of the overall use of raised funds
82ZKTeco 2025 Half Year Report
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 June 30 2025 the balance of remaining raised funds (including interest income and financial product income net of bank handling fees) was RMB 846271541.69.
(2) Committed projects with raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Has there
Committed Has the Investment Date when Accumulated been a
Committed Investment Accumulated Benefits Have the
investment project been progress as the project benefits major
Listing total Amount investment achieved expected
Financing projects and the Project changed Net amount of Adjusted total of the end reaches its achieved as of change in
date of investment During the amount as of during this benefits
project name investment nature (including raised funds investment (1) of the expected the end of the the
securities amount of Reporting the end of the reporting been
direction of over- partial period conditions reporting feasibility
raised funds Period period (2) period achieved
raised funds changes) (3)=(2)/(1) for use period of the
project
Committed investment projects
1. Tangxia
Initial public Production
August Production Base Not Not
offering of and Yes 24841.18 24841.18 Not applicable Yes
17 2022 Construction applicable applicable
stocks in 2022 construction
Project
2. Hybrid
Initial public Biometrics IoT Production
August March 31 Not
offering of Intelligent and No 43689.94 43689.94 43689.94 140.82 27883.19 63.82% 1178.08 4984.79 No
17 2022 2026 applicable
stocks in 2022 Industrial Base construction
Project
3. American
Initial public Manufacturing Production
August August 31 Not Not
offering of Factory and Yes 17392.21 17392.21 14392.65 660.36 980.54 6.81% Not applicable No
17 2022 2027 applicable applicable
stocks in 2022 Construction construction
Project
83ZKTeco 2025 Half Year Report
Initial public 4. R&D Center
August December Not Not
offering of Construction R&D project Yes 18240.58 18240.58 14692.19 44.79 10968.52 74.66% Not applicable No
17 2022 31 2025 applicable applicable
stocks in 2022 Project
5. Global
Initial public Marketing
August Operational August 31 Not Not
offering of Service Network Yes 26802.01 26802.01 26802.01 438.04 9143.35 34.11% Not applicable No
17 2022 management 2028 applicable applicable
stocks in 2022 Construction
Project
6. Remaining
funds after the
previous change
Initial public Production
August in the American Not Not
offering of and Yes 2999.56 Not applicable No
17 2022 Manufacturing applicable applicable
stocks in 2022 construction
Factory
Construction
Project
7. Multimodal
Biometrics
Initial public Production
August Digitalization June 30 Not Not
offering of and Yes 39605.10 2992.58 18302.30 46.21% Not applicable No
17 2022 Industrial Base 2026 applicable applicable
stocks in 2022 construction
Construction
Project
8. Remaining
funds after the
Initial public
August change in the Not Not
offering of R&D project Yes 3548.39 Not applicable No
17 2022 R&D Center applicable applicable
stocks in 2022
Construction
Project
Subtotal of committed investment projects -- 130965.92 130965.92 145729.84 4276.59 67277.90 -- -- 1178.08 4984.79 -- --
Direction of over-raised fund investment direction
1. Production
August Not
Undetermined 14763.92 and Yes 14763.92 14763.92 No
17 2022 applicable
funds construction
Subtotal of over-raised fund investment direction -- 14763.92 14763.92 -- -- -- --
Total -- 145729.84 145729.84 145729.84 4276.59 67277.90 -- -- 1178.08 4984.79 -- --
Describe the situation and 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.
84ZKTeco 2025 Half Year Report
reasons why the planned The Company has formed a more mature consideration for project construction. In order to control project investment risks the procurement research equipment selection project
progress and expected 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
benefits have not been 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
achieved by projects "R&D Center Construction Project" to December 31 2025.(including the reason for 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 to changes
selecting "not applicable" in terminal demand and external objective environmental factors the equipment and material procurement and overall construction progress of the investment project have been delayed
for "whether the expected 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 effectiveness of the
benefits have been investment and avoiding additional resource waste the Company will steadily promote the implementation of this project based on its medium - and long-term development strategy without
achieved") changing the investment content total investment amount and implementation subject of the project under the principle of gradually laying out the project. The Company reasonably
arranges production capacity construction based on customer orders to ensure the smooth implementation of the project. Therefore after careful consideration the Company has decided to
extend the deadline for the project to reach its expected conditions for use until March 31 2026. This adjustment aims to ensure the effective implementation of the project and is also in line
with the Company's long-term development vision.For 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.Regarding the aforementioned Global Marketing Service Network Construction Project and American Manufacturing Factory Construction Project the Company held the 17th Session of the
85ZKTeco 2025 Half Year Report
Third Board Meeting and the 16th Session of the Third Supervisory Board Meeting on April 21 2025 and the General Meetings on May 15 2025 and deliberated and approved the "Proposal
on Adjusting the Internal Investment Structure Implementation Method and Extension of Some Raised Fund Investment Projects". The Company agreed to extend the date for the "Global
Marketing Service Network Construction Project" and the "American Manufacturing Factory Construction Project" to reach their expected conditions for use. Considering the market
environment and the actual construction progress of the investment project the planned date for the Global Marketing Service 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 17 2026 before the adjustment and March 31 2027 after the adjustment. For details please refer to the "Proposal on Adjusting the Internal Investment
Structure Implementation Method and Extension of Some Raised Fund Investment Projects" (Announcement No.: 2025-045) disclosed by the Company on CNINFO
(http://www.cninfo.com.cn) on April 23 2025.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.Description of significant
changes in project Not applicable
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 Second
The amount purpose and 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
progress of the over- 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
raised funds 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.Instances of unauthorized
alteration of the use of
Not applicable
raised funds and illegal
occupation of raised funds
Changes in the
implementation location
Not applicable
of projects invested with
raised funds
Applicable
Occurred during the reporting period
Adjustment of The Company held the 17th Session of the Third Board Meeting and the 16th Session of the Third Supervisory Board Meeting on April 21 2025 and the General Meetings on May 15 2025
implementation methods and deliberated and approved the "Proposal on Adjusting the Internal Investment Structure Implementation Method and Extension of Some Raised Fund Investment Projects". Changes were
and internal investment made to the relevant contents of the Global Marketing Service Network Construction Project and the American Manufacturing Factory Construction Project.structure for projects 1. Reasons for Adjusting the Internal Investment Structure of the Investment Project
invested with raised funds 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
86ZKTeco 2025 Half Year Report
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. In summary to effectively utilize the raised capital the Company plans to adjust certain construction contents of the investment project in light of
market conditions to adapt to the market environment and achieve rational resource allocation and efficient utilization.
2. Specific Details of the Adjustment to the Internal Investment Structure of the Investment Project
Provided that the investment purpose and scale remain unchanged and in conjunction with further planning and review of overseas and domestic marketing networks and the actual progress
during the implementation of the investment project the Company intends to adjust the internal investment structure of the Global Marketing Service Network Construction Project primarily
by reducing equipment procurement costs and increasing personnel salaries.
3. Specific Details of the Adjustment to the Implementation Method of the Investment Project
The original Global Marketing Service Network Construction Project planned to acquire or lease office premises in Panama South Africa (Johannesburg) and other locations. Now
considering the Company's overall overseas marketing strategy local market conditions and other factors the Company intends to cancel the arrangement for acquiring office premises in the
relevant regions. The Company plans to construct a European regional headquarters through its subsidiary ZKTECO EUROPE SL (the Company holds 80.12% equity in ZKTECO EUROPE
SL through its wholly-owned subsidiary ZKTECO CO. LIMITED) on its owned and newly acquired land in Spain to integrate resources enhance operational efficiency and support the
Company's long-term strategic development in the European market. The establishment of the European regional headquarters is not only an important step in the Company's globalization
strategy but also a key initiative to enhance operational efficiency mitigate risks and achieve business growth. Through centralized office operations and integration into the local ecosystem
the Company hopes to build an efficient flexible and competitive operational center in the European market creating long-term value for the Company's development.Applicable
The Company held the 19th Session of the Second Board Meeting and the 13th Session of the Second Supervisory Board Meeting on September 29 2022 and deliberated and approved the
"Proposal on Using Raised Funds to Replace Self Raised Funds for Pre-invested Raised Investment Projects and Paid Issuance Expenses". It is agreed that the Company will use the 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 Account for Raised
Advance investment and
Funds Increasing Capital and Providing Loans to Subsidiaries to Implement Investment Projects". The salaries social insurance premiums housing provident fund utilities etc. of domestic
replacement of raised
personnel of the Company in implementing the investment projects "Hybrid Biometrics IoT Intelligent Industrial Base Project" "R&D Center Construction Project" "Global Marketing
funds for investment
Service Network Construction Project" and the "Multimodal Biometrics Digitalization Industrial Base Construction Project" are planned to be paid by the Company or its subsidiary
projects
implementing the investment projects in advance with their own funds. The Company collected and calculated the aforementioned advance expenses incurred by each investment project on a
monthly basis and then transferred an equal amount of funds from the special account for investment to the Company's or its subsidiary's own fund account for implementing the investment
projects. The implementation location of the Company's investment project "American Manufacturing Factory Construction Project" is in the United States and the investment project
construction funds need to be paid in USD. The Company's investment projects "Global Marketing Service Network Construction Project" and "R&D Center Construction Project" include
overseas construction content and the operability of paying funds required for overseas construction directly from the special account for raised funds is poor. Therefore the Company plans
to use its own foreign exchange to pay the required funds for the overseas parts of the "Global Marketing Service Network Construction Project" "American Manufacturing Factory
Construction Project" and "R&D Center Construction Project". Subsequently the amount of advance payments will be calculated monthly and equal amounts will be transferred from the
special account for raised funds to the Company's own fund account.As of June 30 2025 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
87ZKTeco 2025 Half Year Report
68.1551 million.
Temporary replenishment
of working capital with Not applicable
idle raised funds
The amount and reasons
for the surplus of raised
Not applicable
funds during project
implementation
The purpose and
As of June 30 2025 the balance of the Company's unused IPO raised funds is RMB 846.2715 million (including interest income and financial product income net of handling fees) including
destination of the raised
RMB 69.0815 million of demand deposit in the special account for raised funds and RMB 777.19 million of time deposit and other financial products. The above financial products have high
funds that have not been
safety meet the requirements of capital preservation and have good liquidity which does not affect the normal operation of the investment plan for raised funds.used yet
Problems or other
situations in the use and None
disclosure of raised funds
(3) Change in the use of raised funds
□Applicable □ Not applicable
Unit: RMB '0000
The total Has there
Actual
amount of Actual Investment Date when been a
accumulated Benefits Have the
Corresponding raised funds investment progress as the project significant
investment achieved expected
Financing Fundraising Changed original to be amount of the end reaches its change in the
amount as during this benefits
project name method project committed invested in during this of the expected feasibility of
of the end reporting been
projects the project reporting period conditions the project
of the period achieved
after the period (3)=(2)/(1) for use after the
period (2)
change (1) change
Global Global
Marketing Marketing
Initial
Service Service August 31 Not Not
public 26802.01 26802.01 438.04 9143.35 34.11% No
Network Network 2028 applicable applicable
offering
Construction Construction
Project Project
88ZKTeco 2025 Half Year Report
American American
Manufacturing Initial Manufacturing
August 31 Not Not
Factory public Factory 14392.65 14392.65 660.36 980.54 6.81% No
2027 applicable applicable
Construction offering Construction
Project Project
Not
Total -- -- -- 41194.66 1098.40 10123.89 -- -- -- --
applicable
Description of reasons for changes decision-
For details please refer to the section "Adjustment of implementation methods for projects invested with raised funds" in the "Comparison
making procedures and information disclosure
Table for the Use of Raised Funds".(by specific project)
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
The situation and reasons for not achieving the implemented in the US due to differences in regulatory environments the Company's customized requirements and the coordination of
planned progress or expected benefits (by supply chain and construction resources the project has been delayed. The specific influencing factors are as follows: * Regulatory
specific project) 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 is in the construction stage and has not yet generated benefits. The Global
Marketing Service Network Construction Project is an investment project and does not generate benefits.Description of major changes in project
None
feasibility after the change
89ZKTeco 2025 Half Year Report
6. Entrusted financial management derivative investment and entrusted loans
(1) Entrustment of financial management
□Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: RMB '0000
Provision for
impairment
Source of funds for Amount of
Outstanding Overdue amount of
Specific types entrusted financial entrusted financial
balance uncollected amount overdue
management management
uncollected
financial assets
Bank financial
Own funds 60325.00 18350.24
products
Other categories Own funds 144.19 49.17
Bank financial
Fundraising 130819.00 77719.00
products
Total 191288.19 96118.41
Specific situation of high-risk entrusted financial management with significant individual amounts low safety and poor liquidity
□ Applicable □Not applicable
Expected inability to recover principal or other situations that may lead to impairment in entrusted financial management
□ Applicable □Not applicable
(2) Derivative investment
□Applicable □ Not applicable
1) Derivative investments for hedging purposes during the reporting period
□Applicable □ Not applicable
Unit: RMB '0000
Ratio of
ending
Profits and
Cumulative Purchase Sales investment
losses from
Types of Initial changes in amount amount amount to the
Opening fair value Closing
derivative investment fair value during the during the Company's
amount changes in amount
investments amount recognized reporting reporting net assets at
the current
in equity period period the end of the
period
reporting
period
Forward 0.00 0.00 0.00 2516.79 2516.79 0.00
foreign
exchange 0.00 0.00%
settlement and
sales
Total 0.00 0.00 0.00 0.00 2516.79 2516.79 0.00 0.00%
Accounting
policies and No major change
specific
90ZKTeco 2025 Half Year Report
accounting
principles for
hedging
business during
the reporting
period as well
as description
on whether
there have been
significant
changes
compared to
the previous
reporting
period
Description of
actual profit
During the reporting period the Company obtained investment income of RMB 285800 through forward foreign
and loss during
exchange settlement and sales.the reporting
period
In the daily operation process of the Company foreign currency transaction is involved. In order to prevent
exchange rate fluctuation risks it is necessary for the Company to carry out foreign exchange derivative trading
Description of business related to daily operation needs according to specific circumstances to reduce the risk of exchange rate or
hedging effect 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 may
occur when the exchange rate of the forward foreign exchange settlement and sales agreed in the confirmation letter
Risk analysis
for the forward foreign exchange settlement and sales is lower than the real-time exchange rate.and control
2. Risk of payment collection prediction: Business departments make payment prediction based on customer orders
measures of
and expected orders. During the actual execution process customers may adjust their own orders and predictions
derivatives
resulting in inaccurate company payment prediction and the risk of delayed delivery of forward exchange
positions
settlement.during the
3. Internal control risk: Forward foreign exchange settlement and sales transactions are highly specialized and
reporting
complex which may result in risks due to imperfect internal control systems.period
4. Customer default risk: If the customer's accounts receivable are overdue and the payment cannot be collected
(including but
within the predicted payment period it will cause a delay in forward exchange settlement and result in losses to the
not limited to
Company.market risk
5. Transaction performance risk: Conducting financial derivative trading business carries the risk of default caused
liquidity risk
by the inability of counterparties to perform when the contract expires.credit risk
II. Preparation work and risk control measures for hedging by the Company
operational
The Company follows the principle of hedging when conducting forward foreign exchange settlement and sales
risk legal risk
transactions and does not engage in speculative arbitrage transactions. The main risk control measures are as
etc.)
follows:
1. When signing forward foreign exchange settlement and sales contracts transactions are carried out in strict
accordance with the Company's predicted collection amount and all forward foreign exchange settlement and sales
businesses have a true trade background.
2. The Company has formulated the "Management System for Forward Foreign Exchange Settlement and Sales of
ZKTECO CO. LTD." which clearly stipulates the amount variety approval authority internal audit process
91ZKTeco 2025 Half Year Report
information disclosure and other aspects of forward foreign exchange settlement and sales. Moreover the
Company has strengthened the business training and professional ethics of relevant personnel improved the quality
of relevant personnel and established a timely reporting system for abnormal conditions to avoid the occurrence of
operational risk to the maximum extent.
3. To prevent the delayed delivery of forward foreign exchange settlement and sales the Company will attach great
importance to the management of foreign currency accounts receivable avoid the phenomenon of overdue accounts
receivable and strive to improve the accuracy of payment collection prediction and reduce prediction risks.Meanwhile the Company has purchased credit insurance for some export products thus reducing the customer
default risk.
4. To control transaction performance risks the Company carefully selects counterparties engaged in financial
derivatives business. The Company only conducts financial derivative trading business with legally qualified large
commercial banks and other financial institutions and carefully reviews the contract terms signed with the
counterparties to prevent credit and legal risks.Changes in
market price or
fair value of
products during
the reporting
period of the
invested
The Company's accounting for the fair value of derivatives mainly focuses on the unexpired contracts for forward
derivatives.foreign exchange settlement and sales transactions signed between the Company and banks during the reporting
The analysis of
period. Trading financial assets or trading financial liabilities are recognized based on the difference between the
the fair value
quoted price of the unexpired forward foreign exchange settlement and sales contract at the end of the period and
of derivatives
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)
Disclosure date
of
announcement
by the Board of
Directors for April 23 2025
approval of
derivative
investment (if
any)
2) Derivative investments for speculative purposes during the reporting period
□ Applicable □Not applicable
There were no derivative investments for speculative purposes during the Company's reporting period.
(3) Entrusted loan
□ Applicable □Not applicable
There were no entrusted loans during the reporting period of the Company.
92ZKTeco 2025 Half Year Report
VII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable □Not applicable
There is no disposal of significant asset for the Company during the reporting period.
2. Disposal of significant equity
□ Applicable □Not applicable
VIII. Analysis of Major Holding and Joint-stock Companies
□Applicable □ Not applicable
Major subsidiaries and joint-stock companies with an impact on the Company's net profit of over 10%
Unit: RMB
Company Principal Registered Operating Operating
Company Name Total assets Net assets Net profit
type activities Capital revenue profit
ZKTECO
Sales of
SECURITY Subsidiaries 300000.001 125767373.92 113969712.41 49394328.92 13190456.92 11930400.16
goods
L.L.C
ZK
Sales of
TECHNOLOGY Subsidiaries Not applicable 115200867.18 61380399.15 104110346.53 62900773.12 62899983.41
goods
LLC
Armatura Tech Sales of
Subsidiaries 602983200.002 253101836.90 184634604.61 77149804.16 12508113.55 12679090.75
Co.Ltd. goods
R&D
production
ZKTECO
and sales
(GUANGDONG) Subsidiaries 800000000.00 1596509248.12 968472001.95 511218239.00 22971806.98 22654063.40
of products
CO. LTD
and
software
Note: 1. AED
2. THB
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
With no significant impact on the overall
ZKTECO ROMANIA S.R.L. Cancellation production operation and performance
of the Company.Description of the main controlling and participating companies
Please refer to the relevant content of "Section VIII Financial Report - X. Equity in Other Entities" for details
IX. Structured Entities Controlled by the Company
□ Applicable □Not applicable
93ZKTeco 2025 Half Year Report
X. Risks Faced by the Company and Countermeasures
1. Operational risk
(1) Market competition risk
After years of deep cultivation in the biometric industry the Company has formed competitive advantages in the fields of smart
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
Company's leading position in the industry. However with the increasing market competition if the Company cannot continuously
optimize product design improve production quality enhance brand competitiveness expand and consolidate sales network and
Improve market penetration the Company's existing industry and market position will be affected and the Company will face the risk
of declining market share and profitability.
(2) Overseas business operational risks
In the first half of 2025 the Company's overseas sales revenue from countries and regions was RMB 703.4691 million
accounting for 76.00% 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 and maritime restrictions caused by geopolitical conflicts the
currency depreciation of many countries due to the strong USD rising freight rates and the fluctuations in the US tariff policy. As a
result global trade policies have shown a strong degree of uncertainty. 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.
94ZKTeco 2025 Half Year Report
(3) Tax compliance risks caused by transfer pricing arrangements between various tax entities within the Company both
domestically and internationally
As of June 30 2025 the Company has a total of 48 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"
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. 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 the first half of 2025 the Company's R&D expenses were RMB 104.0672 million accounting for 11.20%
of operating revenue.
95ZKTeco 2025 Half Year Report
As of June 30 2025 the Company has obtained 982 patents including 177 invention patents and obtained 768 computer software
copyrights and 85 work copyrights with strong ability for continuous innovation. However if the Company cannot keep up with the
development trends of domestic and foreign biometric technology and related application products and fully pay attention to the diverse
individual needs of customers and the subsequent R&D investment is insufficient resulting in the Company's technology development
and product upgrading not being able to adapt to industry technology iterations and market demand changes in a timely manner it will
face the risk of declining market competitiveness due to the inability to maintain sustained innovation capabilities.
3. Internal control risk
(1) Management risks caused by future expansion of the Company's scale
With the construction of the marketing network of the Company the Company's scale will constantly expand and the number of
sales R&D and management personnel will increase significantly posing higher requirements for the Company's management level
and system. Although the Company has established a series of relatively complete enterprise management systems such as clear
institutional processes in procurement production sales R&D and service to ensure the competitiveness and reliability of the
Company's products and services if the Company's management ability cannot be further effectively improved it may trigger
corresponding management risks hinder the Company's future development and have a negative impact on the overall profitability of
the Company.
(2) Dealer management risk
During the reporting period the Company mainly adopted a sales model that combines distribution and direct sales and the
proportion of distribution was relatively high. In the first half of 2025 the Company achieved a revenue of RMB 606.8441 million
through the distribution model accounting for 65.56% of the Company's main business income in the first half of 2025.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 587.5041 million accounting
for 63.22% 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 355.5955 million accounting for 11.58% 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 6.88%. 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
96ZKTeco 2025 Half Year Report
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.
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.
97ZKTeco 2025 Half Year Report
XI. Reception of Activities including Research Communication and Interviews During the Reporting Period
□Applicable □ Not applicable
Reception The main content of
Reception Reception Index of basic information of
Reception time object Reception object the discussion and the
location methods research
type materials provided
CNINFO
http://www.cninfo.com.cn
XIAMEN
See CNINFO Announcement date: February
February 27 ZKTECO CO. CHINA EVERWIN Guoxin Investment First State Cinda
Field research Institution (http://www.cninfo.co 27 2025 Investor Relations
2025 LTD. Meeting Ping An Asset Caitong Fund CSC Multiply Capital
m.cn) Activity Record Form of
Room
ZKTECO CO. LTD. (No.
2025-01)
CNINFO
Value Online http://www.cninfo.com.cn
Online
(https://www.ir- See CNINFO Announcement date: April 30
Communication Investors participating in the Company's 2024 annual
April 30 2025 online.cn/) Others (http://www.cninfo.co 2025 Investor Relations
on Online performance briefing online
Network m.cn) Activity Record Form of
Platforms
Interaction ZKTECO CO. LTD. (No.
2025-02)
Taikang Asset Management (Hong Kong) Company
Limited 、 3W Fund FRANKLIN TEMPLETON China
Alpha Fund Management (HK) Limited HSZ (Hong Kong)
Limited Orient Securities Asset Management Company
Limited Shanghai Hesheng Investment Management Co.ZKTeco Cloud Ltd. CSC Research Institute China Capital Management CNINFO
Brain- Co. Ltd. China Post Securities Co. Ltd. Beijing Yuanfeng http://www.cninfo.com.cn
Computer Private Equity Fund Management Partnership (Limited See CNINFO Announcement date: May 6
May 06 2025 (Hangzhou) Field research Institution Partnership) Huaxia Bank Research Institute China (http://www.cninfo.co 2025 Investor Relations
Technology Development Bank Securities Co. Ltd. Tianhong Asset m.cn) Activity Record Form of
Co. Ltd. Management Co. Ltd. Taiping Pension Co. Ltd. Invesco ZKTECO CO. LTD. (No.Meeting Room Great Wall Fund Management Co. Ltd. Western Leadbank 2025-03)
Fund Management Co. Ltd. Lion Fund Management Co
Ltd. Yinhua Fund Management Co. Ltd. Penghua Fund
Management Co. Ltd. Ziheng (Shanghai) Commercial
Management Co. Ltd CCB Wealth Management Hongchou
Capital BNB WEALTH MANAGEMENT Harmony Huiyi
98ZKTeco 2025 Half Year Report
Shanghai Entropy Ying Private Equity Fund Management
Co. Ltd. and China Great Wall Securities Co. Ltd.CNINFO
http://www.cninfo.com.cn
Sinolink Securities China Asset Wanjia Asset AVIC Fund See CNINFO Announcement date: May 16
Telephone
May 16 2025 Online Meeting Institution Management Co. Ltd. Shanghai Yongle Private Equity Fund (http://www.cninfo.co 2025 Investor Relations
Communication
Management Co. Ltd. m.cn) Activity Record Form of
ZKTECO CO. LTD. (No.
2025-04)
CNINFO
http://www.cninfo.com.cn
See CNINFO Announcement date: June 17
ZKTECO
June 17 2025 Field research Institution Guotai Haitong Securities Zeta Capital DM Capital (http://www.cninfo.co 2025 Investor Relations
Meeting Room
m.cn) Activity Record Form of
ZKTECO CO. LTD. (No.
2025-05)
CNINFO
http://www.cninfo.com.cn
ZKTECO
Guotai Haitong Securities Tebon Fund Fullgoal Fund See CNINFO Announcement date: June 25
June 23-25 Meeting Room
Field research Institution Penghua Fund GALAXY ASSET BOCOM Schroders (http://www.cninfo.co 2025 Investor Relations
2025 and Online
BOSC ASSET Changjiang Pension CINDA FUND m.cn) Activity Record Form of
Meetings
ZKTECO CO. LTD. (No.
2025-06)
99ZKTeco 2025 Half Year Report
XII. 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
XIII. Implementation of the Action Plan for "Double Improvement of Quality and Return"
Has the Company disclosed an action plan announcement for "dual improvement of quality and return".□ Yes □No
100ZKTeco 2025 Half Year Report
Section IV Corporate Governance Environment and Society
I. Changes of Directors Supervisors and Senior Management of the Company
□ Applicable □Not applicable
There were no changes in the Company's directors supervisors and senior management during the reporting period as detailed in
the 2024 Annual Report.II. Profit Distribution and Conversion of Capital Reserve to Share Capital during the
Reporting Period
□ Applicable □Not applicable
The Company plans not to distribute cash dividends issue bonus shares or distribute shares from capital reserve during the current
reporting period on a semi-annual basis.III. Implementation of the Company's Equity Incentive Plans Employee Stock Ownership
Plans or Other Employee Incentive Plans
□Applicable □ Not applicable
1. Equity incentives
During the reporting period the Company had a total of two phases of equity incentive plans under implementation. The specific
details are as follows:
(1) 2022 Restricted Share Incentive Plan
The attribution conditions for the first attribution period of the Company's 2022 Restricted Share Incentive Plan's reserved grant
were met. The Company completed the registration of the attribution of these shares in accordance with relevant regulations and the
relevant shares were listed and circulated on January 10 2025. Please refer to the "Announcement on the Attribution Results of the
First Attribution Period of the Reserved Grant in the 2022 Restricted Share Incentive Plan and the Listing of Shares" (Announcement
No. 2025-009) disclosed by the Company on the website of CNINFO (http://www.cninfo.com.cn) on January 8 2025.On April 21 2025 the Company's 17th Session of the Third Board Meeting and the 16th Session of the Third Supervisory Board
Meeting 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".According to the audit report (ZHKS [2025] No. 3301) issued by Zhonghui Certified Public Accountants (Special General Partnership)
on the Company's 2024 annual report the attribution conditions for the second attribution period of the reserved grant in the Company's
2022 Restricted Share Incentive Plan were not met. In accordance with the "Measures for the Administration of Equity Incentives of
Listed Companies" the "2022 Restricted Share Incentive Plan" and other relevant regulations all 129370 restricted shares granted
but not yet affiliated for the second attribution period to the 43 incentive objects of the reserved grant were cancelled and rendered
void. Please refer to the "Announcement 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"
(Announcement No. 2025-047) disclosed by the Company on the website of CNINFO (http://www.cninfo.com.cn) on April 23 2025.
(2) 2025 Restricted Share Incentive Plan
On January 23 2025 the Company held the 15th Session of the Third Board Meeting and the 14th Session of the Third Supervisory
Board Meeting and deliberated and approved the "Proposal on the Company's Restricted Share Incentive Plan 2025 (Draft) and Its
101ZKTeco 2025 Half Year Report
Abstract" and the "Proposal on the Company's Restricted Share Incentive Plan Implementation Assessment Management Measures
2025" and other related proposals. For details please refer to the relevant announcements disclosed by the Company on the website of
CNINFO (http://www.cninfo.com.cn) on January 24 2025. On February 11 2025 the Company's first 2025 Extraordinary General
Meeting deliberated and approved the aforementioned related proposals.On March 28 2025 the Company's 16th Session of the Third Board Meeting and the 15th Session of the Third Supervisory Board
Meeting deliberated and approved the "Proposal on Adjusting the List of Incentive Objects of Restricted Share Incentive Plan in 2025
and the Number of Granted Objects" and the "Proposal on Granting Restricted Shares to the Incentive Objects of 2025 Restricted Share
Incentive Plan". Given that some incentive objects have resigned or voluntarily waived all or part of their restricted shares for personal
reasons the Company adjusted the list of incentive objects and the number of shares granted under this incentive plan. The Board of
Directors believes that the grant conditions stipulated in the Company's 2025 Restricted Share Incentive Plan have been fulfilled and
has agreed to set March 28 2025 as the grant date and to grant 2121170 restricted shares to 353 incentive objects who meet the grant
conditions. For details please refer to the relevant announcements disclosed by the Company on the website of CNINFO
(http://www.cninfo.com.cn) on March 28 2025.
2. Implementation of employee stock ownership plan
□Applicable □ Not applicable
Details of all effective employee stock ownership plans during the reporting period
Proportion to Total
Source of Funds
Scope of Number of Total Shares Held Share Capital of
Changes for the Plan
Employees Employees (Shares) the Listed
Implementation
Company
Company
directors
supervisors senior
Funds obtained
management
from employees'
middle managers
legitimate
and core technical
remuneration self-
(business)
raised funds and
personnel who
358 1336560 None 0.57% funds obtained
play an important
through other
role and have a
methods permitted
significant impact
by laws and
on the Company's
administrative
overall
regulations
performance and
medium- and long-
term development.Shareholdings of directors supervisors and senior management in the employee stock ownership plan during the reporting period
Number of Shares Held Number of Shares Held Proportion to Total
Name Position at the Beginning of the at the End of the Share Capital of the
Reporting Period Reporting Period Listed Company
Fu Zhiqian Director 0 4200 0.00%
Deputy General
Mu Wenting 0 4620 0.00%
Manager
Jiang Wenna Supervisor 0 8400 0.00%
Yang Xianfeng Supervisor 0 6000 0.00%
Changes in asset management institutions during the reporting period
□ Applicable □Not applicable
102ZKTeco 2025 Half Year Report
Changes in equity arising from holders' disposal of shares during the reporting period
□ Applicable □Not applicable
Exercise of shareholder rights during the reporting period
Not applicable
Other related circumstances and explanations of the employee stock ownership plan during the reporting period
□Applicable □ Not applicable
On May 23 2025 the Company received the "Confirmation of Securities Transfer Registration" issued by Shenzhen Branch of China
Securities Depository and Clearing Co. Ltd. The 1113800 shares of the Company's stock held in the Company's dedicated securities
account for share repurchases were non-transactionally transferred on May 22 2025 to the "ZKTECO CO. LTD. - 2025 Employee
Stock Ownership Plan" securities account. The number of transferred shares accounted for 0.5674% of the Company's total share
capital on the announcement date of this employee stock ownership plan draft and the transfer price was RMB 13.25 per share.Changes in the members of the Employee Stock Ownership Plan Management Committee
□ Applicable □Not applicable
Financial impact of the employee stock ownership plan on the listed company during the reporting period and related accounting
treatment
□Applicable □ Not applicable
According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 – Share-based Payment RMB 728700
of share-based payment fees for the employee stock ownership plan were amortized in the current period and included in current profits
and losses correspondingly increasing capital reserve by RMB 728100 and minority interest by RMB 600.Circumstances of the termination of the employee stock ownership plan during the reporting period
□ Applicable □Not applicable
Other explanations:
3. Other employee incentive plans
□ Applicable □Not applicable
103ZKTeco 2025 Half Year Report
IV. Environmental Information Disclosure
Whether the listed company and its main subsidiaries are included in the list of enterprises required by law to disclose environmental
information
□ Yes □No
V. Social Responsibilities
(I) Protection of rights and interests of investors
The Company strictly shall fulfill its information disclosure obligations in accordance with regulatory requirements truthfully
accurately completely and timely disclosing all company information to ensure that investors can fully understand the Company's
operating conditions financial position risk profile and development prospects through Shenzhen Stock Exchange CNINFO the
Company's official website etc. and also release the latest company information on the Company's official website WeChat official
account and other windows to facilitate the stakeholders to understand the situation of the Company in a timely and comprehensive
manner.The Company attaches great importance to communication with investors and has established rich communication and feedback
channels with investors. The Company responds to investors' concerns through Easy to Interact of Shenzhen Stock Exchange investor
relations email investor hotline and other channels. It maintains friendly exchanges and communication with investors through
performance briefings General Meetings and other forms focusing on protecting the legitimate rights and interests of investors such
as the right to know and vote and maintaining a good trust relationship between the Company and investors.(II) Protection of employee rights and interests
The Company has formulated multiple management systems in strict accordance with the "Labor Law of the People's Republic of
China" (hereinafter referred to as the "Labor Law"). Adhering to the principles of "respect fairness and impartiality" and "efficient
identification scientific evaluation personnel position matching and selective recruitment" the Company standardizes the recruitment
and entry process of employees eliminates all forms of discrimination and prejudice and ensures that recruitment work is fair just and
orderly. The Company adheres to the principles of legality compliance and fair respect and explicitly prohibits the transmission of
discriminatory concepts such as geography race and gender in the "Recruitment Behavior Operation Standards" respecting and
protecting the rights and interests of employees in all aspects.The Company establishes the trade union in accordance with relevant laws and regulations regularly holds employee congresses
facilitates communication channels and safeguards the legitimate rights and interests of employees such as the right to know and
participate. The Company also establishes equal and democratic diverse communication methods and sets up employee suggestion
boxes so that employees can raise questions and provide feedback in a timely manner.The Company focuses on employee development formulates career development paths and promotion channels based on actual
situations provides diversified career development directions and opportunities for employees actively carries out employee training
formulates the "Training Management System" creates rich and diverse online and offline learning environments and training
opportunities establishes talent training mechanisms such as on-the-job training and professional technical training accelerates
employee career growth and broadens employee development channels.The Company adheres to the concept of "safety first prevention first" pays attention to the occupational health of employees and
has formulated occupational health and safety management systems such as the "Occupational Health and Safety Management Manual"
and "Occupational Disease Management System". It follows the occupational health and safety policy of "preventing controlling and
eliminating occupational hazards preventing and controlling occupational diseases and protecting the health of workers" and has
established a sound occupational health and safety management system. ZKTECO and Guangdong Zkteco have passed ISO
45001:2018 Occupational Health and Safety Management System Certification. The Company has formulated the "Work Safety
Responsibility System" regularly conducts safety hazard inspections strengthens work safety risk management develops the
"Emergency Rescue Plan for Work Safety Accidents" and conducts work safety fire drills. In addition the Company conducts annual
104ZKTeco 2025 Half Year Report
occupational hazard factor testing in the workplace implements a rotation and job change mechanism for occupational disease risk
personnel regularly conducts occupational health examinations and conducts occupational health education and training.The Company adheres to the talent concept of "people-oriented collaborative and win-win" pays attention to the physical and
mental health development of employees regularly carries out rich and diverse employee activities and strengthens humanistic care.(III) Protection of the rights and interests of suppliers and customers
The Company's supply chain has always adhered to the principles of "transparent procurement honesty and trustworthiness
integrity and self-discipline" and the Company and its suppliers have signed a "CSR Agreement" with suppliers to regulate the
requirements of both parties including labor rights environmental protection occupational health and safety business ethics and other
aspects. The Company is committed to establishing clean fair honest and trustworthy business cooperation relationships with suppliers
and the Company and its suppliers have signed the "Integrity Agreement" and the "Procurement Framework Agreement" advocating
mutual supervision and creating a fair competition honest and trustworthy and sunny and healthy business environment. At the same
time the Company has set up a dedicated complaint channel for accepting reports of illegal and disciplinary behaviors encouraging
the reporting and exposure of behaviors that violate work integrity such as accepting commercial bribes and transmitting improper
benefits and protecting whistleblowers.The Company continues to improve its customer service management system and develop different service strategies for both
domestic and overseas markets constantly listens to the opinions of partners and customers strives to improve product quality and
actively implements the cooperation openness and win-win policy. The Company conducts satisfaction surveys with customers
annually regularly or irregularly through telephone WeChat QQ questionnaire and other survey methods and follows up on
customer feedback or suggestions.The Company attaches great importance to product quality management and requires all employees to establish the guiding
ideology of "quality first" and the service awareness of "customer first" ensuring product quality throughout the entire product life
cycle. ZKTECO ZKTECO Dongguan Branch and Guangdong Zkteco have all passed GB/T 19001-2016 and ISO 9001:2015 Quality
Management System Certification.(IV) Environmental protection and sustainable development
The Company adheres to the ecological and environmental protection concept of "Clear waters and lush mountains are invaluable
assets" continuously improves its environmental management level establishes a sound environmental governance system and has
passed the ISO 14001:2015 Environmental Management System Certification. The Company focuses on the management of emissions
and waste and hires a third-party organization to professionally treat the scattered wastewater produced by Tangxia Industrial Park
ensuring proper wastewater treatment and effectively avoiding wastewater pollution to the surrounding environment.The Company implements the concept of sustainable development in the production and operation process committed to reducing
resource and energy consumption and environmental costs during production and operation and improving resource utilization
efficiency. Institutional norms have been formulated such as the "Energy Conservation Target Management System" the "Energy
Conservation Publicity System" and the "Energy Conservation and Emission Reduction Reward and Punishment System". The
Company actively responds to various environmental protection instructions issued by the environmental protection department
cooperates with the environmental protection department's instructions and enhances employees' awareness of environmental
protection and energy conservation.The Company has always been committed to integrating green technology into product R&D. According to representative
environmental requirements such as RoHS and REACH it continuously promotes technological innovation to achieve environmental
protection and energy conservation of products. The Company has enhanced the competitiveness of products by continuously
developing energy-saving products optimizing production processes and reducing energy consumption contributing to the sustainable
development of society.(V) Actively assuming social responsibility
The Company actively fulfills its social responsibility fully leverages its own advantages and focuses on creating value for society.It focuses on community development and actively carries out diversified public welfare and charity projects giving back to society
105ZKTeco 2025 Half Year Report
with practical actions and conveying warmth and love to society. The Company actively participated in the 2025 "6·30" Assistance to
Rural Revitalization and Dongguan Charity Day activities in Tangxia Town in the reporting period making positive contributions to
consolidating and expanding poverty alleviation achievements and rural revitalization and promoting common prosperity.
106ZKTeco 2025 Half Year Report
Section V Significant Events
I. Commitments completed by actual controllers shareholders related parties purchasers or
the Company within the reporting period and commitments not fulfilled by the end of the
reporting period
□ Applicable □Not applicable
There are no commitments completed by actual controllers shareholders related parties purchasers or the Company within the
reporting period and commitments not fulfilled by the end of the reporting period.II. Non Operating Occupation of Funds by Controlling Shareholders and Other Related Parties
of Listed Company
□ Applicable □Not applicable
During the reporting period there was no non-operating occupation of funds by controlling shareholders or other related parties of the
listed company.III. Illegal Provision of Guarantees for External Parties
□ Applicable □Not applicable
There were no illegal external guarantees during the reporting period of the Company.IV. Appointment and Dismissal of Accounting Firms
Whether the semi-annual financial report has been audited
□ Yes □No
The Company's Half Year Report has not been audited.V. Explanation Given by the Board of Directors Board of Supervisors and Audit Committee
Regarding the "Non-standard Audit Report" Issued by the Accounting Firm for the Current
Reporting Period
□ Applicable □Not applicable
VI. Explanation Given by the Board of Directors regarding the "Non-standard Audit Report"
in the Previous Year
□ Applicable □Not applicable
VII. Matters Related to Bankruptcy Reorganization
□ Applicable □Not applicable
There were no bankruptcy or restructuring related matters during the reporting period of the Company.
107ZKTeco 2025 Half Year Report
VIII. Litigation Matters
Major litigation and arbitration matters
□Applicable □ Not applicable
Basic Amount Is there an Litigation
Progress of
information involved estimated (arbitration)
litigation Execution of litigation (arbitration) judgments Disclosure Date Disclosure Index
of litigation (RMB liability trial results
(arbitration)
(arbitration) '0000) formed and effects
As Zokon Industry has no sufficient assets available for
execution and is unable to repay its due debts the Company
submitted a "Bankruptcy Liquidation Application" to the
The second
Shenzhen Intermediate People's Court on January 6 2025
instance
requesting the court to conduct a bankruptcy liquidation of
Unfair court ruled
Zokon Industry. The Shenzhen Intermediate People's Court filed CNINFO
competition that Zokon
the case on January 16 2025 with the case number (2025) Y 03 (http://www.cninfo.co
dispute filed Industry
PS No. 131. On April 22 2025 the Shenzhen Intermediate m.cn) "2024 Annual
by the Implementati compensate
200 No People's Court issued Civil Ruling (2025) Y 03 PS No. 131 April 23 2025 Report of ZKTECO
Company on stage the Company
ruling to accept the bankruptcy liquidation application filed by CO. LTD."
against and
the Company against Zokon Industry with case number (2025) (Announcement No.Zokon Shenzhen
Y 03 P No. 407. On June 26 2025 the court appointed an 2025-037)
Industry ZKTeco for a
administrator for Zokon Industry's bankruptcy liquidation case
loss of RMB
and issued a notice for creditors to declare their claims. The
2 million
Company filed relevant claims on July 30 2025 and received
the bankruptcy administrator's preliminary claim review letter
on August 11 2025.Other litigation matters
□Applicable □ Not applicable
Amount Is there an
Basic information Progress of Litigation
involved estimated Execution of litigation
of litigation litigation (arbitration) trial Disclosure Date Disclosure Index
(RMB liability (arbitration) judgments
(arbitration) (arbitration) results and effects
'0000) formed
Other The Company CNINFO
The Company strictly
lawsuits/arbitratio strictly follows No significant (http://www.cninfo.com.cn) "2024
1989.51 No follows the progress of each April 23 2025
ns where the the progress of impact Annual Report of ZKTECO CO.case
Company each case LTD." (Announcement No. 2025-
108ZKTeco 2025 Half Year Report
(including 037)
subsidiary
companies in the
consolidated
financial
statements) as the
plaintiff fails to
meet the
disclosure
standards for
major lawsuits
Other
lawsuits/arbitratio
ns where the
Company
(including
subsidiary CNINFO
The Company
companies in the The Company strictly (http://www.cninfo.com.cn) "2024
strictly follows No significant
consolidated 184.7 No follows the progress of each April 23 2025 Annual Report of ZKTECO CO.the progress of impact
financial case LTD." (Announcement No. 2025-
each case
statements) as the 037)
defendant fails to
meet the
disclosure
standards for
major lawsuits
109ZKTeco 2025 Half Year Report
IX. Punishment and Rectification
□ Applicable □Not applicable
There were no penalties or rectifications during the reporting period of the Company.X. The Integrity of the Company Its Controlling Shareholders and Actual Controllers
□Applicable □ Not applicable
During the reporting period the Company its controlling shareholders and actual controllers were in good faith and there were no
instances of failure to fulfill effective court judgments or outstanding debts of significant amounts.XI. Significant Related-Party Transactions
1. Related-party transactions related to daily operations
□ Applicable □Not applicable
There were no related party transactions related to daily operations during the reporting period of the Company.
2. Related-party transactions arising from the acquisition and sale of assets or equity
□ Applicable □Not applicable
There were no related party transactions related to asset or equity acquisitions or sales during the reporting period of the Company.
3. Related-party Transactions Arising from Joint Investments on External Parties
□ Applicable □Not applicable
During the reporting period the Company did not engage in any related party transactions related to joint foreign investment.
4. Related Credit and Debt Transactions
□ Applicable □Not applicable
There were no current associated rights of credit and liabilities during the reporting period of the Company.
5. Transactions with Related Financial Companies
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the Company and its affiliated financial companies the
financial companies held by the Company and related parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the financial company controlled by the Company and its
affiliated parties.
7. Other significant related party transactions
□ Applicable □Not applicable
110ZKTeco 2025 Half Year Report
There were no other major related party transactions during the reporting period of the Company.XII. Significant Contracts and Their Performance
1. Custody contracting and leasing matters
(1) Custody
□ Applicable □Not applicable
There was no custody during the reporting period of the Company.
(2) Contracting
□ Applicable □Not applicable
There was no contracting during the reporting period of the Company.
(3) Leasing
□Applicable □ Not applicable
Description of leasing
During the reporting period the Company and its subsidiaries rented offices at relevant locations for business use due to operational
needs and both parties have signed housing rental contracts.Projects that bring profits and losses to the Company that exceed 10% of the total profit during the reporting period
□ Applicable □Not applicable
There are no leasing projects that bring profits or losses to the Company during the reporting period that exceed 10% of the total
profits of the Company during the reporting period.
2. Significant guarantee
□ Applicable □Not applicable
The Company had no material guarantees during the reporting period.
3. Significant contracts for daily operations
None
4. Other significant contracts
□ Applicable □Not applicable
There were no other significant contracts during the reporting period of the Company.XIII. Explanation of Other Significant Events
□Applicable □ Not applicable
On May 12 2025 the Company released the "Announcement on Signing the Letter of Intent for Equity Acquisition" (Announcement
No.: 2025-055). On the same day the Company Shenzhen Longzhiyuan Technology Co. Ltd. (hereinafter referred to as
111ZKTeco 2025 Half Year Report
"Longzhiyuan") and its relevant shareholders signed the "Letter of Intent for Equity Acquisition of Shenzhen Longzhiyuan Technology
Co. Ltd." The Company is planning to acquire 55% equity interest in Longzhiyuan held by its relevant shareholders through cash
payment and obtain controlling interest in Longzhiyuan. As of the disclosure date of this Report the acquisition is still in progress.XIV. Significant Events of the Company's Subsidiaries
□ Applicable □Not applicable
112ZKTeco 2025 Half Year Report
Section VI Changes in Shares and Information about Shareholders
I. Changes in Shares
1. Changes in shares
Unit: share
Before the change Increase or decrease in this change (+ -) After this change
Share
Issue
transferred
Quantity Proportion new Bonus Others Subtotal Quantity Proportion
from capital
shares
reserve
I. Restricted
11971218861.00%239424392394243914365462761.04%
shares
1. Shares held
by State
2. Shares held
by state-owned
legal persons
3. Shares held
by other domestic 119712188 61.00% 23942439 23942439 143654627 61.04%
enterprises
Including:
shares held by
8564991443.65%171299831712998310277989743.67%
domestic legal
persons
Shares held
by domestic 34062274 17.36% 6812456 6812456 40874730 17.37%
natural persons
4. Foreign
shareholding
Including:
shares held by
overseas legal
persons
Shares held
by overseas
natural person
II. Shares without
trading 76525175 39.00% 74962 15096786 15171748 91696923 38.96%
restrictions
1. RMB
denominated 76525175 39.00% 74962 15096786 15171748 91696923 38.96%
ordinary shares
2. Domestic
listed foreign
shares
3. Overseas
listed foreign
113ZKTeco 2025 Half Year Report
shares
4. Others
III. Total shares 196237363 100.00% 74962 39039225 39114187 235351550 100.00%
Reasons for changes in shares
□Applicable □ Not applicable
1. On January 8 2025 the Company disclosed the "Announcement on the Attribution Results of the First Attribution Period of
the Reserved Grant in the 2022 Restricted Share Incentive Plan and the Listing of Shares". After deliberation and approval by the 14th
Session of the Third Board Meeting the attribution condition for the first attribution period of the reserved grant in the Company's
2022 Restricted Share Incentive Plan was met and the number of attributed shares was 74962 shares which were listed for circulation
on January 10 2025. After the completion of the attribution the total share capital of the Company increased from 196237363 shares
to 196312325 shares.
2. On May 26 2025 the Company disclosed the "2024 Annual Equity Distribution Implementation Announcement". The
Company completed the implementation of the 2024 annual equity distribution on June 4 2025 and the Company's total share capital
increased from 196312325 shares to 235351550 shares.Approval of changes in shares
□Applicable □ Not applicable
1. The attribution condition for the first attribution period of the reserved grant in the Company's 2022 Restricted Share Incentive
Plan has been met and it has been approved by the 14th Session of the Third Board Meeting and the 13th Session of the Third
Supervisory Board Meeting held on December 31 2024. In addition 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) was disclosed on January 2 2025 on CNINFO (http://www.cninfo.com.cn). The Company's total share capital increased
from 196237363 shares to 196312325 shares.
2. The Company held its 2024 annual general meeting on May 15 2025 and deliberated and approved the "Proposal on the 2024
Profit Distribution Plan". On May 26 2025 the Company disclosed the "2024 Annual Equity Distribution Implementation
Announcement" on CNINFO (http://www.cninfo.com.cn) (Announcement No.: 2025-061). On June 4 2025 based on the total share
capital of 196312325 shares after deducting 195196125 shares from the Company's repurchase account in which 1116200 shares
had been repurchased 2 additional were issued for every 10 shares held by all shareholders from capital reserve for a total of
39039225 shares. Following the capital increase by transfers the Company's total share capital increased to 235351550 shares.
Transfer of changes in shares
□Applicable □ Not applicable
The attribution condition for the reserved grant of the first attribution period under the Company's 2022 Restricted Share Incentive
Plan was met and the number of attributed shares was 74962 shares. The shares attributed this time were registered in the relevant
incentive object's securities account on January 10 2025. Shares converted from capital reserve as part of the Company's 2024 annual
equity distribution were registered to the securities accounts of relevant shareholders on June 4 2025.Implementation progress of share repurchase
□ Applicable □Not applicable
Progress in implementing centralized bidding trading to reduce holdings and repurchase shares
□ Applicable □Not applicable
The impact of share changes on financial indicators such as basic earnings per share and diluted earnings per share for the most
recent year and period and net assets per share attributable to ordinary shareholders of the Company
□Applicable □ Not applicable
114ZKTeco 2025 Half Year Report
For details about the impact of share changes on financial indicators such as basic earnings per share and diluted earnings per
share for the most recent year and period and net assets per share attributable to ordinary shareholders of the Company please refer to
"IV. Main Accounting Data and Financial Indicators" in "Section II Company Profile and Key Financial Indicators".Other contents deemed necessary by the Company or required to be disclosed by the securities regulatory authority
□Applicable □ Not applicable
The 1113800 shares of company stock held in the Company's dedicated securities account for share repurchases were transferred
by way of non-trading transfer to the Company's 2025 employee stock ownership plan securities account on May 22 2025. As of the
end of the reporting period the number of shares held in the Company's dedicated securities account for share repurchases was
1116200.
2. Changes in restricted shares
□Applicable □ Not applicable
Unit: share
Number of Number of Number of
Increase in
restricted shares released restricted Date of releasing
Name of restricted Reason for
shares at the from trading shares at the from trading
shareholder shares during restrictions
beginning of restrictions in end of the restrictions
the period
the period this period period
Restricted
Che Quanhong 34022300 0 6804460 40826760 shares before February 17 2026
IPO
Shenzhen
Restricted
ZKTeco Times
58500000 0 11700000 70200000 shares before February 17 2026
Investment Co.IPO
Ltd.Dongguan LX
Investment
Restricted
Partnership
9880000 0 1976000 11856000 shares before August 17 2025
Enterprise
IPO
(Limited
Partnership)
One quarter of the
Shenzhen
shares will be
JYHY
Restricted unlocked from
Investment
6960524 0 1392105 8352629 shares before August 17 2023
Enterprise
IPO until all shares are
(Limited
unlocked on
Partnership)
August 17 2026
One quarter of the
Shenzhen JYSJ shares will be
Investment Restricted unlocked from
Enterprise 7053800 0 1410760 8464560 shares before August 17 2023
(Limited IPO until all shares are
Partnership) unlocked on
August 17 2026
Shenzhen One quarter of the
JYQL shares will be
Restricted
Investment and unlocked from
881400 0 176280 1057680 shares before
Consulting August 17 2023
IPO
Enterprise until all shares are
(Limited unlocked on
115ZKTeco 2025 Half Year Report
Partnership) August 17 2026
One quarter of the
Shenzhen
shares will be
JYLX
Restricted unlocked from
Consulting
2374190 0 474838 2849028 shares before August 17 2023
Enterprise
IPO until all shares are
(Limited
unlocked on
Partnership)
August 17 2026
During the tenure
of supervisors
directors and
senior executives
25% of the total
number of shares
Executive
Jin Hairong 11700 0 2340 14040 held will be
lockup shares
unlocked
annually while
the remaining
75% will be
automatically
locked
During the tenure
of supervisors
directors and
senior executives
25% of the total
number of shares
Executive
Mu Wenting 17550 0 3510 21060 held will be
lockup shares
unlocked
annually while
the remaining
75% will be
automatically
locked
During the tenure
of supervisors
directors and
senior executives
25% of the total
number of shares
Executive
Fu Zhiqian 10724 0 2146 12870 held will be
lockup shares
unlocked
annually while
the remaining
75% will be
automatically
locked
Total 119712188 0 23942439 143654627 -- --
II. Issuance and Listing of Securities
□Applicable □ Not applicable
Type of Issue Listing Transaction
Number of Disclosure
stocks and Issue Date Price (or Listing Date approved Termination Disclosure Index
Issues Date
derivative Interest amount Date
116ZKTeco 2025 Half Year Report
securities Rate) (share)
Stock Category
"Announcement
on the Attribution
Results of the
First Attribution
Period of the
Reserved Grant in
Restricted the 2022
January 10 January 10 January 08
share (Class 13.67 74962 74962 Restricted Share
202520252025
II) Incentive Plan and
the Listing of
Shares"
(Announcement
No. 2025-009) on
the website of
CNINFO
Convertible corporate bonds convertible corporate bonds with separate transactions and
other derivative securities of corporate bonds
Explanation of securities issuance during the reporting period
Explanation of the Attribution Results of the First Attribution Period of the Reserved Grant in the 2022 Restricted Share Incentive Plan
and the Listing of Shares:
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 respectively and deliberated 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". The attribution condition for the first
attribution period of the reserved 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 74962 shares with an attributable price of RMB 13.67 per share. The listing and circulation date was
January 10 2025.III. Number of Shareholders of the Company and Shareholding
Unit: share
Total
Total number of number of
preferred shareholders shareholders
Total number of ordinary
with restored voting holding
shareholders at the end of 22198 0 0
rights at the end of the special
the reporting period
reporting period (if any) voting
(see Note 8) shares (if
any)
Shareholding of shareholders holding more than 5% or the top 10 shareholders (excluding shares lent through refinancing)
Changes Pledge marking or freezing
Number of
in increase Number of Number of
shares held
and shares shares
Name of Nature of Percentage at the end
decrease with without
shareholder shareholder of shares of the Share status Quantity
during the selling trading
reporting
reporting restrictions restrictions
period
period
117ZKTeco 2025 Half Year Report
Shenzhen Domestic
ZKTeco non state-
Times owned 29.83% 70200000 11700000 70200000 0 Not applicable 0
Investment legal
Co. Ltd. persons
Domestic
Che
natural 17.35% 40826760 6804460 40826760 0 Not applicable 0
Quanhong
persons
Shenzhen
Domestic
JYHY
non state-
Investment
owned 5.94% 13978512 103562 8352629 5625883 Not applicable 0
Enterprise
legal
(Limited
persons
Partnership)
Shenzhen
Domestic
JYSJ
non state-
Investment
owned 5.92% 13938856 -99544 8464560 5474296 Not applicable 0
Enterprise
legal
(Limited
persons
Partnership)
Dongguan
LX Domestic
Investment non state-
Partnership owned 5.04% 11856000 1976000 11856000 0 Not applicable 0
Enterprise legal
(Limited persons
Partnership)
Shenzhen
Domestic
JYLX
non state-
Consulting
owned 1.81% 4252073 644179 2849028 1403045 Not applicable 0
Enterprise
legal
(Limited
persons
Partnership)
ZKTECO
CO. LTD. -
2025
Employee Others 0.57% 1336560 1336560 0 1336560 Not applicable 0
Stock
Ownership
Plan
Shenzhen
JYQL
Domestic
Investment
non state-
and
owned 0.54% 1260620 108870 1057680 202940 Not applicable 0
Consulting
legal
Enterprise
persons
(Limited
Partnership)
Hong Kong
Securities Overseas
Clearing legal 0.47% 1106944 617881 0 1106944 Not applicable 0
Company person
Limited
GF
Securities
Others 0.21% 491060 166958 0 491060 Not applicable 0
Co. Ltd. -
Bodao
118ZKTeco 2025 Half Year Report
Chengzhang
Zhihang
Stock
Securities
Investment
Fund
Strategic investors or
general legal persons
become the top 10
Not applicable
shareholders due to the
placement of new shares
(if any) (see Note 3)
Shareholder Che Quanhong is elder brother of shareholder Che Quanzhong from ZKTeco Times are brothers and
son of Che Jun partner of LX Investment.The shareholder Che Quanhong holds 76.02% of the equity of ZKTeco Times being the controlling shareholder of
Description of the above
ZKTeco Times. Meanwhile Che Quanhong holds 1.18% of the property share of shareholder LX Investment and
shareholder's association or
8.65% of the property share of shareholder JYLX.
concerted action
Che Quanzhong the younger brother of shareholder Che Quanhong holds a 23.98% stake in ZKTeco Times.Che Jun the father of shareholder Che Quanhong holds 98.68% of the property share of LX Investment.In addition there is no affiliated relationship between the other shareholders of the Company.Description of the above
shareholders' involvement
in entrusting/entrusted Not involved
voting rights and waiver of
voting rights
Special description of the
existence of special As of June 30 2025 the Company's dedicated securities account for share repurchases holds 1116200 A ordinary
repurchase accounts shares accounting for 0.47% of the current total share capital of the Company. As required it is not included in the
among the top 10 list of the top 10 shareholders of the Company.shareholders (see Note 11)
Particulars about the top 10 shareholders not subject to trading restrictions (excluding shares lent through refinancing and executive lockup shares)
Number of shares without trading restrictions held at the end of the Types of shares
Name of shareholder
reporting period Types of shares Quantity
Shenzhen JYHY
RMB denominated
Investment Enterprise 5625883 5625883
ordinary shares
(Limited Partnership)
Shenzhen JYSJ Investment
RMB denominated
Enterprise (Limited 5474296 5474296
ordinary shares
Partnership)
Shenzhen JYLX
RMB denominated
Consulting Enterprise 1403045 1403045
ordinary shares
(Limited Partnership)
ZKTECO CO. LTD. -
RMB denominated
2025 Employee Stock 1336560 1336560
ordinary shares
Ownership Plan
Hong Kong Securities RMB denominated
11069441106944
Clearing Company Limited ordinary shares
GF Securities Co. Ltd. -
Bodao Chengzhang RMB denominated
491060491060
Zhihang Stock Securities ordinary shares
Investment Fund
J. P. Morgan Securities RMB denominated
475895475895
PLC – Proprietary Funds ordinary shares
Changjiang Wealth Asset RMB denominated
436310436310
Management - Bank of ordinary shares
119ZKTeco 2025 Half Year Report
Nanjing - Changjiang
Wealth - ZKTeco
Employee Strategic
Placement No.1 Collective
Asset Management Plan
RMB denominated
Han Xiao 428100 428100
ordinary shares
Bank of Communications
Co. Ltd. - Cinda Core RMB denominated
405244405244
Technology Hybrid ordinary shares
Securities Investment Fund
Description of the
association or concerted
action between the top 10
shareholders of
Shareholder Che Quanhong holds 8.65% of the property shares of shareholder JYLX. In addition the Company
outstanding shares without
does not know whether there is a related relationship between the top 10 other shareholders of shares not subject to
trading restrictions as well
trading restrictions as well as between the top 10 shareholders of outstanding shares not subject to trading
as between the top 10
restrictions and the top 10 shareholders or whether they belong to Concerted Parties.shareholders of
outstanding shares without
trading restrictions and the
top 10 shareholders
Description of top 10
ordinary shareholders Among the top 10 shareholders not subject to trading restrictions at the period end Han Xiao held a total of
participating in margin 428100 A shares of the Company including 57600 A shares held through margin accounts and 370500 A shares
trading (if any) (see Note held through client credit transaction guaranty securities accounts of China Galaxy Securities Co. Ltd.
4)
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
□ Yes □No
Did the top 10 ordinary shareholders and the top 10 shareholders of ordinary shares without trading restrictions engage in agreed
repurchase transactions during the reporting period
□ Yes □No
The top 10 ordinary shareholders and the top 10 shareholders of ordinary shares without trading restrictions did not engage in any
agreed repurchase transactions during the reporting period.IV. Changes in Shareholding of Directors Supervisors and Senior Management
□Applicable □ Not applicable
Number Number Number
Shares Shares Shares of of of
Shares
held at the increased decreased restricted restricted restricted
held at the
Tenure beginning during during stocks stocks stocks
Name Position end of the
status of the the the granted at granted granted at
period
period period period the in this the end of
(shares)
(shares) (shares) (shares) beginning period the
of the (shares) period
120ZKTeco 2025 Half Year Report
period (shares)
(shares)
Che
Chairman Incumbent 34022300 40826760
Quanhong
Director
Jin and
Incumbent 15600 18720
Hairong General
Manager
Deputy
Mu
General Incumbent 23400 28080 7150 7150
Wenting
Manager
Fu
Director Incumbent 14300 17160 6500 6500
Zhiqian
Total -- -- 34075600 0 0 40890720 0 13650 13650
Note: The change in the above-mentioned period-end shareholding is due to the equity distribution implemented during the reporting
period.V. Changes in Controlling Shareholders and Actual Controllers
Changes in controlling shareholders during the reporting period
□ Applicable □Not applicable
There was no change in the controlling shareholder of the Company during the reporting period.Changes in actual controller during the reporting period
□ Applicable □Not applicable
There has been no change in the actual controller of the Company during the reporting period.
121ZKTeco 2025 Half Year Report
VI. Preferred Shares
□ Applicable □Not applicable
There is no preferred share in the Company during the reporting period.
122ZKTeco 2025 Half Year Report
Section VII Bonds
□ Applicable □Not applicable
123ZKTeco 2025 Half Year Report
Section VIII Financial Report
I. Audit Report
Whether the Half Year Report has been audited
□ Yes □No
The Company's semi-annual financial report has not been audited.II. Financial Statements
The unit of the financial statements in the financial notes is: RMB
1. Consolidated Balance Sheet
Prepared by: ZKTECO CO. LTD.June 30 2025
Unit: RMB
Item Ending Balance Beginning Balance
Current assets:
Monetary funds 1303913618.46 1473334905.97
Deposit reservation for balance
Lendings to banks and other financial
institutions
Trading financial assets 781091002.96 491331815.79
Derivative financial assets
Notes receivable 372725.58 165450.00
Accounts receivable 528788174.89 519014337.89
Receivable financing
Prepayments 24706043.33 26561472.98
Premiums receivable
Reinsurance accounts receivable
Reserves for reinsurance contract
receivable
Other receivables 29543091.46 41144121.16
Including: interest receivable
Dividends receivable
Buying back the sale of financial assets
Inventories 355595477.00 335306397.14
Including: Data resources
Contract assets 33581.84 212795.14
Held-for-sale assets
Non-current assets due within one year 19228842.89 20383238.35
Other current assets 27700160.77 33070816.00
124ZKTeco 2025 Half Year Report
Total current assets 3070972719.18 2940525350.42
Non-current assets:
Loans and advances to customers
Debt investment 17784828.21 15775806.16
Other debt investment
Long-term receivables 11292621.24 5479301.55
Long-term equity investment 29216116.25 28982092.23
Other equity instrument investments
Other non-current financial assets
Investment real estate 20683730.73 21504316.77
Fixed assets 599912936.02 535337384.82
Construction in progress 208311207.77 226445932.02
Productive biological assets
Oil and gas assets
Right-of-use assets 51425459.62 48352214.14
Intangible assets 99754444.05 99844396.80
Including: Data resources
Development expenditures
Including: Data resources
Goodwill 510213.32 512337.25
Long-term deferred expenses 7363855.01 5555537.61
Deferred income tax assets 88689270.14 81688798.50
Other non-current assets 7010017.40 4620055.22
Total non-current assets 1141954699.76 1074098173.07
Total assets 4212927418.94 4014623523.49
Current liabilities:
Short-term loan 74552050.16
Borrowings from the Central Bank
Borrowings from banks and other
financial institutions
Trading financial liabilities
Derivative financial liabilities
Notes payable 237011100.20 134784219.75
Accounts payable 205803262.63 225414642.83
Advances from customer
Contract liabilities 76175981.93 71168318.91
Financial assets sold for repurchase
Deposit from customers and interbank
Acting trading securities
Acting underwriting securities
Payroll payable 48810658.14 53990974.31
Taxes payable 26884835.36 20281098.96
Other payables 57377148.21 45821035.19
125ZKTeco 2025 Half Year Report
Including: interest payable
Dividends payable 556900.00
Handling charges and commissions
payable
Reinsurance accounts receivable
Liabilities held for sale
Non-current liabilities due within one
25880992.7922822648.87
year
Other current liabilities 6573319.05 12060579.96
Total current liabilities 759069348.47 586343518.78
Non-current liabilities:
Reserves for insurance contracts
Long-term loan 6448024.17 7021328.89
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 29522243.80 29108076.76
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 1386722.80 1420041.44
Deferred income tax liabilities 12867934.19 12730094.50
Other non-current liabilities
Total non-current liabilities 50224924.96 50279541.59
Total liabilities 809294273.43 636623060.37
Owner's equity:
Share capital 235351550.00 196312325.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2055085307.45 2107323633.23
Less: treasury stock 44078890.10 59683228.10
Other comprehensive income 53004940.98 41914807.74
Special reserve
Surplus reserves 64002687.03 64002687.03
General risk reserves
Undistributed profits 996116972.96 1000479479.18
Total owner's equity attributable to the
3359482568.323350349704.08
parent company
Minority interests 44150577.19 27650759.04
Total owner's equity 3403633145.51 3378000463.12
Total liabilities and owner's equity 4212927418.94 4014623523.49
Legal Representative: Jin Hairong Person in charge of the accounting work: Wang Youwu Person in charge of accounting institution:
Xu Ping
2. Balance Sheet of Parent Company
Unit: RMB
126ZKTeco 2025 Half Year Report
Item Ending Balance Beginning Balance
Current assets:
Monetary funds 539590409.29 824570527.22
Trading financial assets 373988305.97 71072880.32
Derivative financial assets
Notes receivable 269041.58
Accounts receivable 459860056.83 516437060.81
Receivable financing
Prepayments 10878603.40 10439376.39
Other receivables 42533705.23 28468054.40
Including: interest receivable 46922.03 46922.03
Dividends receivable 19000000.00
Inventories 79788971.15 105623350.08
Including: Data resources
Contract assets 13563.73 192777.03
Held-for-sale assets
Non-current assets due within one year 363648.16 339420.08
Other current assets 1663242.63 4922632.78
Total current assets 1508949547.97 1562066079.11
Non-current assets:
Debt investment 10407671.21 10260784.31
Other debt investment
Long-term receivables 3804207.90 2323586.07
Long-term equity investment 1390028530.81 1360368042.33
Other equity instrument investments
Other non-current financial assets
Investment real estate
Fixed assets 41342575.02 46126552.33
Construction in progress 116956.35
Productive biological assets
Oil and gas assets
Right-of-use assets 6447476.20 9186583.12
Intangible assets 30111064.29 31838535.17
Including: Data resources
Development expenditures
Including: Data resources
Goodwill
Long-term deferred expenses 3025290.38 3048841.86
Deferred income tax assets 52298538.85 49639639.95
Other non-current assets 589955.22
Total non-current assets 1537582311.01 1513382520.36
Total assets 3046531858.98 3075448599.47
127ZKTeco 2025 Half Year Report
Current liabilities:
Short-term loan
Trading financial liabilities
Derivative financial liabilities
Notes payable 133403418.62 102953171.16
Accounts payable 108355841.50 109367315.26
Advances from customer
Contract liabilities 22036832.59 27371907.92
Payroll payable 13260444.29 14888641.90
Taxes payable 2842967.40 2599023.91
Other payables 69781659.24 49256238.57
Including: interest payable
Dividends payable 556900.00
Liabilities held for sale
Non-current liabilities due within one
4203496.155620355.31
year
Other current liabilities 4292589.72 9674292.24
Total current liabilities 358177249.51 321730946.27
Non-current liabilities:
Long-term loan
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 2163111.41 3377514.34
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 11365.24
Deferred income tax liabilities 3264039.81 3443841.43
Other non-current liabilities
Total non-current liabilities 5427151.22 6832721.01
Total liabilities 363604400.73 328563667.28
Owner's equity:
Share capital 235351550.00 196312325.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2068126094.36 2116684780.13
Less: treasury stock 44078890.10 59683228.10
Other comprehensive income
Special reserve
Surplus reserves 63911390.54 63911390.54
Undistributed profits 359617313.45 429659664.62
Total owner's equity 2682927458.25 2746884932.19
Total liabilities and owner's equity 3046531858.98 3075448599.47
128ZKTeco 2025 Half Year Report
3. Consolidated Profit Statement
Unit: RMB
Item Half Year of 2025 Half Year of 2024
I. Total operating revenue 929258759.50 903103158.77
Including: operating revenue 929258759.50 903103158.77
Interest income
Premium earned
Revenue from handling charges and
commissions
II. Total operating cost 810404715.03 824250410.31
Including: operating cost 454165899.16 456172112.83
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 12100939.14 13044317.00
Selling expenses 209649741.81 214636210.94
Administrative expenses 57337406.90 53529882.13
R&D expenses 104067183.21 105650008.20
Financial expenses -26916455.19 -18782120.79
Including: interest expenses 1322384.38 1576340.90
Interest income 18677549.88 23834740.57
Plus: other income 6937337.84 8367842.99
Investment income (loss expressed with
2885464.652900142.97
"-")
Including: income from investment in
1265201.27989323.74
associates and joint ventures
Gains from derecognition of financial
assets measured at amortized cost
Gains from foreign exchange (loss
expressed with "-")
Gains from net exposure hedging (loss
expressed with "-")
Gains from changes in fair value (loss
7977831.684288802.32
expressed with "-")
Losses from credit impairment (loss
-3853667.85-771004.22
expressed with "-")
Losses from impairment of assets (loss
-9329887.04-5196924.78
expressed with "-")
129ZKTeco 2025 Half Year Report
Gains from disposal of assets (loss
141757.67-83513.11
expressed with "-")
III. Operating profit (loss expressed with
123612881.4288358094.63
"-")
Plus: non-operating revenue 299936.36 2456249.93
Less: non-operating expenditure 1737567.87 1048561.28
IV. Total profit (loss expressed with "-") 122175249.91 89765783.28
Less: income tax expenses 10696749.06 4902747.31
V. Net profit (loss expressed with "-") 111478500.85 84863035.97
(I) Classification by business continuity
1. Net profit from continuing operations
111478500.8584863035.97
(net loss expressed with "-")
2. Net profit from discontinued
operations (net loss expressed with "-")
(II) Classification by ownership
1. Net profit attributable to shareholders
of the parent company (net loss 93235556.28 78637727.33
expressed with "-")
2. Minority shareholders' profit and loss
18242944.576225308.64
(net loss expressed with "-")
VI. Other comprehensive income - after
13551797.73-4827043.56
tax
Net of tax of other comprehensive
income attributable to the owner of the 11090133.24 -5722101.19
parent company
(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
11090133.24-5722101.19
will be reclassified into profit or loss
1. Other comprehensive income that can
be transferred to profit or loss under the
equity method
2. Changes in fair value of other debt
investments
3. Amount of financial assets reclassified
into other comprehensive income
4. Provision for credit impairment of
other debt investments
5. Cash flow hedging reserve
6. Translation difference of foreign
11090133.24-5722101.19
currency financial statements
7. Others
After-tax net amount of other
comprehensive income attributable to the 2461664.49 895057.63
minority shareholders
130ZKTeco 2025 Half Year Report
VII. Total comprehensive income 125030298.58 80035992.41
Total comprehensive income attributable
104325689.5272915626.14
to owners of the parent company
Total comprehensive income attributable
20704609.067120366.27
to minority shareholders
VIII. EPS:
(I) Basic EPS 0.3999 0.3386
(II) Diluted EPS 0.3996 0.3372
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 the accounting work: Wang Youwu Person in charge of accounting institution:
Xu Ping
4. Parent Company's Profit Statement
Unit: RMB
Item Half Year of 2025 Half Year of 2024
I. Operating revenue 399608284.19 647819547.32
Less: operating cost 274399587.13 496879095.81
Taxes and surcharges 1725090.87 3255592.42
Selling expenses 63003265.18 73667450.00
Administrative expenses 23491068.76 24735982.08
R&D expenses 39065003.66 62060996.17
Financial expenses -11249381.24 -17528945.14
Including: interest expenses 151110.67 278823.58
Interest income 9565323.02 13097924.13
Plus: other income 1698822.06 1415280.88
Investment income (loss expressed with
20211693.2716051868.96
"-")
Including: income from investment in
44575.58
associates and joint ventures
Gains from derecognition of financial
assets measured at amortized cost
Gains from net exposure hedging (loss
expressed with "-")
Gains from changes in fair value (loss
2501228.42452371.07
expressed with "-")
Losses from credit impairment (loss
-7683700.45-2701198.72
expressed with "-")
Losses from impairment of assets (loss
-868834.34-6694294.85
expressed with "-")
Gains from disposal of assets (loss
-48176.51-92272.68
expressed with "-")
II. Operating profit (loss expressed with
24984682.2813181130.64
"-")
Plus: non-operating revenue 134172.76 2032935.23
Less: non-operating expenditure 408366.76 126963.88
III. Total profits (total losses expressed 24710488.28 15087101.99
131ZKTeco 2025 Half Year Report
with "-")
Less: income tax expenses -2845223.05 -5893764.58
IV. Net profit (net loss expressed with "-
27555711.3320980866.57
")
(I) Net profit from continuing operations
27555711.3320980866.57
(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
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 27555711.33 20980866.57
VII. EPS:
(I) Basic EPS
(II) Diluted EPS
5. Consolidated Cash Flow Statement
Unit: RMB
Item Half Year of 2025 Half Year of 2024
I. Cash flows from operating activities:
Cash received from sale of goods and
972536504.27987598999.46
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
132ZKTeco 2025 Half Year Report
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 54248297.48 38702440.49
Cash received from other operating
79222721.9742692501.49
activities
Subtotal of cash inflows from operating
1106007523.721068993941.44
activities
Cash paid for purchase of goods and
422815870.66513173787.14
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 269063841.06 289353780.70
Payments of all types of taxes 40252008.01 50283470.29
Other cash payments relating to
204692650.43149550581.46
operating activities
Subtotal of cash outflows from operating
936824370.161002361619.59
activities
Net cash flows from operating activities 169183153.56 66632321.85
II. Cash flows from investing activities:
Cash received from disinvestment 934811362.57 522835114.48
Cash received from investment income 4289144.22 3280492.40
Net cash received from disposal of fixed
assets intangible assets and other long- 81406.35 64151.25
term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
285803.2368155.00
activities
Subtotal of cash inflows from investing
939467716.37526247913.13
activities
Cash paid to acquire and construct fixed
79189512.48122974400.98
assets intangible assets and other long-
133ZKTeco 2025 Half Year Report
term assets
Cash paid for investments 1315253169.16 649403947.08
Net increase in pledge loans
Net cash paid to acquire subsidiaries and
other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing
1394442681.64772378348.06
activities
Net cash flows from investing activities -454974965.27 -246130434.93
III. Cash flows from financing activities:
Cash received from investors 981714.84
Including: cash received by subsidiaries
from the absorption of minority 981714.84
shareholders' investments
Cash received from borrowings
Cash received from other financing
89309900.163512381.80
activities
Subtotal of cash inflows from financing
90291615.003512381.80
activities
Cash paid for debt repayments 524174.15 494458.32
Cash paid for distribution of dividends
104321613.6697339032.69
and profits or payment of interest
Including: dividends and profits paid to
8902314.2910655807.14
minority shareholders by subsidiaries
Cash paid for other financing activities 15293492.76 78886895.58
Subtotal of cash outflows from financing
120139280.57176720386.59
activities
Net cash flows from financing activities -29847665.57 -173208004.79
IV. Effect of exchange rate changes on
5463575.552155653.57
cash and cash equivalents
V. Net increase in cash and cash
-310175901.73-350550464.30
equivalents
Plus: beginning balance of cash and cash
1214344327.431317020553.02
equivalents
VI. Closing balance of cash and cash
904168425.70966470088.72
equivalents
6. Cash Flow Statement of Parent Company
Unit: RMB
Item Half Year of 2025 Half Year of 2024
I. Cash flows from operating activities:
Cash received from sale of goods and
415337253.75686692249.18
rendering of services
Refund of taxes and surcharges 25222229.18 20889299.35
Cash received from other operating
72727351.0155574317.42
activities
Subtotal of cash inflows from operating
513286833.94763155865.95
activities
Cash paid for purchase of goods and
170338570.68454533033.49
rendering of services
Cash paid to and for employees 77341779.52 118642728.71
Payments of all types of taxes 6065323.29 3888977.04
Other cash payments relating to
132304972.21112488304.96
operating activities
134ZKTeco 2025 Half Year Report
Subtotal of cash outflows from operating
386050645.70689553044.20
activities
Net cash flows from operating activities 127236188.24 73602821.75
II. Cash flows from investing activities:
Cash received from disinvestment 681413782.78 30000000.00
Cash received from investment income 1915897.25 9155000.00
Net cash received from disposal of fixed
assets intangible assets and other long- 1974486.44 3535.05
term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
285803.2368155.00
activities
Subtotal of cash inflows from investing
685589969.7039226690.05
activities
Cash paid to acquire and construct fixed
assets intangible assets and other long- 1297573.72 15884167.26
term assets
Cash paid for investments 1081583640.72 215070884.43
Net cash paid to acquire subsidiaries and
other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing
1082881214.44230955051.69
activities
Net cash flows from investing activities -397291244.74 -191728361.64
III. Cash flows from financing activities:
Cash received from investors
Cash received from borrowings
Cash received from other financing
14757850.00
activities
Subtotal of cash inflows from financing
14757850.00
activities
Cash paid for debt repayments
Cash paid for distribution of dividends
95340047.5086602278.60
and profits or payment of interest
Cash paid for other financing activities 3153682.13 63228099.14
Subtotal of cash outflows from financing
98493729.63149830377.74
activities
Net cash flows from financing activities -83735879.63 -149830377.74
IV. Effect of exchange rate changes on
1588106.033239301.33
cash and cash equivalents
V. Net increase in cash and cash
-352202830.10-264716616.30
equivalents
Plus: beginning balance of cash and cash
688934703.03875420293.96
equivalents
VI. Closing balance of cash and cash
336731872.93610703677.66
equivalents
7. Consolidated Statement of Changes in Equity
135ZKTeco 2025 Half Year Report
Amount in current period
Unit: RMB
Half Year of 2025
Equity attributable to owners of the parent company
Item Other equity instruments Other General Minority Total owner's
Less: treasury Special Surplus Undistributed
Share capital Preferred Perpetual Capital reserve comprehensive risk Others Subtotal
interests equity
Others stock reserve reserves profits
stock bonds income reserves
I. Ending
balance of 196312325.00 2107323633.23 59683228.10 41914807.74 64002687.03 1000479479.18 3350349704.08 27650759.04 3378000463.12
previous year
Plus: changes in
accounting
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 196312325.00 0.00 0.00 0.00 2107323633.23 59683228.10 41914807.74 0.00 64002687.03 0.00 1000479479.18 0.00 3350349704.08 27650759.04 3378000463.12
year
III. Amount
increase/decrease
of the current -
39039225.00-52238325.7811090133.24-4362506.229132864.2416499818.1525632682.39
period (decrease 15604338.00
expressed with "-
")
(I) Total
comprehensive 11090133.24 93235556.28 104325689.52 20704609.06 125030298.58
income
(II) Capital
invested and -
-13199100.782405237.224697523.387102760.60
reduced by the 15604338.00
owners
136ZKTeco 2025 Half Year Report
1. Common
stock contributed 981714.84 981714.84
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payments 5569086.64 5569086.64 4216.32 5573302.96
recognized in
equity
-
4. Others -18768187.42 -3163849.42 3711592.22 547742.80
15604338.00
(III) Profit
-97598062.50-97598062.50-8902314.29-106500376.79
distribution
1. Surplus
reserves
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
owners (or -97598062.50 -97598062.50 -8902314.29 -106500376.79
shareholders)
4. Others 0.00 0.00
(IV) Internal
carryover of 39039225.00 -39039225.00 0.00 0.00
owner's equity
1. Capital
surplus transfer
39039225.00-39039225.000.000.00
to capital (or
equity capital)
137ZKTeco 2025 Half Year 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 0.00 0.00
IV. Ending
balance of 235351550.00 2055085307.45 44078890.10 53004940.98 64002687.03 996116972.96 3359482568.32 44150577.19 3403633145.51
current period
Amount of previous year
Unit: RMB
Item Half Year of 2024
138ZKTeco 2025 Half Year Report
Equity attributable to owners of the parent company
Other equity instruments Other General Minority Total owner's
Less: treasury Special Surplus Undistributed
Share capital interests equity Preferred Perpetual Capital reserve comprehensive risk Others Subtotal
Others stock reserve reserves profits
stock bonds income reserves
I.Ending balance
194679508.002075479375.13784700.0028000959.1960455422.50907583024.383265413589.2025375754.083290789343.28
of previous year
Plus: changes in
accounting
policies
Corrections of
prior period
errors
Others
II. Beginning
balance of this 194679508.00 2075479375.13 784700.00 28000959.19 60455422.50 907583024.38 3265413589.20 25375754.08 3290789343.28
year
III. Amount
increase/decrease
of the current
7628802.6158898528.10-5722101.19-7964551.27-64956377.953464440.02-61491937.93
period (decrease
expressed with "-
")
(I) Total
comprehensive -5722101.19 78637727.33 72915626.14 7120366.27 80035992.41
income
(II) Capital
invested and
7628802.6158898528.10-51269725.496999880.89-44269844.60
reduced by the
owners
1. Common
stock contributed 58898528.10 -58898528.10 -58898528.10
by owners
2. Capital
139ZKTeco 2025 Half Year Report
invested by
holders of other
equity
instruments
3. Amount of
share-based
payments 7628802.61 7628802.61 136509.00 7765311.61
recognized in
equity
4. Others 6863371.89 6863371.89
(III) Profit -
-86602278.60-86602278.60-97258085.74
distribution 10655807.14
1. Surplus
reserves
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
-
owners (or -86602278.60 -86602278.60 -97258085.74
10655807.14
shareholders)
4. Others
(IV) Internal
carryover of
owner's equity
1. Capital
surplus transfer
to capital (or
equity capital)
2. Surplus
reserve transfer
to capital (or
equity capital)
3. Surplus
140ZKTeco 2025 Half Year Report
reserve offsetting
losses
4. Changes in
defined benefit
plans carried
forward to
retained earnings
5. Retained
income carried
forward from
other
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of 194679508.00 2083108177.74 59683228.10 22278858.00 60455422.50 899618473.11 3200457211.25 28840194.10 3229297405.35
current period
8. Statement of Changes in Equity of the Parent Company
Amount in current period
Unit: RMB
Half Year of 2025
Other equity instruments Other
Item Less: treasury Special Surplus Undistributed Total owner's
Share capital Capital reserve comprehensive Others
Preferred Perpetual Others stock reserve reserves profits equity income
141ZKTeco 2025 Half Year Report
stock bonds
I. Ending balance
196312325.002116684780.1359683228.1063911390.54429659664.622746884932.19
of previous year
Plus: changes in
accounting
policies
Corrections of
prior period errors
Others
II. Beginning
balance of this 196312325.00 2116684780.13 59683228.10 63911390.54 429659664.62 2746884932.19
year
III. Amount
increase/decrease
of the current
39039225.00-48558685.77-15604338.00-70042351.17-63957473.94
period (decrease
expressed with "-
")
(I) Total
comprehensive 27555711.33 27555711.33
income
(II) Capital
invested and
-9519460.77-15604338.006084877.23
reduced by the
owners
1. Common stock
contributed by
owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of 5527977.23 5527977.23
142ZKTeco 2025 Half Year Report
share-based
payments
recognized in
equity
4. Others -15047438.00 -15604338.00 556900.00
(III) Profit
-97598062.50-97598062.50
distribution
1. Surplus
reserves
withdrawal
2. Distribution to
owners (or -97598062.50 -97598062.50
shareholders)
3. Others
(IV) Internal
carryover of 39039225.00 -39039225.00 0.00
owner's equity
1. Capital surplus
transfer to capital 39039225.00 -39039225.00 0.00
(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
143ZKTeco 2025 Half Year Report
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending
balance of current 235351550.00 2068126094.36 44078890.10 63911390.54 359617313.45 2682927458.25
period
Amount1 of previous period
Unit: RMB
Half Year of 2024
Other equity instruments Other
Item Less: treasury Special Surplus Undistributed Total owner's
Share capital Preferred Perpetual Capital reserve comprehensive Others
Others stock reserve reserves profits equity
stock bonds income
I. Ending balance
194679508.002085198988.61784700.0060364126.01484336562.432823794485.05
of previous year
Plus: changes in
accounting policies
Corrections of prior
period errors
Others
II. Beginning
194679508.002085198988.61784700.0060364126.01484336562.432823794485.05
balance of this year
III. Amount
increase/decrease 6573698.77 58898528.10 -65621412.03 -117946241.36
of the current
144ZKTeco 2025 Half Year Report
period (decrease
expressed with "-")
(I) Total
comprehensive 20980866.57 20980866.57
income
(II) Capital
invested and
6573698.7758898528.10-52324829.33
reduced by the
owners
1. Common stock
contributed by 58898528.10 -58898528.10
owners
2. Capital invested
by holders of other
equity instruments
3. Amount of
share-based
payments 6573698.77 6573698.77
recognized in
equity
4. Others
(III) Profit
-86602278.60-86602278.60
distribution
1. Surplus reserves
withdrawal
2. Distribution to
owners (or -86602278.60 -86602278.60
shareholders)
3. Others
(IV) Internal
carryover of
owner's equity
1. Capital surplus
transfer to capital
145ZKTeco 2025 Half Year Report
(or equity capital)
2. Surplus reserve
transfer to capital
(or equity capital)
3. Surplus reserve
offsetting losses
4. Changes in
defined benefit
plans carried
forward to retained
earnings
5. Retained income
carried forward
from other
comprehensive
income
6. Others
(V) Special reserve
1. Withdrawal in
this period
2. Use in the
current period
(VI) Others
IV. Ending balance
194679508.002091772687.3859683228.1060364126.01418715150.402705848243.69
of current period
146ZKTeco 2025 Half Year Report
III. Basic Information of the Company
ZKTECO CO. LTD. (hereinafter referred to as "the Company" or "Company") formerly known as Dongguan Zhongkong 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 June 30 2025 the Company has issued a total of 235351550 shares of share capital after years of converting into share capital
and issuing new shares with a registered capital of RMB 235351550. 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.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.
147ZKTeco 2025 Half Year Report
For specific accounting policies please refer to the relevant explanations in Section V(34) Section V(23) Section V(26) etc. of this
chapter.
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.
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
148ZKTeco 2025 Half Year Report
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.
(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
149ZKTeco 2025 Half Year Report
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
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
150ZKTeco 2025 Half Year Report
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 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 loss 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.
151ZKTeco 2025 Half Year Report
(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 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.
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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.
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
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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
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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
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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
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
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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".* 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
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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
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
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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 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
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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
Bank acceptance bill 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
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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
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
Determination methods and accounting treatment methods of expected credit losses of other receivables
(1) Determination method and accounting treatment method of expected credit losses of other receivables
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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 (%)
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
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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 credit
Aging portfolio
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.
17. Inventory
(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
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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 or purpose
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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.
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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.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
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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
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 represent 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.
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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
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
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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 services assessment
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
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
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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 losses from impairment of assets 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
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
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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
Investment real estate refers to the assets held for capital appreciation or lease earning as well as the aims of 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
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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.
23. Fixed assets
(1) Recognition conditions
Fixed assets refer to tangible assets that simultaneously possess the following characteristics: 1) Held for the production of commodities
the provision of labor services the rental or operation and management; 2) With a useful life of more than one fiscal 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
Annual depreciation
Category Depreciation method Depreciation period Residual value rate
rate
Houses and buildings Straight-line method 20-50 years 5.00% 1.90%-4.75%
Machinery equipment Straight-line method 5-10 years 5.00% 9.50%-19.00%
Transportation vehicles Straight-line method 3-5 years 5.00% 19.00%-31.67%
Electronic equipment
Straight-line method 4 years 5.00% 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. Project under construction
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.
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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
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
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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 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:
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Basis for estimated useful
Item Period (year)
life
Software Benefit period 2-10
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
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:
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(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.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.
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28. Long-term deferred expense
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.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.
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(4) Accounting treatment of 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 payment
(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
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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 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 the sale of 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.
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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.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.
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3) The principle for recognizing sales revenue through online self operation mode of products: In self operation mode the Company
mainly sells products directly to consumers through domestic e-commerce platforms (Tmall Taobao JD PDD Suning) and overseas
e-commerce platforms (Amazon Lazada Shoppe). The Company confirms online self operated business revenue when sending out
goods either directly confirmed by consumers or automatically confirmed by the system's default delivery time and meeting the return
period terms.
4) Principle for recognizing sales revenue of system integration: The sales of company system integration products include providing
customers with supporting products installation debugging and system trial operation and other supporting services. After passing
the acceptance inspection sales revenue is recognized.
5) Software sales revenue recognition principle: The software is directly provided to the buyer and requires a dedicated software
authorization code to be used. After the software authorization code is provided to the buyer the realization of software sales revenue
is recognized. If the company contract stipulates that the software needs to be installed debugged or inspected the software sales
revenue will be recognized after the installation debugging or inspection are completed and an acceptance report is obtained.
(3) Principles for income processing of specific transactions
1) A contract with quality assurance clauses attached
The Company shall assess whether the quality assurance provides a separate service beyond ensuring that the products sold meet
established standards to customers. If the Company provides additional services it shall be treated as a single performance obligation
and subject to accounting treatment in accordance with the income standards; otherwise the quality assurance responsibility shall be
accounted for in accordance with the accounting standards for contingencies.
2) Main responsible persons and agents
The Company determines whether it the main responsible person or agent when engaging in transactions based on whether it has
control over the goods or services before transferring them to customers. If the Company is able to control the goods or services before
transferring them to customers it is the main responsible person and recognizes revenue based on the total amount of consideration
received or receivable; otherwise the Company acts as an agent and recognizes revenue based on the expected amount of commission
or handling fees entitled to receive. This amount is determined by deducting the total amount of consideration received or receivable
from the amount payable to other relevant parties.The adoption of different business models for similar businesses involves different revenue recognition methods and measurement
methods
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.
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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.
36. Government subsidies
(1) Classification of government subsidies
Government subsidies refer to monetary and non-monetary assets acquired by the Company from the government for free. It is divided
into government subsidies related to assets and those 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:
185ZKTeco 2025 Half Year Report
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 time point for 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.Item Accounting content
186ZKTeco 2025 Half Year Report
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 income 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
187ZKTeco 2025 Half Year Report
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 deductible
temporary difference deductible loss or tax deduction to be likely obtained unless the said deductible temporary difference is generated
in the following transactions:
(1) 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
188ZKTeco 2025 Half Year Report
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
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
189ZKTeco 2025 Half Year Report
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 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.
190ZKTeco 2025 Half Year Report
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.
40. Explanation of 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
191ZKTeco 2025 Half Year Report
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 losses from credit
impairment 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
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
192ZKTeco 2025 Half Year Report
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 material accounting policies and accounting estimates
(1) Significant accounting policy changes
□Applicable □ Not applicable
Unit: RMB
Name of report items that are significantly
Contents and reasons for changes in accounting policies Affected amount
affected
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 Operating cost (January-June 2025
1870289.28
No. 18 of the Accounting Standards for Business Consolidated Financial Statements)
Enterprises" issued by the Ministry of Finance as of
December 6 2024 and retrospectively adjusted the
comparable period information.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 Selling expense (January-June 2025
-1870289.28
No. 18 of the Accounting Standards for Business Consolidated Financial Statements)
Enterprises" issued by the Ministry of Finance as of
December 6 2024 and retrospectively adjusted the
comparable period information.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 Operating cost (January-June 2025 Parent
1575408.33
No. 18 of the Accounting Standards for Business Company Financial Statements)
Enterprises" issued by the Ministry of Finance as of
December 6 2024 and retrospectively adjusted the
comparable period information.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 Selling expense (January-June 2025 Parent
-1575408.33
No. 18 of the Accounting Standards for Business Company Financial Statements)
Enterprises" issued by the Ministry of Finance as of
December 6 2024 and retrospectively adjusted the
comparable period information.
(2) Changes in significant accounting estimates
□ Applicable □Not applicable
(3) Implementation of new accounting standards adjustment for the first time starting from 2025. Relevant project information
on financial statements at the beginning of the year
□ Applicable □Not applicable
193ZKTeco 2025 Half Year Report
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%
ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET
25.00%
LIMITED SIRKETI.ZKTECO LATAM S.A. DE C.V. 30.00%
ZK SOFTWARE DE MEXICO S.A. DE C.V. 30.00%
ZKTECO COLOMBIA SAS 35.00%
ZKTECO (M) SDN. BHD. 24.00%
ZKTECO BIOMETRICS INDIA PRIVATE LIMITED 25.00%、15.00%
ZKTECO EUROPE SL 25.00%
ZKTECO IRELAND LIMITED 12.50%
ZKTeco Deutschland GmbH 31.225%
ZKTECO ITALIA S.R.L. 27.90%
ZKTECO UK LTD 19.00%、25.00%
ZKTECO PERU SOCIEDAD ANONIMA CERRADA 29.50%
ZKTECO THAI CO. LTD. 20.00%、15.00%、0.00%
ZKTeco Chile SpA 27.00%
194ZKTeco 2025 Half Year Report
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%
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%
ZKTeco Yunlian (Xiamen) Technology 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%、9.00%
ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co.
20.00%
Ltd.
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
195ZKTeco 2025 Half Year Report
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. 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 2025 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 2025 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%.
(6) The corporate income tax rate of ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET LIMITED SIRKETI for the year
2025 was 25%.
196ZKTeco 2025 Half Year Report
(7) PT.ZKTECO BIOMETRICS INDONESIA and PT. ZKDIGIMAX EXCEL NOBLE apply the corporate income tax rate for the
year 2025 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 2025 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 2025 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%;
197ZKTeco 2025 Half Year Report
4) For the non-compliant income portion of free zone compliant enterprises the applicable tax rate is 9.00%.
(16) The preferential tax rate of ZKTeco Polska Sp. z o.o. was 9%. Enterprises must continuously qualify as small taxpayers within
the current tax year (annual turnover not exceeding EUR 2 million converted to PLN at the Euro to PLN exchange rate published by
the National Bank of Poland rounded to the nearest thousand for the first year). If the cumulative quarterly or monthly turnover exceeds
the threshold the standard tax rate of 19% will be reinstated from the next reporting period and the difference in tax calculated at the
9% rate plus interest must be paid.
VII. Notes to Consolidated Financial Statements
1. Monetary funds
Unit: RMB
Item Ending Balance Beginning Balance
Cash on hand 490485.81 772216.84
Cash in bank 1214284695.20 1423494905.16
Other monetary funds 89138437.45 49067783.97
Total 1303913618.46 1473334905.97
Including: total amount deposited abroad 421430458.69 359182516.43
Other explanations:
Note 1: As of June 30 2025 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 298862984.66 (December 31 2024: RMB 198918980.00) and
the amount of interest receivable that has not yet matured was RMB 14933155.59 (December 31 2024: RMB 12227894.14) 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 781091002.96 491331815.79
current profits and losses
Including:
Financial products 781091002.96 491331815.79
Including:
Total 781091002.96 491331815.79
Other explanations:
198ZKTeco 2025 Half Year Report
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Ending Balance Beginning Balance
Banker's acceptance 372725.58 165450.00
Trade acceptance 0.00
Total 372725.58 165450.00
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Book Accrual Book
Proportio Amoun Proportio Amoun
Amount proportio value Amount proportio value
n t n t
n n
Including:
Bills
receivable
for dad
debt 372725.5 372725.5 165450.0 165450.0
100.00%100.00%
reserve 8 8 0 0
withdraw
n by
portfolio
Including:
372725.5372725.5165450.0165450.0
Total 100.00% 100.00%
8800
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
199ZKTeco 2025 Half Year Report
4. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 493125235.92 504979612.03
1-2 years 61790888.12 47589232.67
2-3 years 22910485.48 15397520.31
Over 3 years 9677442.17 5704760.98
3-4 years 5105898.87 3287160.38
4-5 years 2711150.14 1197968.12
Over 5 years 1860393.16 1219632.48
Total 587504051.69 573671125.99
(2) Disclosure by bad debt accrual method
200ZKTeco 2025 Half Year Report
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Book value Accrual Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable
with
20387713.403.47%20387713.40100.00%0.0019535854.243.41%19535854.24100.00%0.00
individual
provision for
bad debts
Including:
Accounts
receivable
with
insignificant
single
20387713.403.47%20387713.40100.00%0.0019535854.243.41%19535854.24100.00%0.00
amount and
bad debt
reserve
withdrawn
separately
Receivable
with
combined
567116338.2996.53%38328163.406.76%528788174.89554135271.7596.59%35120933.866.34%519014337.89
provision for
bad debt
reserve
Including:
Aging
567116338.2996.53%38328163.406.76%528788174.89554135271.7596.59%35120933.866.34%519014337.89
portfolio
Total 587504051.69 100.00% 58715876.80 9.99% 528788174.89 573671125.99 100.00% 54656788.10 9.53% 519014337.89
201ZKTeco 2025 Half Year Report
Category name of bad debt reserve made individually single item provision
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
AREEJ
SECURTECH Expected non-
13649377.2813649377.2813509046.2213509046.22100.00%
TRADING recoverable
LLC
Hainan Jialing
Digital Expected non-
2032000.002032000.002032000.002032000.00100.00%
Technology recoverable
Co. Ltd.Expected non-
BBT (Naira) 457382.88 457382.88 100.00%
recoverable
Noble IT
Expected non-
Solutions Co. 421686.28 421686.28 419938.15 419938.15 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 376995.64 376995.64 375432.78 375432.78 100.00%
recoverable
Securit
Al Asma Expected non-
360448.21360448.21356742.41356742.41100.00%
Technology recoverable
TIMEWATCH
Expected non-
INFOCOM 305211.28 305211.28 303946.00 303946.00 100.00%
recoverable
PVT. LTD.Shenzhen
Xuhui
Expected non-
Information 270358.32 270358.32 270358.32 270358.32 100.00%
recoverable
Technology
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-
204017.72204017.72203171.95203171.95100.00%
INTERNACIO recoverable
NAL LTDA
Shanghai Leqi
Automation Expected non-
261950.00261950.00171950.00171950.00100.00%
Technology recoverable
Co. Ltd.ASIA
IDENTIFICAT
ION AND
Expected non-
SECURITY 170370.11 170370.11 169663.83 169663.83 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
Wanqiao
Information Expected non-
165900.00165900.00165900.00165900.00100.00%
Technology recoverable
Co.Ltd.Tianjin Eagle
Expected non-
Eye 162281.00 162281.00 162281.00 162281.00 100.00%
recoverable
Biotechnology
202ZKTeco 2025 Half Year Report
Co. Ltd.One Network Expected non-
158290.96158290.96100.00%
(PVT) Ltd. recoverable
Baoneng Urban
Development
Expected non-
and 155292.00 155292.00 155292.00 155292.00 100.00%
recoverable
Construction
Group Co. Ltd.WESTGATE
Expected non-
TECHNOLOGI 141295.59 141295.59 100.00%
recoverable
ES LIMITED
Hainan
Zhongkong
Expected non-
IOT 122173.74 122173.74 122173.74 122173.74 100.00%
recoverable
Technology
Co. Ltd.PONTO RHJ Expected non-
101554.91101554.91101133.91101133.91100.00%
EIRELI - ME recoverable
SECUZAA
SECURITY
SOLUTIONS Expected non-
99690.7499690.7499277.4799277.47100.00%
LAB recoverable
PRIVATE
LIMITED
Expected non-
U.S. Plast 82681.83 82681.83 100.00%
recoverable
True Security
Expected non-
Consultant 79828.27 79828.27 100.00%
recoverable
Limited
INTELLISMA
RT Expected non-
75607.5975607.5975294.1575294.15100.00%
TECHNOLOG recoverable
Y INC.Qianxinan
Mengku
Expected non-
Business 74672.00 74672.00 74672.00 74672.00 100.00%
recoverable
Service Co.Ltd.Rahat Telecom Expected non-
74145.8474145.84100.00%
LLC recoverable
RBB
Expected non-
Technologies 61357.44 61357.44 61162.78 61162.78 100.00%
recoverable
Private Limited
Yichang Anlian
Intelligent
Expected non-
Technology 56085.00 56085.00 56085.00 56085.00 100.00%
recoverable
Development
Co. Ltd.Global
Expected non-
Communication 53621.14 53621.14 100.00%
recoverable
s LLC
Expected non-
Others 184148.98 184148.98 230269.18 230269.18 100.00%
recoverable
Total 19535854.24 19535854.24 20387713.40 20387713.40
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
203ZKTeco 2025 Half Year Report
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 567116338.29 38328163.40 6.76%
Total 567116338.29 38328163.40
Explanation of the basis for determining the portfolio:
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category
Balance Return or Redeem/redem
Ending Balance
Provision Others
reversal ption
Withdrawing
bad debt
19535854.241125657.5097177.5025113.28-151507.5620387713.40
reserves by
individual item
Bad debt
reserve
35120933.862833096.89374132.6538328163.40
withdrawn by
portfolio
Total 54656788.10 3958754.39 97177.50 25113.28 222625.09 58715876.80
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 25113.28
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanation of accounts receivable verification:
204ZKTeco 2025 Half Year Report
None
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending balance
Unit: RMB
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
Customer 1 43039493.79 43039493.79 7.32% 2399371.29
Customer 2 36662051.49 36662051.49 6.24% 2304991.19
Customer 3 23254176.57 23254176.57 3.96% 1162708.84
Customer 4 19763037.08 19763037.08 3.36% 1245964.51
Customer 5 14900734.21 14900734.21 2.54% 745036.71
Total 137619493.14 137619493.14 23.42% 7858072.54
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
79475.4845893.6433581.84335494.48122699.34212795.14
deposit
receivable
Total 79475.48 45893.64 33581.84 335494.48 122699.34 212795.14
(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:
Bad debt
reserve
withdrawn 79475.48 100.00% 45893.64 57.75% 33581.84 335494.48 100.00% 122699.34 36.57% 212795.14
by
portfolio
Including:
Aging
79475.48100.00%45893.6457.75%33581.84335494.48100.00%122699.3436.57%212795.14
portfolio
Total 79475.48 100.00% 45893.64 57.75% 33581.84 335494.48 100.00% 122699.34 36.57% 212795.14
205ZKTeco 2025 Half Year Report
Category number of bad debt reserve made by portfolio: 1
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 79475.48 45893.64 57.75%
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses
□ Applicable □Not applicable
(3) 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 -76805.70
aging distribution and
portfolio
expected credit risk
Total -76805.70 ——
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:
6. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Other receivables 29543091.46 41144121.16
Total 29543091.46 41144121.16
(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 3579854.51 4674861.45
Guarantee deposit 10199456.31 14910797.93
Reserve funds and loans 4830544.15 3115748.90
Collection and payment on behalf of
1247311.122721289.57
others
206ZKTeco 2025 Half Year Report
Withholding and paying social security
1550780.931642381.43
and provident fund on behalf of others
Export tax refund 10566182.56 15515710.55
Others 802425.25 1778689.71
Total 32776554.83 44359479.54
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 20836884.57 28324198.88
1-2 years 1879110.66 1755594.41
2-3 years 1468990.12 1554437.48
Over 3 years 8591569.48 12725248.77
3-4 years 2514862.85 2869212.53
4-5 years 1566085.57 221614.92
Over 5 years 4510621.06 9634421.32
Total 32776554.83 44359479.54
3) Disclosure by bad debt accrual method
207ZKTeco 2025 Half Year Report
□Applicable □ Not applicable
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Book value Accrual Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Withdrawing
bad debt
reserves by 1639799.46 5.00% 1639799.46 100.00% 0.00 1608349.35 3.63% 1608349.35 100.00% 0.00
individual
item
Including:
Single item
1639799.465.00%1639799.46100.00%0.001608349.353.63%1608349.35100.00%0.00
provision
Bad debt
reserve
31136755.3795.00%1593663.915.12%29543091.4642751130.1996.37%1607009.033.76%41144121.16
withdrawn by
portfolio
Including:
Aging
2139724.266.53%1593663.9174.48%546060.352802184.006.32%1607009.0357.35%1195174.97
portfolio
Portfolio of
deposits
security
28997031.1188.47%0.000.00%28997031.1139948946.1990.05%0.000.00%39948946.19
deposits
employee
loans etc.Total 32776554.83 100.00% 3233463.37 9.87% 29543091.46 44359479.54 100.00% 3215358.38 7.25% 41144121.16
208ZKTeco 2025 Half Year Report
Category name of bad debt reserve made individually single item provision
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
CNB
Expected non-
TECHNOLOGY 1308756.05 1308756.05 1303330.51 1303330.51 100.00%
recoverable
INC.Expected non-
New bio 299593.30 299593.30 336468.95 336468.95 100.00%
recoverable
Total 1608349.35 1608349.35 1639799.46 1639799.46
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year 148138.72 7406.94 5.00%
1-2 years 416958.31 41695.83 10.00%
2-3 years 42951.60 12885.51 30.00%
Over 3 years 1531675.63 1531675.63 100.00%
Total 2139724.26 1593663.91
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
57455.821549553.211608349.353215358.38
12025
Balance as of January
1 2025 in the current
period
Provision in current
-50048.8842139.840.00-7909.04
period
Reversals in the current
0.000.00
period
Write-off in current
0.00
period
Other changes -5436.08 31450.11 26014.03
Balance as of June 30
7406.941586256.971639799.463233463.37
2025
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
209ZKTeco 2025 Half Year Report
4) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance Balance Provision Others
reversal cancellation
Withdrawing
bad debt
1608349.3531450.111639799.46
reserves by
individual item
Bad debt
reserve made
1607009.03-7909.04-5436.081593663.91
by aging
portfolio
Total 3215358.38 -7909.04 26014.03 3233463.37
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 0.00
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
Description for writing off other receivables:
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
No. 1 Export tax refund 10566182.56 Within 1 year 32.24% 0.00
No. 2 Current account 1660530.47 Over 3 years 5.07% 1660530.47
210ZKTeco 2025 Half Year Report
No. 3 Current account 1303330.51 Over 3 years 3.98% 1303330.51
No. 4 Guarantee deposit 907168.15 Over 3 years 2.77% 0.00
No. 5 Guarantee deposit 567882.33 1-2 years 1.73% 0.00
Total 15005094.02 45.78% 2963860.98
7. Prepayments
(1) Prepayments listed by aging
Unit: RMB
Ending Balance Beginning Balance
Aging
Amount Proportion Amount Proportion
Within 1 year 21516706.20 87.09% 25493011.77 95.98%
1-2 years 2767673.47 11.20% 1044012.35 3.93%
2-3 years 397665.65 1.61% 450.85 0.00%
Over 3 years 23998.01 0.10% 23998.01 0.09%
Total 24706043.33 26561472.98
Explanation of the reasons why prepayments with an aging of over 1 year and significant amounts were not settled in a timely manner:
None
(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 2288554.95 9.26%
Supplier 2 2017406.03 8.17%
Supplier 3 1578400.00 6.39%
Supplier 4 1124249.80 4.55%
Supplier 5 1115265.64 4.51%
Total 8123876.42 32.88%
Other explanations:
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
Item Inventory Inventory
Book balance depreciation Book value Book balance depreciation Book value
reserves or reserves or
211ZKTeco 2025 Half Year Report
contract contract
performance performance
cost cost
impairment impairment
reserves reserves
Raw materials 112238867.64 4053216.21 108185651.43 93407452.97 4182521.26 89224931.71
Products in
7413961.540.007413961.5410928773.180.0010928773.18
process
Inventory
256982128.0222030340.52234951787.50240786117.7413846891.80226939225.94
goods
Sending goods 5214978.00 170901.47 5044076.53 8482461.31 268995.00 8213466.31
Total 381849935.20 26254458.20 355595477.00 353604805.20 18298408.06 335306397.14
(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 4182521.26 1267764.95 29343.94 1426413.94 4053216.21
Products in
0.000.00
process
Inventory
13846891.8013307361.68503438.695627351.6522030340.52
goods
Sending goods 268995.00 110263.62 0.00 208357.15 170901.47
Total 18298408.06 14685390.25 532782.63 7262122.74 26254458.20
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 18150144.37 19802583.11
Long-term receivables due within one
1078698.52580655.24
year
Total 19228842.89 20383238.35
(1) Debt investment due within one year
□Applicable □ Not applicable
212ZKTeco 2025 Half Year Report
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
CD
Term deposits 18150144.37 18150144.37 19802583.11 19802583.11
Total 18150144.37 18150144.37 19802583.11 19802583.11
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
Effective interest rate Overdue principal
Item Face value Coupon rate Due Date 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 7588339.09 11474437.07
Value added tax deduction amount 18486705.79 21313002.62
Other prepaid taxes 1625115.89 283376.31
Total 27700160.77 33070816.00
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 -
34835741.7134835741.7135235692.0235235692.02
Principal
Bank CD -
1099230.871099230.87342697.25342697.25
Interest
213ZKTeco 2025 Half Year Report
Debt
investment due -18150144.37 -18150144.37 -19802583.11 -19802583.11
within one year
Total 17784828.21 17784828.21 15775806.16 15775806.16
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
12. Long-term receivables
(1) Information on long-term receivables
Unit: RMB
Ending Balance Beginning Balance
Discount rate
Item Bad debt Book Bad debt
Book balance Book value Book value range
reserve balance reserve
Employee
12371319.7612371319.766059956.796059956.793.60%~4.30%
housing loan
Long-term
receivables
-1078698.52-1078698.52-580655.24-580655.243.60%~4.30%
due within
one year
Total 11292621.24 11292621.24 5479301.55 5479301.55
214ZKTeco 2025 Half Year Report
13. Long-term equity investment
Unit: RMB
Increase or decrease in the current period
Investment
Beginning
Beginning profit or Cash
Ending
balance of Other
Ending
Investee balance (book loss Changes dividends
balance of
impairment Additional Reduced comprehensive Impairment
balance (book
value) recognized in other or profits Others
impairment
provision investment investment income provision
value)
under equities declared provision
adjustments
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
CV Squared -
3784728.110.000.000.00-5169.230.000.000.000.003763883.930.00
Inc. 15674.95
ZKTECO
SMART
CITY 1436786.20 0.00 0.00 0.00 216873.80 0.00 0.00 0.00 0.00 -6581.18 1647078.82 0.00
(THAILAND)
CO. LTD.Xiamen
Xingniu
Yunyu
Venture
Capital 23760577.92 0.00 0.00 0.00 44575.58 0.00 0.00 0.00 0.00 0.00 23805153.50 0.00
Partnership
Enterprise
(Limited
Partnership)
-
Subtotal 28982092.23 0.00 0.00 0.00 256280.15 0.00 0.00 0.00 0.00 29216116.25 0.00
22256.13
-
Total 28982092.23 0.00 0.00 0.00 256280.15 0.00 0.00 0.00 0.00 29216116.25 0.00
22256.13
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
215ZKTeco 2025 Half Year 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
Other explanations:
216ZKTeco 2025 Half Year Report
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 Balance 34416026.15 34416026.15
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
II. Accumulated
depreciation and
accumulated
amortization
1. Beginning Balance 12911709.38 12911709.38
2. Increase in current
820586.04820586.04
period
(1) Provision or
820586.04820586.04
amortization
3. Decrease in current
period
(1) Disposal
(2) Other transfers out
4. Ending balance 13732295.42 13732295.42
III. Provision for
impairment
1. Beginning Balance
2. Increase in current
period
217ZKTeco 2025 Half Year Report
(1) Provision
3. Decrease in current
period
(1) Disposal
(2) Other transfers out
4. Ending balance
IV. Book value
1. Ending book value 20683730.73 20683730.73
2. Beginning book
21504316.7721504316.77
value
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable □Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
Other explanations:
(2) Investment real estate adopting fair value measurement model
□ Applicable □Not applicable
(3) Converted to investment real estate and measured at fair value
Unit: RMB
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:
15. Fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Fixed assets 599912936.02 535337384.82
Disposal of fixed assets 0.00 0.00
218ZKTeco 2025 Half Year Report
Total 599912936.02 535337384.82
(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
517773308.9054643596.7213839192.69116723366.94702979465.25
Balance
2. Increase in
70519425.602647599.711651045.8013965079.8988783151.00
current period
(1) Purchase 26840744.48 2406207.63 1578153.34 10002620.70 40827726.15
(2) Transferred
from construction 40526428.97 1726217.83 42252646.80
in progress
(3) Increase in
business merger
(4) Differences in
foreign currency
3152252.15241392.0872892.462236241.365702778.05
statement
translation
3. Decrease in
3822630.84252949.885767819.749843400.46
current period
(1) Disposal or
3822630.84252949.885767819.749843400.46
retirement
4. Ending balance 588292734.50 53468565.59 15237288.61 124920627.09 781919215.79
II. Accumulated
depreciation
1. Beginning
50390962.1931381296.759118656.3776751165.12167642080.43
Balance
2. Increase in
8787204.863515336.46903681.117947442.9821153665.41
current period
(1) Provision 8550335.76 3362601.72 818049.27 7198084.27 19929071.02
(2) Differences in
foreign currency
236869.10152734.7485631.84749358.711224594.39
statement
translation
3. Decrease in
2409381.13234323.564145761.386789466.07
current period
(1) Disposal or
2409381.13234323.564145761.386789466.07
retirement
4. Ending balance 59178167.05 32487252.08 9788013.92 80552846.72 182006279.77
III. Provision for
impairment
1. Beginning
219ZKTeco 2025 Half Year Report
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal or
retirement
4. Ending balance
IV. Book value
1. Ending book
529114567.4520981313.515449274.6944367780.37599912936.02
value
2. Beginning book
467382346.7123262299.974720536.3239972201.82535337384.82
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 189590748.85 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
49941852.26.
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
220ZKTeco 2025 Half Year Report
(6) Disposal of fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Total 0.00 0.00
Other explanations:
16. Construction in progress
Unit: RMB
Item Ending Balance Beginning Balance
Construction in progress 208311207.77 226445932.02
Total 208311207.77 226445932.02
(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
189590748.85189590748.85179899141.410.00179899141.41
Industrial Base
Construction
Project
American
Manufacturing
Factory 18531276.90 18531276.90 6539114.96 0.00 6539114.96
Construction
Project
Thai factory
construction
0.000.0040007675.650.0040007675.65
and office
buildings
Administration
Department 116956.35 116956.35 0.00 0.00
Large Screen
Zhangmutou
Main Gate
72225.6772225.670.000.00
Security Room
No. 2
Total 208311207.77 208311207.77 226445932.02 226445932.02
221ZKTeco 2025 Half Year Report
(2) Current changes in important construction in progress
Unit: RMB
Proportion of Including:
Amount Accumulated Current
Other decreases accumulated current
Beginning Increase in transferred to Engineering amount of interest
Project Name Budget amount in the current Ending Balance project interest Source of Funds
Balance current period fixed assets in the progress interest capitalization
period investment to capitalized
current period capitalization rate
budget amount
Multimodal
Partial
Biometrics
completion
Digitalization
284566264.91 179899141.41 9691607.44 0.00 0.00 189590748.85 69.59% and transfer 1
Industrial Base
to fixed
Construction
assets
Project
Thai factory
construction and 109095400.00 40007675.65 1675814.43 42252646.80 -569156.72 0.00 100.00% Completed 2
office buildings
Total 393661664.91 219906817.06 11367421.87 42252646.80 -569156.72 189590748.85
Note: 1. Own funds and raised funds
2. Own funds
(3) Current provision for impairment of construction in progress
Unit: RMB
Decrease in the current
Item Beginning Balance Increase in the current period Ending Balance Reason for provision
period
Other explanations:
None
(4) Impairment test of construction in progress
□ Applicable □Not applicable
222ZKTeco 2025 Half Year Report
(5) Engineering materials
Unit: RMB
Ending Balance Beginning Balance
Item Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Other explanations:
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 Balance 105951804.64 3367291.18 23200.93 109342296.75
2. Increase in current
20899834.43684891.550.0021584725.98
period
(1) Lease 19078731.99 494275.35 0.00 19573007.34
(2) Differences in
foreign currency 1821102.44 190616.20 0.00 2011718.64
statement translation
3. Decrease in current
18751985.08907936.750.0019659921.83
period
(1) Expiration of lease 10603884.10 907936.75 0.00 11511820.85
(2) Lease change 5206454.56 0.00 0.00 5206454.56
(3) Termination of
2941646.420.000.002941646.42
lease
4. Ending balance 108099653.99 3144245.98 23200.93 111267100.90
II. Accumulated
depreciation
1. Beginning Balance 59181759.19 1790536.05 17787.37 60990082.61
2. Increase in current
13817172.781029358.032320.1014848850.91
period
(1) Provision 13918414.57 879128.43 2320.10 14799863.10
(2) Differences in
foreign currency -101241.79 150229.60 0.00 48987.81
statement translation
3. Decrease in current
15044824.34952467.900.0015997292.24
period
(1) Disposal 0.00
(2) Expiration of lease 10038409.20 952467.90 0.00 10990877.10
(3) Lease change 3904371.81 0.00 0.00 3904371.81
(4) Termination of
1102043.330.000.001102043.33
lease
4. Ending balance 57954107.63 1867426.18 20107.47 59841641.28
III. Provision for
impairment
1. Beginning Balance
223ZKTeco 2025 Half Year Report
2. Increase in current
period
(1) Provision
3. Decrease in current
period
(1) Disposal
4. Ending balance
IV. Book value
1. Ending book value 50145546.36 1276819.80 3093.46 51425459.62
2. Beginning book
46770045.451576755.135413.5648352214.14
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
Non-patent
Item Land use rights Patent rights Software Others Total
technology
I. Original book
value
1. Beginning
83690229.4039345602.92116213.23123152045.55
Balance
2. Increase in
2104302.39663913.92809.212769025.52
current period
(1) Purchase 360676.48 360676.48
(2) Internal
R&D
(3) Increase in
business
merger
(4) Differences
in foreign
currency 2104302.39 303237.44 809.21 2408349.04
statement
translation
3. Decrease in
32772.5132772.51
current period
224ZKTeco 2025 Half Year Report
(1) Disposal 32772.51 32772.51
4. Ending
85794531.7939976744.33117022.44125888298.56
balance
II.Accumulated
amortisation
1. Beginning
12587135.3510654231.5566281.8523307648.75
Balance
2. Increase in
621076.952169332.5748904.902839314.42
current period
(1) Provision 621076.95 1921515.20 50117.60 2592709.75
(2) Differences
in foreign
currency 247817.37 -1212.70 246604.67
statement
translation
3. Decrease in
13108.6613108.66
current period
(1) Disposal 13108.66 13108.66
4. Ending
13208212.3012810455.46115186.7526133854.51
balance
III. Provision
for impairment
1. Beginning
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
4. Ending
balance
IV. Book value
1. Ending book
72586319.4927166288.871835.6999754444.05
value
2. Beginning
71103094.0528691371.3749931.3899844396.80
book value
The proportion of intangible assets formed through internal research and development of the company to the balance of intangible
assets at the end of this period is 0.00%
(2) Data resources recognized as intangible assets
Unit: RMB
Item Purchased Data Self-Developed Data Data Resource Total
225ZKTeco 2025 Half Year Report
Resource Intangible Resource Intangible Intangible Assets
Assets Assets Acquired by Other
Means
(3) Land use rights without completed property ownership certificates
Unit: RMB
Reasons for not completing the property
Item Book value
rights certificate
Other explanations:
(4) Impairment test for intangible assets
□ Applicable □Not applicable
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 Ending Balance
Balance Exchange rate
forming business Disposals fluctuations
goodwill merger
ZKTECO (M)
175733.09-728.51175004.58
SDN. BHD.ZK
INVESTIMEN
TOS DO 336604.16 -1395.42 335208.74
BRASIL
LTDA
Total 512337.25 -2123.93 510213.32
(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 Operating segments and basis
asset group or portfolio to years
226ZKTeco 2025 Half Year Report
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:
(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
□ 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:
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 4139639.18 1435444.50 739940.66 6504.52 4828638.50
Employee housing 622274.12 1393101.71 280496.41 46387.36 1688492.06
227ZKTeco 2025 Half Year Report
loan deferred
interest
Others 793624.31 265190.62 212090.48 0.00 846724.45
Total 5555537.61 3093736.83 1232527.55 52891.88 7363855.01
Other explanations:
21. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets not offset
Unit: RMB
Ending Balance Beginning Balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for
56651418.147873797.6647192027.836521838.09
impairment of assets
Unrealized profits from
97440529.7120844979.1584185246.3517508200.23
internal transactions
Deductible losses 304166465.22 45160518.07 285896113.31 42872331.32
Withholding rebates 4543371.32 653344.16 10022833.77 1393756.83
Share-based payments 3916825.96 589480.65
Provision for inventory
17272730.013028040.7914186283.122370858.96
write-down
Deferred income 1386722.80 208008.42 1420041.44 213006.22
Lease liabilities 49945160.95 9992699.74 49257032.77 10466405.35
Payroll payable 2156010.00 338401.50 2236010.00 342401.50
Total 537479234.11 88689270.14 494395588.59 81688798.50
(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 8129445.86 1219416.88 3617185.62 542577.84
instruments
Accelerated
depreciation of fixed 16638455.53 2503082.60 16600073.87 2490011.08
assets
Right-of-use asset 46659196.97 9145434.71 46681772.88 9697505.58
Total 71427098.36 12867934.19 66899032.37 12730094.50
(3) Deferred income tax assets or liabilities listed at net amount after offset
Unit: RMB
Amount of mutual Ending balance of Amount of mutual Beginning balance of
offset between deferred deferred income tax offset between deferred deferred income tax
Item
income tax assets and assets and liabilities income tax assets and assets and liabilities
liabilities at the end of after offset liabilities at the after offset
228ZKTeco 2025 Half Year Report
period beginning of period
Deferred income tax
88689270.1481688798.50
assets
Deferred income tax
12867934.1912730094.50
liabilities
(4) Details of unconfirmed deferred income tax assets
Unit: RMB
Item Ending Balance Beginning Balance
Deductible temporary difference 26652960.58 16623824.03
Deductible losses 97383303.56 96349663.36
Total 124036264.14 112973487.39
(5) The deductible losses of unrecognized deferred income tax assets will expire in the following years
Unit: RMB
Year Closing amount Opening amount Remarks
2025337438.781274747.09
20261562105.032241647.99
20276955709.916892984.64
202817278632.6415815109.76
2029 and beyond 71249417.20 70125173.88
Total 97383303.56 96349663.36
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
Prepaid
equipment 6350017.40 0.00 6350017.40 4620055.22 0.00 4620055.22
payment
Prepayment for
660000.000.00660000.000.000.000.00
software
Total 7010017.40 0.00 7010017.40 4620055.22 0.00 4620055.22
Other explanations:
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
Monetary Deposit Bill deposit: Deposit Bill deposit:
85949052.5185949052.5147843704.4047843704.40
funds and funds RMB and funds RMB
229ZKTeco 2025 Half Year Report
in transit 77434579.93 in transit 45703490.78
funds in funds in
transit: RMB transit: RMB
8514472.582140213.62
Total 85949052.51 85949052.51 47843704.40 47843704.40
Other explanations:
24. Short-term loan
(1) Classification of short-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Discounted loan 74552050.16
Total 74552050.16
Explanation of short-term loan classification:
The short-term loan for the current period was obtained by discounting bank acceptance bills with the bank.
25. Notes payable
Unit: RMB
Category Ending Balance Beginning Balance
Bank acceptance bill 237011100.20 134784219.75
Total 237011100.20 134784219.75
The total amount of unpaid notes payable at the end of this period is RMB 0.00 with no reason for non-payment at maturity.
26. Accounts payable
(1) Listing of accounts payable
Unit: RMB
Item Ending Balance Beginning Balance
Material payment 166179354.45 173900619.81
Equipment payment 915421.98 898794.71
Service fee 6343072.51 5020813.02
Project payment 26795022.32 42641363.41
Others 5570391.37 2953051.88
Total 205803262.63 225414642.83
27. Other payables
Unit: RMB
Item Ending Balance Beginning Balance
Dividends payable 556900.00
Other payables 56820248.21 45821035.19
Total 57377148.21 45821035.19
230ZKTeco 2025 Half Year Report
(1) Dividends payable
Unit: RMB
Item Ending Balance Beginning Balance
Common stock dividend 556900.00
Total 556900.00
Other explanations including important dividends payable that have not been paid for more than one year whose reasons for the non-
payment shall be disclosed:
None
(2) Other payables
1) List of other payables by nature of money
Unit: RMB
Item Ending Balance Beginning Balance
Employee reimbursement 3555223.69 1648647.92
Payment to be settled 3123274.51 5241858.41
Withholding and paying social security
59803.80125966.01
and provident fund on behalf of others
Current account 3518881.39 6093622.83
Collection and payment on behalf of
1011979.181552934.62
others
Guarantee deposit 2524615.10 2489844.38
Liabilities recognized for repurchase
obligations under share-based payment 14200950.00
arrangements
Others 28825520.54 28668161.02
Total 56820248.21 45821035.19
28. Contract liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Advances on sales 76175981.93 71168318.91
Total 76175981.93 71168318.91
Significant contract liabilities with an aging of over 1 year
Unit: RMB
Reasons for non-repayment or carry-
Item Ending Balance
forward
Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Change
Item Reasons for changes
amount
231ZKTeco 2025 Half Year Report
29. 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
52837254.18247554988.89252475706.8647916536.21
compensation
II. Post-employment
welfare - defined 416810.35 14225790.62 14238560.73 404040.24
contribution plan
III. Dismissal benefit 736909.78 819254.63 1066082.72 490081.69
Total 53990974.31 262600034.14 267780350.31 48810658.14
(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
50669903.85228688003.75233227539.9946130367.61
allowance and subsidy
2. Employee benefits 240584.42 4282120.68 4172246.41 350458.69
3.Social insurance 651724.81 11405678.19 11866791.94 190611.06
Including: medical
649683.1010734365.6711212428.83171619.94
insurance premium
Work-related injury
2041.71462414.18445464.7718991.12
insurance premium
Birth insurance
208898.34208898.34
premium
4. Housing fund 92893.61 2753371.07 2788033.19 58231.49
5. Labor union
expenditure and
1182147.49221585.65217740.921185992.22
personnel education
fund
6. Other short-term
204229.55203354.41875.14
compensation
Total 52837254.18 247554988.89 252475706.86 47916536.21
(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
397285.3513586797.8013610189.92373893.23
insurance expense
2.Unemployment
19525.00638992.82628370.8130147.01
insurance
232ZKTeco 2025 Half Year Report
Total 416810.35 14225790.62 14238560.73 404040.24
Other explanations:
30. Taxes payable
Unit: RMB
Item Ending Balance Beginning Balance
VAT 6330608.13 5579760.29
Enterprise income tax 8544419.68 6705759.08
Individual income tax 5793247.33 5232563.89
Urban maintenance and construction tax 119519.57 444230.76
Property tax 1453735.73 488175.02
Stamp duty 317094.44 407386.15
Education surcharge 114403.07 440506.80
Others 4211807.41 982716.97
Total 26884835.36 20281098.96
Other explanations:
31. Non-current liabilities due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Long-term loans due within one year 1030434.94 964811.76
Lease liabilities due within one year 24850557.85 21857837.11
Total 25880992.79 22822648.87
Other explanations:
32. Other current liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Sales rebates payable 4543371.32 10022833.77
Tax to be transferred to output tax 2029947.73 2037746.19
Total 6573319.05 12060579.96
Changes in short-term bonds payable:
Unit: RMB
Accruing Amortization Whether it
Bond Coupon Bond Issue Beginning Current Current Ending
Face value Issue Date interest at of excess and is a breach
name rate duration amount Balance issue repayment Balance
face value discount of contract
Total
Other explanations:
233ZKTeco 2025 Half Year Report
33. Long-term loan
(1) Classification of long-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Credit borrowings 7478459.11 7986140.65
Long-term loans due within one year -1030434.94 -964811.76
Total 6448024.17 7021328.89
Explanation of long-term loan classification:
As of June 30 2025 the credit borrowings included an amount of RMB 7040.00 for accrued but unpaid interest (December 31 2024:
RMB 8211.50).Other explanations including interest rate range:
None
34. Lease liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Lease payment amount 61271778.17 57524873.16
Unrecognized financing charges -6898976.52 -6558959.29
Lease liabilities due within one year -24850557.85 -21857837.11
Total 29522243.80 29108076.76
Other explanations:
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
1420041.440.0033318.641386722.80
subsidies allocation
Total 1420041.44 0.00 33318.64 1386722.80
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 196312325.00 39039225.00 39039225.00 235351550.00
234ZKTeco 2025 Half Year Report
Shares
Other explanations:
According to the resolution of the Company's 2024 annual general meeting the Company will based on the share capital after deducting
the shares in the Company's dedicated securities account for share repurchases from the total share capital on the record date for the
implementation of equity distribution capitalize capital reserve by issuing 2 shares for every 10 shares to all shareholders with the
capital reserve converted into share capital amounting to RMB 39039225.00.
37. Capital reserve
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Capital premium (share
2039432865.6057807412.421981625453.18
capital premium)
Other capital reserves 67890767.63 5569086.64 73459854.27
Total 2107323633.23 5569086.64 57807412.42 2055085307.45
Other descriptions including changes in current period and reasons for changes:
(1)The decrease in capital reserve - share premium in the current period is mainly due to the following: * Pursuant to the "Proposal
on the Company's 2025 Employee Stock Ownership Plan (Draft) and Its Abstract" the "Proposal on the Company's 2025 Employee
Stock Ownership Plan Management Measures" and the "Proposal on Submitting the Company's General Meetings to Authorize the
Board of Directors to Handle Matters Related to the 2025 Employee Stock Ownership Plan" which were respectively deliberated and
approved at the 15th Session of the Third Board Meeting the 14th Session of the Third Supervisory Board Meeting and the First
Extraordinary General Meeting of 2025 the Company granted 1113800 shares to employees at a grant price of RMB 13.25 per share.The difference between the subscription payment for employee shares received (RMB 14757850.00) and the treasury shares of the
same number calculated at the average repurchase price (RMB 29805288.00) was offset against share premium (RMB 15047438.00).* As of June 3 2025 based on the total share capital of 196312325 shares after deducting 195196125 shares from the Company's
repurchase account in which 1116200 shares had been repurchased 2 shares were issued for every 10 shares to all shareholders
reducing capital reserve - share premium by RMB 39039225.00.
(2) The increase of RMB 5569086.64 in capital reserve - other capital reserve is due to share-based payment fees recognized under
the 2025 Equity Incentive Plan. For detailed information please refer to "Note XV".
38. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Implementing equity
incentives for 59683228.10 15604338.00 44078890.10
repurchasing shares
Total 59683228.10 15604338.00 44078890.10
Other descriptions including changes in current period and reasons for changes:
The decrease in treasury shares in the current period is due to the following: * Pursuant to the "Proposal on the Company's 2025
Employee Stock Ownership Plan (Draft) and Its Abstract" the "Proposal on the Company's 2025 Employee Stock Ownership Plan
Management Measures" and the "Proposal on Submitting the Company's General Meetings to Authorize the Board of Directors to
235ZKTeco 2025 Half Year Report
Handle Matters Related to the 2025 Employee Stock Ownership Plan" which were respectively deliberated and approved at the 15th
Session of the Third Board Meeting the 14th Session of the Third Supervisory Board Meeting and the First Extraordinary General
Meeting of 2025 the Company granted 1113800 shares to employees. The amount of treasury shares to be offset calculated at the
average repurchase price was RMB 29805288.00. Concurrently a liability was recognized for the repurchase transaction increasing
the amount of treasury shares by RMB 14757850.00. * The employee stock ownership plan offset the corresponding treasury shares
by RMB 556900.00 based on a dividend distribution of RMB 5 per ten shares in the current period.
39. Other comprehensive income
Unit: RMB
Amount incurred in the current period
Less: the net
amount that is
Less: Profit
included in
and loss
other
included in
Amount comprehensive
other Attributable to Attributable to
Beginning incurred profits of prior Ending
Item comprehensive Less: income parent minority
Balance before income period and Balance
income at tax expenses company after shareholder
tax in the retained
early stage and tax after tax
current period earnings
transferred in
transferred
the current
into the
period
current profits
and loss
I. Other
comprehensive
income to be
41914807.7413551797.7311090133.242461664.4953004940.98
reclassified
into profits
and losses
Translation
difference of
foreign
41914807.7413551797.7311090133.242461664.4953004940.98
currency
financial
statements
Total of other
comprehensive 41914807.74 13551797.73 11090133.24 2461664.49 53004940.98
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 64002687.03 64002687.03
Total 64002687.03 64002687.03
Description of surplus reserve including changes in current period and reasons for changes:
236ZKTeco 2025 Half Year Report
41. Undistributed profits
Unit: RMB
Item Current period Previous period
Undistributed profits before adjustment
1000479479.18907583024.38
at end of the previous period
Undistributed profit at the end of the
1000479479.18907583024.38
adjustment period
Plus: Net profits attributable to parent
93235556.28183045997.93
company in this period
Less: withdrawal of legal surplus
3547264.53
reserves
Dividends payable on ordinary shares 97598062.50 86602278.60
Undistributed profit at the end of the
996116972.961000479479.18
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
Income Cost Income Cost
Main business 925627146.27 453345313.12 899298084.45 455351526.79
Other businesses 3631613.23 820586.04 3805074.32 820586.04
Total 929258759.50 454165899.16 903103158.77 456172112.83
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 170351364.94 49955004.77 170351364.94 49955004.77
Smart space 686171421.87 354954954.62 686171421.87 354954954.62
Digital
identity 40163072.57 26311868.13 40163072.57 26311868.13
authentication
Smart
28941286.8922123485.6028941286.8922123485.60
business
Other
3631613.23820586.043631613.23820586.04
products
237ZKTeco 2025 Half Year Report
Classification
by region of
operation
Including:
Domestic
225526933.68155150552.06225526933.68155150552.06
sales
Overseas
703731825.82299015347.10703731825.82299015347.10
sales
Market or
customer type
Including:
Distribution 606844149.80 334230434.97 606844149.80 334230434.97
Direct sales 318782996.47 119114878.15 318782996.47 119114878.15
Others 3631613.23 820586.04 3631613.23 820586.04
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total 929258759.50 454165899.16 929258759.50 454165899.16
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:
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
238ZKTeco 2025 Half Year Report
Unit: RMB
Item Accounting treatment method Amount of impact on income
Other explanations:
43. Taxes and surcharges
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Urban maintenance and construction tax 1081144.01 1313026.35
Education surcharge 640116.95 774884.49
Property tax 1516598.02 790526.59
Land use tax 53192.27 53192.27
Stamp duty 592617.78 1273419.68
Local education surcharges 426744.56 516589.62
Other taxes and fees for overseas
7778404.678309729.91
companies
Others 12120.88 12948.09
Total 12100939.14 13044317.00
Other explanations:
44. Administrative expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 23662952.00 23903152.68
Office allowance 1497450.76 1394754.13
Travel expense 625145.17 1572016.50
Low-value consumables 216174.14 292293.53
Share-based payments 801317.95 719846.67
Car expenses 512186.16 358274.00
Software usage fee 815514.18 654161.87
Depreciation and amortization of right-
2762201.053113740.46
of-use assets
Taxes 274580.42 198914.56
Communications fee 377946.79 298281.74
Repair fee 192877.31 324653.19
Business entertainment expenses 949272.01 1236467.04
Depreciation and amortization 9119447.66 6046891.71
Agency fees 3907439.27 3688497.16
Others 11622902.03 9727936.89
Total 57337406.90 53529882.13
Other explanations:
45. Selling expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 130371321.56 128756323.33
Travel expense 10064633.43 13058671.93
239ZKTeco 2025 Half Year Report
Depreciation and amortization of right-
9099763.948710857.10
of-use assets
Advertising expenses 7734351.84 13042036.99
Service fees and commissions 7635393.54 5959250.01
Agency fees 7003206.27 6985958.39
Exhibition and conference fees 6039204.97 6216072.66
Office allowance 4778609.60 5095135.43
Depreciation and amortization 2970776.05 3487498.16
Share-based payments 2923688.14 3741494.90
Rental expenses 2799483.37 2672349.49
Insurance premium 2587046.52 2993136.00
Maintenance and testing fees 2543660.51 2131723.55
Software usage fee 1970852.76 2089695.96
Business entertainment expenses 1895840.13 1833773.74
Others 9231909.18 7862233.30
Total 209649741.81 214636210.94
Other explanations:
46. R&D expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 75869647.82 81473986.07
Office allowance 869093.76 723170.03
Travel expense 1429082.97 2128700.33
Share-based payments 1373315.54 2908870.45
Software and technical service fees 9290419.57 4745229.55
Depreciation and amortization of right-
894401.61882806.79
of-use assets
R&D material costs 3100377.47 3182303.79
Depreciation and amortization 4036414.77 2581016.27
Others 7204429.70 7023924.92
Total 104067183.21 105650008.20
Other explanations:
47. Financial expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest expense 1322384.38 1576340.90
Including: interest expenses on lease
1677473.84598981.62
liabilities
Less: interest income 18677549.88 23834740.57
Exchange profits and losses -10706325.87 2516264.93
Handling fee expenditure 1183331.50 947989.18
Others -38295.32 12024.77
Total -26916455.19 -18782120.79
Other explanations:
48. Other income
Unit: RMB
240ZKTeco 2025 Half Year Report
Sources of other income generation Amount incurred in the current period Amount incurred in the previous period
Government subsidies related to daily
1640887.624790479.66
activities of the enterprise
Refund of individual income tax
247010.14239983.22
handling fee
Value added tax credit additional
deduction and immediate collection and 5049440.08 3337380.11
refund
Total 6937337.84 8367842.99
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 7977831.68 4288802.32
Including: gains from changes in fair
value generated by derivative financial -92617.82
instruments
Total 7977831.68 4288802.32
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
1265201.27989323.74
accounted by equity method
Investment income from disposal of
-216072.16
long-term equity investment
Investment income obtained from
1334460.152058736.39
financial products
Forward foreign exchange settlement and
285803.2368155.00
sales contract
Total 2885464.65 2900142.97
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 -3861576.89 -728583.49
Bad debt losses on other receivables 7909.04 -42420.73
Total -3853667.85 -771004.22
Other explanations:
241ZKTeco 2025 Half Year Report
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 -9406692.74 -5196924.78
loss
II. Impairment losses on contract assets 76805.70
Total -9329887.04 -5196924.78
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
Gain recognized on disposal of non-
current assets not classified as held for 141757.67 -83513.11
sale
Including: fixed assets 161769.11 -76794.85
Right-of-use assets -20011.44 -6718.26
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 impairment and
retirement of non-current 30333.70 5007.30 30333.70
assets
Penalty income 7840.56
Others 269602.66 2443402.07 269602.66
Total 299936.36 2456249.93 299936.36
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 904338.66 410712.93 904338.66
Asset retirement damage and
328890.2565449.79328890.25
loss
Extraordinary losses 457628.84
Penalty expenses 120359.15 3280.71 120359.15
Others 383979.81 111489.01 383979.81
Total 1737567.87 1048561.28 1737567.87
Other explanations:
242ZKTeco 2025 Half Year Report
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 17559381.01 11186808.91
Deferred income tax expense -6862631.95 -6284061.60
Total 10696749.06 4902747.31
(2) Accounting profit and income tax expense adjustment process
Unit: RMB
Item Amount incurred in the current period
Total profits 122175249.91
Income tax expenses calculated based on statutory/applicable
18326287.49
tax rates
The impact of different tax rates applicable to subsidiaries 5390085.94
The impact of adjusting previous period income tax 490136.04
The impact of non-taxable income -7941604.19
The impact of non-deductible costs expenses and losses 849515.78
The impact of deductible losses on unrecognized deferred
-2050332.59
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 7393318.95
current period
The impact of additional deductions on R&D expenses -11739780.26
Salary paid for the placement of disabled individuals with
-13039.97
additional deductions
The impact of tax rate changes on the beginning deferred
-7838.13
income tax
Income tax expense 10696749.06
Other explanations:
57. Other comprehensive income
Please refer to Note 39.
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 14539538.96 33260268.95
Government subsidies 1607568.98 4952825.13
Current account 5778367.31 1844175.02
243ZKTeco 2025 Half Year Report
Restricted funds such as restricted bill
deposit guarantee deposit and funds in 53841815.00 808538.31
transit
Others 3455431.72 1826694.08
Total 79222721.97 42692501.49
Description of other cash received relating to operating activities:
Other cash paid relating to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Expense payment 90471076.32 103961087.89
Current account 46699693.62 26147972.24
Restricted funds such as restricted bill
deposit guarantee deposit and funds in 62372488.73 16607790.66
transit
Others 5149391.76 2833730.67
Total 204692650.43 149550581.46
Description of other cash paid relating to operating activities:
(2) Cash relating to investing activities
Other cash received related to investment activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Expiration of forward foreign exchange
285803.2368155.00
settlement
Total 285803.23 68155.00
Significant cash received relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposit and wealth management 909643512.57 522835114.48
Expiration of forward foreign exchange
25167850.00
settlement
Total 934811362.57 522835114.48
Description of 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
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 1290085319.16 649403947.08
Forward foreign exchange settlement
25167850.00
purchase
Total 1315253169.16 649403947.08
Description of other cash paid relating to investing activities:
244ZKTeco 2025 Half Year Report
(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 3512381.80
Equity incentive subscription funds 14757850.00
Proceeds from discounting notes
74552050.16
receivable received
Total 89309900.16 3512381.80
Description of other cash received relating to financing activities:
Other cash paid in connection with financing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Lease liability payment amount 15293492.76 16270394.68
Bill deposit 3717972.80
Share repurchase 58898528.10
Total 15293492.76 78886895.58
Description of other cash paid relating to financing activities:
Information on changes in liabilities arising from financing activities
□Applicable □ Not applicable
Unit: RMB
Increase in the current period Decrease in the current period
Beginning
Item Non cash Non cash Ending Balance Balance Cash changes Cash changes
changes changes
Short-term loan 0.00 74552050.16 0.00 0.00 0.00 74552050.16
Non-current
liabilities due 22822648.87 0.00 18670569.23 14170711.49 1441513.82 25880992.79
within one year
Long-term loan 7021328.89 0.00 11697.94 529610.37 55392.29 6448024.17
Lease liabilities 29108076.76 0.00 31868789.26 1122781.17 30331841.05 29522243.80
Total 58952054.52 74552050.16 50551056.43 15823103.03 31828747.16 136403310.92
(4) Description of cash flows presented as net amount
Basis for reporting net
Item Related facts Financial impact
amount
(5) Significant activities and financial impacts that do not involve current cash inflows and outflows but
affect the financial position of the enterprise or may affect the cash flow of the enterprise in the future
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
245ZKTeco 2025 Half Year Report
1. Reconciliation of net profit to cash
flows from operating activities:
Net profit 111478500.85 84863035.97
Plus: provision for asset impairment 13183554.89 5967929.00
Depreciation of fixed assets
consumption of oil and gas assets and 19929071.02 16949822.52
productive biological assets
Depreciation of right of use assets 14799863.10 14446245.08
Amortization of intangible assets 2098172.80 1112025.07
Long-term unamortized expenses 1232527.55 1703204.79
Loss from disposal of fixed assets
intangible assets and other long-term -141757.67 83513.11
assets (gains expressed with "-")
Loss on retirement of fixed assets (gains
298556.5560442.48
expressed with "-")
Loss from changes in fair value (gains
-7977831.68-4288802.32
expressed with "-")
Financial expenses (gains expressed with
-9383947.15-2794360.99
"-")
Investment loss (gains expressed with "-
-1876543.53-2900142.90
")
Decrease of deferred income tax assets
-7000471.64-7856218.33
(increase expressed with "-")
Increases of deferred income tax
137839.691572156.78
liabilities (decrease expressed with "-")
Decrease of inventory (increase
-30924354.73-13366506.95
expressed with "-")
Decreases of operational receivables
6325505.21-32843911.15
(increase expressed with "-")
Increases of operating payables (decrease
51431165.34-3841421.92
expressed with "-")
Others 5573302.96 7765311.61
Net cash flows from operating activities 169183153.56 66632321.85
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 19573007.34 19856763.01
3. Net change of cash and cash
equivalents:
Ending balance of cash 904168425.70 966470088.72
Less: beginning balance of cash 1214344327.43 1317020553.02
Plus: ending balance of cash equivalents
Less: beginning balance of cash
equivalents
246ZKTeco 2025 Half Year Report
Net increase in cash and cash equivalents -310175901.73 -350550464.30
(2) Net cash paid for acquiring subsidiaries in the current period
Unit: RMB
Amount
Including:
Including:
Including:
Other explanations:
(3) Net cash received from disposal of subsidiaries in the current period
Unit: RMB
Amount
Including:
Including:
Including:
Other explanations:
(4) Composition of cash and cash equivalents
Unit: RMB
Item Ending Balance Beginning Balance
I. Cash 904168425.70 1214344327.43
Including: Cash on hand 490485.81 772216.84
Bank deposit available for payment at
900488554.951212348031.02
any time
Other monetary funds available for
3189384.941224079.57
payment at any time
II. Ending balance of cash and cash
904168425.701214344327.43
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 313796140.25 211146874.14 Please refer to the note in
247ZKTeco 2025 Half Year Report
outstanding interest Note VII (1).receivable
Margin of bank acceptance Not available for use at any
77434579.9345703490.78
draft time
Not actually credited to the
Funds in transit 8514472.58 2140213.62
account
Total 399745192.76 258990578.54
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 896675533.17
Including: USD 111459618.68 7.1586 797894826.28
EUR 3086621.65 8.4024 25935029.75
HKD 3401876.92 0.9120 3102341.66
GBP 105921.40 9.8300 1041207.36
MYR 1273544.83 1.6950 2158696.91
INR 25172141.00 0.0838 2108680.46
COP 453849781.73 0.0018 795331.47
MXN 2153859.11 0.3809 820361.50
PEN 37936.99 2.0168 76510.98
TRL 2581729.89 0.1797 463828.53
ZAR 24160610.09 0.4031 9739432.45
THB 18198183.76 0.2197 3997843.53
AED 15697970.48 1.9509 30624808.29
IDR 4417727167.60 0.0004 1954115.34
CLP 179006971.00 0.0076 1363378.34
ARS 11863275.08 0.0060 71470.18
RUB 6558726.61 0.0913 598653.37
KRW 36485479.00 0.0053 192028.84
BRL 498543.12 1.3067 651467.78
SGD 634444.37 5.6179 3564245.03
KES 2024743.17 0.0554 112141.79
NGN 37368121.47 0.0046 173534.50
AUD 43754.17 4.6817 204843.90
JPY 131553215.37 0.0496 6524250.16
DZD 11400.00 0.0553 630.72
RSD 110.00 0.0716 7.88
MAD 410240.72 0.7924 325077.40
248ZKTeco 2025 Half Year Report
EGP 49198.50 0.1441 7087.79
CAD 248394.31 5.2358 1300542.93
PLN 216992.72 1.9826 430216.74
SAR 231848.77 1.9105 442941.31
Accounts receivable 530573045.77
Including: USD 53071928.82 7.1586 379920709.65
EUR 2005621.42 8.4024 16852033.42
HKD 449.00 0.9120 409.47
GBP 262548.24 9.8300 2580849.20
MYR 1632747.42 1.6950 2767556.14
INR 126050323.78 0.0838 10559286.73
COP 1092728669.40 0.0018 1914910.03
MXN 56376732.46 0.3809 21472760.41
PEN 331695.89 2.0168 668961.32
TRL 3920035.09 0.1797 704265.82
ZAR 10823011.05 0.4031 4362885.90
THB 50931514.36 0.2197 11188821.26
DNS 24285641.80 1.9509 47378298.05
IDR 19453076340.20 0.0004 8604776.48
CLP 368807420.00 0.0076 2808963.50
ARS 17705471.68 0.0060 106666.43
RUB 144000.00 0.0913 13143.72
KRW 1389610892.00 0.0053 7313741.54
BRL 3363336.17 1.3067 4395016.30
SGD 155776.03 5.6179 875134.16
NGN 406290768.69 0.0046 1886781.12
VND 3590687409.00 0.0003 985027.59
JPY 46117610.00 0.0496 2287156.75
PLN 466496.41 1.9826 924890.78
Other receivables 15402902.55
US Dollar 1029312.22 7.1586 7368434.44
EUR 132006.26 8.4024 1109169.36
HKD 166068.49 0.9120 151446.16
MYR 60286.94 1.6950 102188.18
INR 14614229.85 0.0838 1224239.96
COP 113070031.50 0.0018 198145.20
MXN 3281181.11 0.3809 1249735.71
PEN 29745.91 2.0168 59991.29
TRL 159608.30 0.1797 28674.91
ZAR 102353.73 0.4031 41260.02
THB 3665967.11 0.2197 805353.06
DNS 146878.96 1.9509 286542.77
IDR 70027600.00 0.0004 30975.66
CLP 44902006.00 0.0076 341989.04
ARS 13208275.47 0.0060 79573.12
RUB 921066.88 0.0913 84071.17
KRW 80670109.90 0.0053 424579.53
BRL 85000.00 1.3067 111073.16
SGD 61767.86 5.6179 347005.66
KES 458000.00 0.0554 25366.64
NGN 17227815.66 0.0046 80004.57
VND 1020358603.00 0.0003 279913.36
JPY 8863276.00 0.0496 439565.31
MMK 5438522.53 0.0034 18539.15
PHP 180000.00 0.1267 22799.30
249ZKTeco 2025 Half Year Report
BDT 2313087.40 0.0586 135431.71
XOF 12919684.00 0.0128 165172.27
EGP 123056.00 0.1441 17728.09
PLN 73207.17 1.9826 145142.89
SAR 15070.00 1.9105 28790.86
Accounts payable 49825972.24
US Dollar 4942038.22 7.1586 35378074.80
EUR 132545.99 8.4024 1113704.43
GBP 4520.00 9.8300 44431.60
MYR 3750.00 1.6950 6356.36
INR 6716376.18 0.0838 562633.56
COP 1280276.00 0.0018 2243.57
MXN 20195835.18 0.3809 7692186.32
PEN 37846.10 2.0168 76327.68
TRL 65930.85 0.1797 11845.01
ZAR 509382.60 0.4031 205338.25
THB 10499604.92 0.2197 2306591.59
DNS 948.15 1.9509 1849.72
IDR 2890819061.06 0.0004 1278710.44
CLP 70947743.00 0.0076 540362.29
ARS 6204286.97 0.0060 37377.66
RUB 13492.14 0.0913 1231.51
BRL 305173.09 1.3067 398782.83
NGN 24533838.81 0.0046 113933.14
MAD 68136.09 0.7924 53991.48
Other payables 5792804.55
US Dollar 203711.89 7.1586 1458291.92
EUR 39319.66 8.4024 330379.48
HKD 11769.00 0.9120 10732.74
GBP 42439.99 9.8300 417185.10
MYR 7030.50 1.6950 11916.91
INR 1552278.07 0.0838 130034.96
MXN 1510740.04 0.3809 575410.41
PEN 257.69 2.0168 519.71
TRL 372819.72 0.1797 66980.06
ZAR 241092.74 0.4031 97187.38
THB 5873630.67 0.2197 1290340.66
DNS 500.00 1.9509 975.44
CLP 25909771.00 0.0076 197337.68
ARS 5985735.71 0.0060 36061.00
KRW 1526997.80 0.0053 8036.83
SGD 79493.32 5.6179 446585.52
KES 379844.72 0.0554 21037.96
NGN 33209433.75 0.0046 154221.90
VND 50200412.00 0.0003 13771.40
JPY 1264489.00 0.0496 62711.07
MAD 46443.31 0.7924 36801.98
CAD 2400.00 5.2358 12565.92
EGP 2085291.11 0.1441 300417.89
PKR 665393.64 0.0252 16792.83
PLN 42725.47 1.9826 84708.89
MMK 3461250.28 0.0034 11798.91
Long-term loan 322931.51
Including: USD 10483.12 7.1586 75044.46
EUR 0.00 8.4024 0.00
250ZKTeco 2025 Half Year Report
HKD 0.00 0.9120 0.00
MYR 75213.43 1.6950 127489.03
ZAR 298671.36 0.4031 120398.02
Other explanations:
(2) Description of overseas operating entities including for important overseas operating entities disclosure
of their main overseas operating location recording currency and selection basis. Reasons for changes in the
recording currency should also be disclosed.□Applicable □ Not applicable
Recording
Name Main business place Selection basis
currency
Sales and procurement are mainly
ZKTECO CO. LIMITED Hong Kong US Dollar
priced in USD
Currency used in the place of
Armatura Tech Co.Ltd. Thailand THB
operation
Currency used in the place of
ZKTECO SECURITY L.L.C Dubai AED
operation
Currency used in the place of
ZKTECO EUROPE SL Spain EUR
operation
Currency used in the place of
ZK TECHNOLOGY LLC America US Dollar
operation
Currency used in the place of
ZKTECO USA LLC America US Dollar
operation
ZKTECO BIOMETRICS INDIA PRIVATE Currency used in the place of
India INR
LIMITED operation
Sales and procurement are mainly
ZKTECO PANAMA S.A. Panama US Dollar
priced in USD
Currency used in the place of
ZKTECO LATAM S.A DE C.V. Mexico MXN
operation
Currency used in the place of
ZK INTELLIGENT SOLUTIONS (PTY) LTD South Africa ZAR
operation
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
Item Amount in the Current Period
Interest on lease liabilities included in financial expenses 1677473.84
Total 1677473.84
(b) Simplified rental fees for short-term leases or low value asset leases
251ZKTeco 2025 Half Year Report
Item Amount in the Current Period
Short-term lease fee 1877944.88
Low-value asset lease fee 2057162.23
Total 3935107.11
(c) Total cash outflows related to the lease
Item Amount in the Current Period
Cash paid for repayment of principal and interest on lease liabilities 15293492.76
Simplified short-term lease payments and low-value asset lease payments
3935107.11
made
Total 19228599.87
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 2785089.04
Total 2785089.04
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 3501596.44 441089.43
2nd year 3052749.38 165827.50
3rd year 3039446.64 165827.50
4th year 2930341.95 152983.48
5th year 2930341.95 143809.18
Total undiscounted lease receivables
5716874.72143809.18
after five years
Reconciliation table of undiscounted lease receivables and net investment in leases
252ZKTeco 2025 Half Year Report
(3) Gains or losses from finance lease sales recognized as a manufacturer or dealer
□ Applicable □Not applicable
VIII. R&D expenditures
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Employee remuneration 75869647.82 81473986.07
Office allowance 869093.76 723170.03
Travel expense 1429082.97 2128700.33
Share-based payments 1373315.54 2908870.45
Software and technical service fees 9290419.57 4745229.55
Depreciation and amortization of right-
894401.61882806.79
of-use assets
R&D material costs 3100377.47 3182303.79
Depreciation and amortization 4036414.77 2581016.27
Others 7204429.70 7023924.92
Total 104067183.21 105650008.20
Including: Expensed R&D expenditures 104067183.21 105650008.20
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
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
Description of changes in the scope of consolidation caused by other reasons (for example establishing new subsidiaries liquidating
subsidiaries etc.) and their related situations:
S/N Company Name Establishment Date Registered Capital Shareholding ratio (%) Reason for Change
1 ZKTECO ROMANIA S.R.L. September 8 2022 250. RON 100% Cancellation
3. Others
X. Equity in other entities
1. Equity in subsidiaries
(1) Composition of the enterprise group
Unit: RMB
Name of Subsidiaries Registered Capital Main Registration Nature of Percentage of shares Acquisition
253ZKTeco 2025 Half Year Report
business place business method
Direct Indirect
place
1. Xiamen Zkteco
Biometric Software
38500000.00 Xiamen Xiamen 100.00% Acquisition
Identification development
Technology Co. Ltd.
2. Shenzhen ZKTeco
Biometric Sales of
1000000.00 Shenzhen Shenzhen 100.00% Acquisition
Identification goods
Technology Co. Ltd.
2.1.ZK by
100.001 America America Established 100.00%
INVESTMENTS INC. investment
2.1.1.ZK Sales of by
Not applicable America America 76.92%
TECHNOLOGY LLC goods investment
3. ZKTeco Sales Co. Sales of by
50000000.00 Dongguan Dongguan 100.00%
Ltd. goods investment
4. Hangzhou ZKTeco
by
Hanlian E-commerce 2000000.00 Hangzhou Hangzhou E-commerce 100.00%
investment
Co. Ltd.
5. ZKCserv
Software by
Technology Limited 1000000.00 Shenzhen Shenzhen 51.00%
development investment
Co. Ltd.Software
6. Dalian ZKTeo CO. by
3000000.00 Dalian Dalian development 100.00%
Ltd. investment
and sales
Software
7. XIAMEN ZKTECO by
100000000.00 Xiamen Xiamen development 100.00%
CO. LTD. investment
and sales
7.1.ZKTECO
VIETNAM Sales of by
4550000000.0022 Vietnam Vietnam 100.00%
TECHNOLOGY goods investment
COMPANY LIMITED
8. ZKTECO Production
by
(GUANGDONG) CO. 800000000.00 Dongguan Dongguan and sales of 100.00%
investment
LTD goods
9. Xi'an ZKTeco Co. Sales of
1060000.00 Xi'an Xi'an 100.00% Acquisition
Ltd. goods
10. ZKTeco Cloud
Brain-Computer Software by
20000000.00 Hangzhou Hangzhou 100.00%
(Hangzhou) development investment
Technology Co. Ltd.Hong Hong
11. ZKTECO CO. Sales of by
15000000.001 Kong Kong 100.00%
LIMITED goods investment
China China
11.1.ZKTECO
TURKEY
ELEKTRONIK Sales of by
1200000.0017 Turkey Turkey 88.09%
SANAYI VE goods investment
TICARET LIMITED
SIRKETI.
11.2.ZKTECO
Sales by
LATAM S.A. DE 4426000.008 Mexico Mexico 100.00%
services investment
C.V.Capital
11.3.ZK SOFTWARE
R&D increase
DE MEXICO S.A. DE 3748688.008 Mexico Mexico 100.00%
services and equity
C.V.investment
254ZKTeco 2025 Half Year Report
11.4.ZKTECO Sales by
1500000000.007 Columbia Columbia 100.00%
COLOMBIA SAS services investment
11.5.ZKTECO （M） Sales of
646000.0020 Malaysia Malaysia 51.00% Acquisition
SDN. BHD. goods
Capital
11.6.ZKTECO
Sales of increase
BIOMETRICS INDIA 132765240.0016 India India 99.15%
goods and equity
PRIVATE LIMITED
investment
11.7.ZKTECO Sales of
538500.002 Spain Spain 75.69% Acquisition
EUROPE SL goods
11.7.1.ZKTECO Sales by
60000.002 Ireland Ireland 75.69%
IRELAND LIMITED services investment
11.7.2.ZKTeco Sales of by
100000.002 Germany Germany 75.69%
Deutschland GmbH goods investment
11.7.3.ZKTECO Sales of by
350000.002 Italy Italy 71.37%
ITALIA S.R.L. goods investment
11.7.4.ZKTECO UK Sales of by
1500000.003 UK UK 75.69%
LTD goods investment
11.7.5.ZKTeco Polska Sales of by
400000.0011 Poland Poland 75.69%
Sp. z o.o. goods investment
11.8.ZKTECO PERU
SOCIEDAD Sales
1274336.0021 Peru Peru 100.00% Acquisition
ANONIMA services
CERRADA
11.9.ZKTECO THAI Sales of
10000000.005 Thailand Thailand 99.80% Acquisition
CO. LTD. goods
11.10.ZKTeco Chile Sales by
146370000.009 Chile Chile 100.00%
SpA services investment
11.10.1.SOLUCIONES
Sales by
INTEGRALES Y 60000000.009 Chile Chile 100.00%
services investment
SISTEMAS SpA
11.11.ZKTECO Sales of
300000.0014 Dubai Dubai 100.00% Acquisition
SECURITY L.L.C goods
11.12.ZKTECO Sales of
4000000.0025 Argentina Argentina 98.00% Acquisition
ARGENTINA S.A. goods
11.13.Limited Liability
Company "ZKTeco Sales of by
17850554.8018 Russia Russia 100.00%
biometrics and goods investment
security"
11.14.ZKTECO by
80000.001 America America Established 100.00%
Investment Inc. investment
11.14.1.ZKTECO USA Sales of by
America America 80.00%
LLC goods investment
11.14.2.Armatura Co. Sales of
118960000.0023 Korea Korea 90.00% Acquisition
Ltd. goods
11.14.3.ZKTeco Japan Sales of by
100000000.0024 Japan Japan 100.00%
Co. Ltd. goods investment
11.14.4.ARMATURA Sales of by
America America 100.00%
LLC. goods investment
11.14.5.RALVIE AI Sales of by
10000.001 Canada Canada 100.00%
INC. goods investment
11.15.PT. ZKTECO
Sales of by
BIOMETRICS 2657200000.006 Indonesia Indonesia 95.00%
goods investment
INDONESIA
11.16.ZK
INVESTIMENTOS 611440.0010 Brazil Brazil Established 99.68% Acquisition
DO BRASIL LTDA.
255ZKTeco 2025 Half Year Report
11.16.1 ZKTECO DO Sales of
1085403.0610 Brazil Brazil 74.76% Acquisition
BRASIL S.A. goods
Hong Hong
11.17.NGTECO Sales of by
10000.004 Kong Kong 100.00%
CO.LIMITED goods investment
China China
11.18. ZKTECO
Sales of by
BIOMETRIC 100000000.0015 Nigeria Nigeria 60.00%
goods investment
LIMITED
11.19. ZKTECO Sales of by
360000.001 Panama Panama 99.86%
PANAMA S.A. goods investment
11.20. ZK
INTELLIGENT South South Sales of by
100.00%
SOLUTIONS (PTY) Africa Africa goods investment
LTD
11.21. ZKTECO
Sales of by
BIOMETRICS 10910000.0012 Kenya Kenya 100.00%
goods investment
KENYA LIMITED
11.22 ZKTECO
BUSINESS Saudi Saudi Sales by
1000000.0019100.00%
SOLUTIONS Arabia Arabia services investment
COMPANY
12. Hubei ZKTeco Co. Sales of by
10000000.00 Wuhan Wuhan 100.00%
Ltd. goods investment
13. Wuhan ZKTeco
Sales of by
Perception Technology 1000000.00 Wuhan Wuhan 51.00%
goods investment
Co. Ltd.
14.ZKTECO SG
Sales of by
INVESTMENT PTE. 1000000.001 Singapore Singapore 100.00%
goods investment
LTD.
14.1.ZKTECO
Sales of by
SINGAPORE PTE. 500000.0026 Singapore Singapore 100.00%
goods investment
LTD.Production
14.2.Armatura Tech
602983200.005 Thailand Thailand and sales of 99.99% Acquisition
Co. Ltd.goods
14.3.ZKDIGIMAX Sales of by
20000000.001 Singapore Singapore 80.00%
PTE. LTD. goods investment
14.3.1.ZKDIGIMAX Sales of by
10000.001 Panama Panama 80.00%
PANAMA S.A. goods investment
14.3.2.ZKDIGIMAX Sales of by
10000000.007 Columbia Columbia 80.00%
COLOMBIA SAS goods investment
14.3.3.ZKDIGIMAX South South Sales of by
80.00%
(PTY) LTD Africa Africa goods investment
14.3.4.PT.
Sales of by
ZKDIGIMAX EXCEL 1001000000.006 Indonesia Indonesia 56.00%
goods investment
NOBLE
14.3.5 ZKTeco
Sales of by
Yunlian (Xiamen) 300000.001 Xiamen Xiamen 80.00%
goods investment
Technology Co. Ltd.
14.3.6.ZK
Sales of by
TECHNOLOGY 1515000.0013 Morocco Morocco 100.00%
goods investment
MOROCCO
14.3.7 ZKTECO Sales of by
120000.001 Egypt Egypt 100.00%
EGYPT LLC goods investment
Note: 1. USD
2. EUR
3. GBP
256ZKTeco 2025 Half Year Report
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. PEN
22. VND
23. KRW
24. JPY
25. ARS
26. SGD
Explanation of 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:
For important structured entities included in the consolidation scope the basis for control is:
Basis for determining whether the Company is an agent or principal:
Other explanations:
(2) Important partly-owned subsidiaries
Unit: RMB
Profit and loss Dividends declared for
Minority shareholding attributable to minority distribution to minority Closing balance of
Name of Subsidiaries
ratio shareholders in current shareholders in the minority interest
period current period
ZK TECHNOLOGY
23.08%18869995.018615142.8617592371.25
LLC
Explanation of the fact that shareholding percentage is different from the proportion of voting rights for minority shareholders in the
subsidiaries:
Other explanations:
257ZKTeco 2025 Half Year Report
(3) Main financial information of important partly-owned subsidiaries
Unit: RMB
Ending Balance Beginning Balance
Name of Non-
Non-current Current Non-current Total Non-current Current
Subsidiaries Current assets Total assets Current assets Total assets current Total liabilities
assets liabilities liabilities liabilities assets liabilities
liabilities
ZK
TECHNOLOGY 110488348.35 4712518.83 115200867.18 51472839.31 2347628.72 53820468.03 70297290.30 1700956.02 71998246.32 44197796.74 390771.06 44588567.80
LLC
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Name of Total Cash flow from Total Cash flow from
Subsidiaries Operating revenue Net profit comprehensive operating Operating revenue Net profit comprehensive operating
income activities income activities
ZK
TECHNOLOGY 104110346.53 62899983.41 62687863.49 63050126.83 56247880.47 31949659.82 32228136.86 38230718.47
LLC
Other explanations:
258ZKTeco 2025 Half Year Report
2. Transactions resulting in change of owners' equity in subsidiaries and the subsidiaries still being under
control
(1) Change of owners' equity in subsidiaries
The shareholders of ZKTECO ARGENTINA S.A. a subsidiary of the Company are ZKTECO CO. LIMITED and Marcelo Alfredo
Sosa with ZKTECO CO. LIMITED holding 24000 shares (60% equity stake) and Marcelo Alfredo Sosa holding 16000 shares (40%
equity stake). On June 6 2025 Marcelo Alfredo Sosa transferred 800 shares of ZKTECO ARGENTINA S.A. to Lorenzo Antonio
HERNANDEZ JAIMES and the remaining 15200 shares to ZKTECO CO. LIMITED. Following the transfer the equity stake of
ZKTECO CO. LIMITED in ZKTECO ARGENTINA S.A. was 98% and that of Lorenzo Antonio HERNANDEZ JAIMES in
ZKTECO ARGENTINA S.A. was 2%. The agreed price for this share transaction was 1600000.00 Pesos of which ZKTECO CO.LIMITED paid ARS 152000.00 to Marcelo Alfredo Sosa and Lorenzo Antonio HERNANDEZ JAIMES paid ARS 80000 to Marcelo
Alfredo Sosa. As of June 30 2025 the payment remains outstanding.
(2) Effect of transactions on minority equity and owners' equity attributable to the parent company
Unit: RMB
Acquisition cost/disposal consideration 9157.21
--Cash 9157.21
-- Fair value of non-cash assets
Total cost/disposal consideration 9157.21
Less: Net assets of the subsidiaries calculated based on the
-487392.21
proportion of assets acquired/disposed
Difference 496549.42
Including: Adjustment to the capital reserves 496549.42
Adjustment to surplus reserve
Adjustment to undistributed profit
Other explanations:
3. Equity in joint ventures or associates
(1) Summary financial information of unimportant joint ventures and associated enterprises
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Joint venture:
The total number of the following items
calculated based on shareholding ratio
Associates:
Total investment book value 29216116.25 28982092.23
The total number of the following items
calculated based on shareholding ratio
259ZKTeco 2025 Half Year Report
-- Net profit -389620.58 -1006921.81
-- Other comprehensive income 33632.60 91638.47
--Total comprehensive incomes -355987.98 -915283.34
Other explanations:
(2) Description of significant limitations on the ability of joint ventures or associates to transfer funds to the
Company
None
(3) 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. -871279.86 -664696.27 -1535976.13
PT. ZKTECO SECURITY
-473315.6032693.35-440622.25
INDONESIA
Other explanations:
(4) Unrecognized commitments related to joint venture investments
None
(5) 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
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
260ZKTeco 2025 Half Year Report
Deferred Assets-
1420041.4433318.641386722.80
income related
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 1640887.62 4790479.66
Other explanations:
None
XII. Risks Related to 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
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
261ZKTeco 2025 Half Year Report
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".
(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 loss to the Company caused by the counterparty's failure to perform its contractual
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
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
262ZKTeco 2025 Half Year Report
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 237011100.20 - - 237011100.20
Accounts payable 205803262.63 - - 205803262.63
Other payables 57377148.21 - - 57377148.21
Non-current
liabilities due 25880992.79 - - 25880992.79
within one year
Other current
4543371.32--4543371.32
liabilities
Lease liabilities - 36421220.32 - 36421220.32
Long-term loan - 6455064.17 - 6455064.17
Short-term loan 74552050.16 74552050.16
Total 605167925.31 42876284.49 0.00 648044209.80
Continued:
Beginning 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
22822648.87--22822648.87
due within one year
Other current
10022833.77--10022833.77
liabilities
Lease liabilities - 35667036.05 - 35667036.05
Long-term loan - 7246091.36 - 7246091.36
Total 438865380.41 42913127.41 - 481778507.82
263ZKTeco 2025 Half Year Report
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 June 30 2025 the Company's asset liability ratio was 19.21% (December
312024:15.86%).
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
781091002.96781091002.96
assets
1. Financial assets
measured at fair value
and whose changes are 781091002.96 781091002.96
included in the current
profits and losses
(1) Debt instrument
781091002.96781091002.96
investment
II. Continuous fair
--------
value measurement
2. Basis for determining the market value of continuous and non-continuous first 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
The 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.
264ZKTeco 2025 Half Year Report
4. Others
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 29.83% 29.83%
Co. Ltd.Explanation of 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
Important joint ventures or associates of the Company are detailed in the notes.Related party transactions with the Company occurred in the current period the information of other joint ventures or associates that
have formed balances through related party transactions with the Company in the early stage is as follows:
Name of joint venture or associate Relationship with the enterprise
ZKTECO SMART CITY (THAILAND) CO. LTD. Joint venture
PT. ZKTECO SECURITY INDONESIA Joint venture
ZKTECO SOLUTIONS INC. Joint venture
CV Squared Inc. Joint venture
Guizhou Zhongjiang Intelligent Technology Co. Ltd. Joint venture
Xiamen Xingniu Yunyu Venture Capital Partnership Enterprise
Joint venture
(Limited Partnership)
Other explanations:
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 25.22% stake in Shenzhen Elite Lixin
Consulting Enterprise (Limited Partnership) which in turn held
1.81% of the Company's shares as of June 30 2025.
Sibolan (Xiamen) Life Science and Technology Co. Ltd. A company controlled by the actual controller
Dongguan LX Investment Partnership Enterprise (Limited
Holding a 5.04% stake in the Company.Partnership)
Che Quanhong Chairman
265ZKTeco 2025 Half Year Report
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
Yang Xianfeng Supervisor
Other explanations:
None
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
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
ZKTECO SMART
CITY
Purchasing goods 24752.62 Yes 86270.11
(THAILAND)
CO. LTD.PT. ZKTECO
Marketing
SECURITY 124235.43 Yes
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
PT. ZKTECO SECURITY
Selling goods 1176633.58 867424.05
INDONESIA
ZKTECO SMART CITY
Selling goods 906213.51 411149.62
(THAILAND) CO. LTD.PSD SECURITY S.L. Selling goods 2598729.23 2331543.67
ZKTECO SOLUTIONS INC. Selling goods 3657871.22 4751125.29
Description of related party transactions for purchasing and selling goods providing and receiving labor services
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 2025 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:
266ZKTeco 2025 Half Year Report
Unit: RMB
Custody
Termination Pricing Basis
Name of Name of Type of Start Date of Income/Contrac
Date of for Custody
Principal/Outso Trustee/Contrac Entrusted/Contr Entrusting/Cont ting Income
Entrusting/Cont Income/Contrac
urcer tor acted Assets racting Recognized in
racting ting Income
Current Period
Description of related custody/contracting situation
The Company's Entrusted Management/Outsourcing Situation:
Unit: RMB
Custody
Termination Pricing Basis
Name of Name of Entrusted/Outs Start Date of Fee/Contracting
Date of for Custody
Principal/Outso Trustee/Contrac ourced Asset Entrusting/Outs Fee Recognized
Entrusting/Outs Fee/Outsourcin
urcer tor Type ourcing in Current
ourcing g Fee
Period
Description of 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 94118.54 140413.28
INDONESIA
Sibolan (Xiamen) Life
Science and Technology Co. Houses and buildings 11009.16 0.00
Ltd.Dongguan LX Investment
Partnership Enterprise Houses and buildings 2293.60 0.00
(Limited Partnership)
The Company as lessee:
Unit: RMB
Variable lease
Simplified rental
payments not
fees for short-term Interest expense on
included in the Increased right-of-use
leases and low value Rent paid lease liabilities
measurement of assets
asset leases (if assumed
Types of lease liabilities (if
Name of applicable)
leased applicable)
lessor
assets Amount Amount Amount Amount Amount Amount Amount
Amount Amount Amount
incurred incurred incurred incurred in incurred incurred incurred
incurred in incurred in incurred in
in the in the in the the in the in the in the
the current the current the previous
previous current previous previous current previous current
period period period
period period period period period period period
Houses
Che
and 361933.99 0.00 542901.00
Quanhong
buildings
Houses
Che -
and 15000.00 0.00 30000.00 656283.06 12249.36
Quanzhong 4041291.00
buildings
267ZKTeco 2025 Half Year Report
Information of related leasing situation
(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
Description of 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
3345620.953787829.58
personnel
(8) Other related party transactions
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 4842473.39 380384.22 6058310.39 781857.75
receivable
INDONESIA
Accounts ZKTECO SMART 1274660.17 64375.49 1301360.13 65713.17
268ZKTeco 2025 Half Year Report
receivable CITY
(THAILAND)
CO. LTD.ZKTECO
Accounts
SOLUTIONS 19763037.08 1245964.51 19486553.08 1051921.51
receivable
INC.Accounts PSD SECURITY
1406173.5870308.68
receivable S.L.Other receivables Che Quanhong 60322.00 767631.62
Other receivables Yang Xianfeng 28208.34 27771.62
Prepayment Che Quanzhong 15000.00
Prepayment Che Quanhong 180967.00
(2) Accounts payable
Unit: RMB
Project Name Related party Closing book balance Opening book balance
ZKTECO SMART CITY
Accounts payable 6790.93 1709.19
(THAILAND) CO. LTD.Accounts payable PSD SECURITY S.L. 2484.76
PT. ZKTECO SECURITY
Other payables 54834.88 87475.64
INDONESIA
Contract liabilities CV Squared Inc. 1275140.00 1275140.00
Dongguan LX Investment
Contract liabilities Partnership Enterprise 3500.00
(Limited Partnership)
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
Unlocked in current Expired in current
Grant object Current grant Current exercise period period
category
Quantity Amount Quantity Amount Quantity Amount Quantity Amount
Directors
senior
management
middle 3234970.00 42863352.50 0 0.00 0 0.00 0 0.00
managers
and core
technology
269ZKTeco 2025 Half Year Report
(business)
backbone
employees of
the Company
(including
branches and
subsidiaries)
Total 3234970.00 42863352.50 0 0.00 0 0.00 0 0.00
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 remaining
unlocking period for
the Company's
Directors senior outstanding 2025
The exercise price for
management middle restricted share
both the restricted
managers and core contract is March 28
shares granted by the
technology (business) 2025 - March 27 2028.Company and the
backbone employees of The remaining
employee stock
the Company unlocking period for
ownership plan was
(including branches the Company's
RMB 13.25/share.and subsidiaries) employee stock
ownership plan is May
23 2025 - May 22
2028.
Other explanations:
None
2. Equity settled share-based payments
□Applicable □ Not applicable
Unit: RMB
For the Company's employee stock ownership plan the fair
value is determined by the closing price of the Company's
Method for determining the fair value of equity instruments on
shares on the grant date. For restricted shares the fair value of
the grant date
stock options is calculated using the Black-Scholes model (B-S
model).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
5569086.64
recognized in capital reserve
270ZKTeco 2025 Half Year Report
The total amount of expenses recognized for equity settled
5573302.96
share-based payments in this period
Other explanations:
On January 23 2025 the Company held the 15th Session of the Third Board Meeting and the 14th Session of the Third Supervisory
Board Meeting. On February 11 2025 the Company held the First Extraordinary General Meeting of 2025 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
Company's General Meetings to Authorize the Board of Directors to Handle Matters Related to Equity Incentive". On March 28 2025
the Company held the 16th Session of the Third Board Meeting and the 15th Session of the Third Supervisory Board Meeting
deliberated and approved the "Proposal on Adjusting the List of Incentive Objects of Restricted Share Incentive Plan in 2025 and the
Number of Granted Objects" and the "Proposal on Granting Restricted Shares to the Incentive Objects of 2025 Restricted Share
Incentive Plan". The Board of Supervisors verified the list of incentive objects for this grant of restricted shares and issued verification
opinions.On January 23 2025 the Company held the 15th Session of the Third Board Meeting and the 14th Session of the Third Supervisory
Board Meeting. On February 11 2025 the Company held the First Extraordinary General Meeting of 2025 deliberated and approved
the "Proposal on the Company's 2025 Employee Stock Ownership Plan (Draft) and Its Abstract" the "Proposal on the Company's 2025
Employee Stock Ownership Plan Management Measures" and the "Proposal on Submitting the Company's General Meetings to
Authorize the Board of Directors to Handle Matters Related to the 2025 Employee Stock Ownership Plan" and agreed to implement
the 2025 Employee Stock Ownership Plan. The Board of Supervisors verified matters related to the Company's 2025 Employee Stock
Ownership Plan and issued verification opinions. The 1113800 shares of company stock held in the Company's dedicated securities
account for share repurchases were transferred by way of non-trading transfer to the Company's 2025 employee stock ownership plan
securities account on May 22 2025.
3. Cash settled share-based payments
□ Applicable □ Not applicable
4. Share-based payment fees in the current period
□Applicable □ Not applicable
Unit: RMB
Grant object category Equity settled share-based payment fees Cash settled share-based payment fees
Directors senior management middle
managers and core technology (business)
5573302.96
backbone employees of the Company
(including branches and subsidiaries)
Total 5573302.96
Other explanations:
5. Modification and termination of share-based payment
None
271ZKTeco 2025 Half Year Report
6. Others
None
XVI. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
2. Contingencies
(1) Significant contingencies on the balance sheet date
(2) The Company shall also provide a description if there are no important contingencies that need to be
disclosed
There are no significant contingencies that need to be disclosed by the Company.
3. Others
XVII. Events after the Balance Sheet Date
1. Important non adjustment matters
Unit: RMB
Number of impacts on The reason for the inability to
Item Content financial position and estimate the number of
operating results impacts
2. Profit distribution
None
3. Sales return
None
4. Description of 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
272ZKTeco 2025 Half Year Report
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) 398160061.25 471787442.13
1-2 years 44298507.86 35016611.18
2-3 years 16685053.55 19976746.03
Over 3 years 15695726.70 3550379.93
3-4 years 12506142.42 1814634.08
4-5 years 1736255.14 631687.17
Over 5 years 1453329.14 1104058.68
Total 474839349.36 530331179.27
273ZKTeco 2025 Half Year 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
Accrual Book value Accrual Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable with
individual 5146279.34 1.08% 5146279.34 100.00% 0.00 4702784.12 0.89% 4702784.12 100.00% 0.00
provision for
bad debts
Including:
Accounts
receivable with
insignificant
single amount
5146279.341.08%5146279.34100.00%0.004702784.120.89%4702784.12100.00%0.00
and bad debt
reserve
withdrawn
separately
Receivable with
combined
469693070.0298.92%9833013.192.09%459860056.83525628395.1599.11%9191334.341.75%516437060.81
provision for
bad debt reserve
Including:
Related party
350197587.1573.75%350197587.15390141325.0073.56%0.00%390141325.00
portfolio
Aging portfolio 119495482.87 25.17% 9833013.19 8.23% 109662469.68 135487070.15 25.55% 9191334.34 6.78% 126295735.81
Total 474839349.36 100.00% 14979292.53 3.15% 459860056.83 530331179.27 100.00% 13894118.46 2.62% 516437060.81
274ZKTeco 2025 Half Year Report
Category name of bad debt reserve made individually single item provision
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Hainan Jialing
Digital Expected non-
2032000.002032000.002032000.002032000.00100.00%
Technology recoverable
Co. Ltd.Noble IT
Expected non-
Solutions Co. 421686.28 421686.28 419938.15 419938.15 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 376995.64 376995.64 375432.78 375432.78 100.00%
recoverable
Securit
Shenzhen
Xuhui
Expected non-
Information 270358.32 270358.32 270358.32 270358.32 100.00%
recoverable
Technology
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-
204017.72204017.72203171.95203171.95100.00%
INTERNACIO recoverable
NAL LTDA
Shanghai Leqi
Automation Expected non-
261950.00261950.00171950.00171950.00100.00%
Technology recoverable
Co. Ltd.Wanqiao
Information Expected non-
165900.00165900.00165900.00165900.00100.00%
Technology recoverable
Co.Ltd.Tianjin Eagle
Eye Expected non-
162281.00162281.00162281.00162281.00100.00%
Biotechnology recoverable
Co. Ltd.One Network Expected non-
158290.96158290.96100.00%
(PVT) Ltd. recoverable
Baoneng Urban
Development
Expected non-
and 155292.00 155292.00 155292.00 155292.00 100.00%
recoverable
Construction
Group Co. Ltd.WESTGATE
Expected non-
TECHNOLOGI 141295.59 141295.59 100.00%
recoverable
ES LIMITED
PONTO RHJ Expected non-
101554.91101554.91101133.91101133.91100.00%
EIRELI - ME recoverable
Hainan
Zhongkong
Expected non-
IOT 98773.74 98773.74 98773.74 98773.74 100.00%
recoverable
Technology
Co. Ltd.
275ZKTeco 2025 Half Year Report
Expected non-
U.S. Plast 82681.83 82681.83 100.00%
recoverable
True Security
Expected non-
Consultant 79828.27 79828.27 100.00%
recoverable
Limited
INTELLISMA
RT Expected non-
75607.5975607.5975294.1575294.15100.00%
TECHNOLOG recoverable
Y INC.Qianxinan
Mengku
Expected non-
Business 74672.00 74672.00 74672.00 74672.00 100.00%
recoverable
Service Co.Ltd.Rahat Telecom Expected non-
74145.8474145.84100.00%
LLC recoverable
KWK
CELLPHONE
Expected non-
AND 38065.52 38065.52 37907.72 37907.72 100.00%
recoverable
ACCESSORIE
S
ELECTRONIC
Expected non-
A GHANA 23253.40 23253.40 15998.40 15998.40 100.00%
recoverable
LIMITED
Nanjing Xianji
Expected non-
Technology 15570.00 15570.00 15570.00 15570.00 100.00%
recoverable
Co. Ltd.Expected non-
Others 130.00 130.00 9686.73 9686.73 100.00%
recoverable
Total 4702784.12 4702784.12 5146279.34 5146279.34
Category name of bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year 100240685.41 5012034.30 5.00%
1-2 years 13318273.76 1331827.38 10.00%
2-3 years 3496245.98 1048873.79 30.00%
Over 3 years 2440277.72 2440277.72 100.00%
Total 119495482.87 9833013.19
Explanation of the basis for determining the portfolio:
If the bad debt reserve of accounts receivable is made according to the general model of expected credit losses:
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category
Balance Return or Redeem/redem
Ending Balance
Provision Others
reversal ption
Withdrawing
4702784.12545799.2297177.50-5126.505146279.34
bad debt
276ZKTeco 2025 Half Year Report
reserves by
individual item
Bad debt
reserve
9191334.34629374.8512304.009833013.19
withdrawn by
portfolio
Total 13894118.46 1175174.07 97177.50 0.00 7177.50 14979292.53
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 0.00
Important accounts receivable verification status:
Unit: RMB
Whether the
Verification and
payment is
Nature of accounts cancellation
Company name Write-off amount Write-off reason incurred due to
receivable programs that have
related
been performed
transactions
Explanation of accounts receivable verification:
(5) Accounts receivable and contract assets from top five borrowers classified based on the ending balance
Unit: RMB
Ending balance of
Proportion in the
bad debt reserves
Ending balance of total ending
Ending balance of for accounts
Ending balance of accounts balance of
Company name accounts receivable and
contract assets receivable and accounts
receivable impairment
contract assets receivable and
provision for
contract assets
contract assets
Customer 1 210058645.29 210058645.29 44.24%
Customer 2 43837191.34 43837191.34 9.23%
Customer 3 20692755.60 20692755.60 4.36%
Customer 4 18270754.97 18270754.97 3.85% 1171350.37
Customer 5 18156398.23 18156398.23 3.82%
Total 311015745.43 311015745.43 65.50% 1171350.37
277ZKTeco 2025 Half Year Report
2. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Interest receivable 46922.03 46922.03
Dividends receivable 19000000.00
Other receivables 23486783.20 28421132.37
Total 42533705.23 28468054.40
(1) Interest receivable
1) Classification of interest receivable
Unit: RMB
Item Ending Balance Beginning Balance
Interest on related party loans 46922.03 46922.03
Total 46922.03 46922.03
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 Return or Write-off or Ending Balance Balance Provision Other changes
reversal cancellation
The amount of bad debt reserves recovered or reversed in the current period is significant:
Unit: RMB
The basis and
rationality for
Accounts recovered or determining the
Company name Reason for reversal Recovery method
transferred back provision ratio of
original bad debt
reserves
Other explanations:
278ZKTeco 2025 Half Year Report
5) Interests receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important interests receivable verification
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanation of writing off:
Other explanations:
(2) Dividends receivable
1) Classification of dividends receivable
Unit: RMB
Item (or the investee) Ending Balance Beginning Balance
XIAMEN ZKTECO CO. LTD. 19000000.00 0.00
Total 19000000.00
2) Important dividends receivable with an aging of over 1 year
Unit: RMB
Whether impairment
Item (or the investee) Ending Balance Aging Reasons for unrecovery occurred and its
judgment basis
3) Disclosure by bad debt accrual method
□ Applicable □Not applicable
4) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category Return or Write-off or Ending Balance Balance Provision Other changes
reversal cancellation
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
279ZKTeco 2025 Half Year Report
Other explanations:
5) Dividends receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Information on important dividends receivable verification
Unit: RMB
Whether the
Verification and
payment is
cancellation
Company name Payment nature Write-off amount Write-off reason incurred due to
programs that have
related
been performed
transactions
Explanation of writing off:
Other explanations:
(3) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 12191872.35 15954593.23
Guarantee deposit 1599208.02 2035338.71
Reserve funds and loans 11294991.90 1572655.42
Collection and payment on behalf of
521054.122180706.91
others
Withholding and paying social security
601969.53723607.47
and provident fund on behalf of others
Export tax refund 1913187.28 5921725.86
Others 1981900.67 51379.06
Total 30104183.87 28440006.66
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 18062969.91 16527198.43
1-2 years 540417.40 920284.48
2-3 years 2706186.02 8880717.85
Over 3 years 8794610.54 2111805.90
3-4 years 7828560.84 388876.50
4-5 years 171853.89 249210.72
Over 5 years 794195.81 1473718.68
Total 30104183.87 28440006.66
280ZKTeco 2025 Half Year Report
3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Book value Accrual Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Withdrawing
bad debt
reserves by 6580000.00 21.86% 6580000.00 100.00% 0.00
individual
item
Including:
Other
receivables
with
significant
individual
6580000.0021.86%6580000.00100.00%0.00
amounts and
separate
provision for
bad debt
reserves
Bad debt
reserve
23524183.8778.14%37400.670.16%23486783.2028440006.66100.00%18874.290.07%28421132.37
withdrawn by
portfolio
Including:
Related party
15794264.6952.47%15794264.6915577107.5254.77%15577107.52
portfolio
Portfolio of
deposits
security 7355912.47 24.43% 7355912.47 12485413.43 43.90% 12485413.43
deposits
employee
281ZKTeco 2025 Half Year Report
loans export
tax refunds
etc.Aging
374006.711.24%37400.6710.00%336606.04377485.711.33%18874.295.00%358611.42
portfolio
Total 30104183.87 100.00% 6617400.67 21.98% 23486783.20 28440006.66 100.00% 18874.29 0.07% 28421132.37
282ZKTeco 2025 Half Year Report
Category name of bad debt reserve made individually: other receivables with significant individual amounts and separate provision
for bad debt reserves
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Wuhan
ZKTeco
Long-term non-
Perception 6580000.00 6580000.00 100.00%
recoverable
Technology
Co. Ltd.Total 6580000.00 6580000.00
Category name of bad debt reserve made by portfolio: related party portfolio deposits security deposits employee loans and other
portfolios and aging portfolios
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 15794264.69
Portfolio of deposits security
7355912.47
deposits employee loans etc.Aging portfolio 374006.71 37400.67 10.00%
Total 23524183.87 37400.67
Explanation of the basis for determining the portfolio:
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
18874.290.000.0018874.29
12025
Balance as of January
1 2025 in the current
period
- Transfer to stage 2 -18874.29 18874.29 0.00
Provision in current
18526.386580000.006598526.38
period
Balance as of June 30
0.0037400.676580000.006617400.67
2025
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
283ZKTeco 2025 Half Year Report
Current period change amount
Beginning
Category Return or Write-off or Ending Balance Balance Provision Others
reversal cancellation
Other
receivables
with significant
individual
amounts and 0.00 6580000.00 6580000.00
separate
provision for
bad debt
reserves
Other
receivables
with provision
for bad debt
reserves based 18874.29 18526.38 37400.67
on a
combination of
credit risk
characteristics
Total 18874.29 6598526.38 6617400.67
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 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
No
Description for writing off other receivables:
6) Other accounts receivable with the top five ending balances collected by the debtor
Unit: RMB
284ZKTeco 2025 Half Year Report
Proportion to the
total ending
Ending balance of
Company name Nature of payment Ending Balance Aging balance of other
bad debt reserve
accounts
receivable
Customer 1 Current account 12161613.08 Within 1 year 40.40%
Reserve funds and
Customer 2 6580000.00 Over 3 years 21.86% 6580000.00
loans
Customer 3 Export tax refund 1913187.28 Within 1 year 6.36%
Reserve funds and
Customer 4 1780000.00 Over 3 years 5.91%
loans
Customer 5 Others 503851.75 Over 3 years 1.67%
Total 22938652.11 76.20% 6580000.00
7) Being reported as other receivables due to centralized fund management
Unit: RMB
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
1366223377.311366223377.311336607464.411336607464.41
subsidiaries
Investment in
affiliated and 23805153.50 23805153.50 23760577.92 23760577.92
joint ventures
Total 1390028530.81 1390028530.81 1360368042.33 1360368042.33
(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
impairment Additional Reduced Impairment Others (book value) impairment value)
provision investment investment provision provision
Shenzhen
ZKTeco
Biometric
12608518.1412608518.14
Identification
Technology Co.Ltd.Hangzhou
ZKTeco Hanlian
2103348.405162.842108511.24
E-commerce Co.Ltd.ZKTECO CO. 197126656.03 19928572.32 217055228.35
285ZKTeco 2025 Half Year Report
LIMITED
XIAMEN
ZKTECO CO. 107075312.69 683045.04 107758357.73
LTD.Xiamen Zkteco
Biometric
Identification 38986734.80 32697.99 39019432.79
Technology Co.Ltd.ZKCserv
Technology 510000.00 510000.00
Limited Co. Ltd.ZKTECO
(GUANGDONG) 806159928.79 1539853.26 807699782.05
CO. LTD
Dalian ZKTeo
4232906.9024093.264257000.16
CO. Ltd.Xi'an ZKTeco
518684.8151052.33569737.14
Co. Ltd.Hubei ZKTeco
3518105.7627535.153545640.91
Co. Ltd.ZKTeco Sales
21523355.44318375.1621841730.60
Co. Ltd.ZKTECO SG
INVESTMENT 137943912.65 2705525.55 140649438.20
PTE. LTD
ZKTeco Cloud
Brain-Computer
(Hangzhou) 4300000.00 4300000.00 8600000.00
Technology Co.Ltd.Total 1336607464.41 29615912.90 1366223377.31
(2) Investment in affiliated and joint ventures
Unit: RMB
Increase or decrease in the current period
Investment
Beginning profit or Cash Ending
Beginning Other Ending
balance of loss Changes dividends balance of
Investor balance (book Additional Reduced comprehensive Impairment balance (book
impairment recognized in other or profits Others impairment
value) investment investment income provision value)
provision under equities declared provision
adjustments
equity to pay
method
I. Joint ventures
II. Joint venture
Xiamen
Xingniu
Yunyu
Venture
Capital 23760577.92 44575.58 23805153.50
Partnership
Enterprise
(Limited
Partnership)
286ZKTeco 2025 Half Year Report
Subtotal 23760577.92 44575.58 23805153.50
Total 23760577.92 44575.58 23805153.50
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□ Applicable □Not applicable
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
Reasons for significant discrepancies between the information used in the Company's impairment tests of previous year and the actual
situation of that year
(3) Other descriptions
4. Operating revenue and operating cost
Unit: RMB
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 389272089.20 270233983.91 647059913.82 496879095.81
Other businesses 10336194.99 4165603.22 759633.50
Total 399608284.19 274399587.13 647819547.32 496879095.81
Breakdown information of operating revenue and operating costs:
Unit: RMB
Division 1 Division 2 Total
Contract
classification Operating Operating Operating Operating Operating Operating Operating cost Operating cost
revenue cost revenue cost revenue revenue
Business type
Including:
Digital
identity 31123848.57 28093347.65 31123848.57 28093347.65
authentication
Smart office 21298007.76 13855022.08 21298007.76 13855022.08
Smart space 326871051.23 219375961.01 326871051.23 219375961.01
Smart
9979181.648909653.179979181.648909653.17
business
Others 10336194.99 4165603.22 10336194.99 4165603.22
Classification
by region of
operation
Including:
Domestic
sales 170338013.93 135286061.43 170338013.93 135286061.43
Overseas
sales 229270270.26 139113525.70 229270270.26 139113525.70
Market or
customer type
Including:
287ZKTeco 2025 Half Year Report
Distribution
334946045.93233306891.16334946045.93233306891.16
sales
Direct sales 54326043.27 36927092.75 54326043.27 36927092.75
Others 10336194.99 4165603.22 10336194.99 4165603.22
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total 399608284.19 274399587.13 399608284.19 274399587.13
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:
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 19000000.00 16000000.00
288ZKTeco 2025 Half Year Report
investment accounted with cost method
Long-term equity investment income
44575.58-110397.50
accounted by equity method
Gains from remeasuring the remaining
0.00
equity at fair value after loss of control
Forward foreign exchange settlement and
285803.2368155.00
sales contract
Financial products 881314.46 94111.46
Total 20211693.27 16051868.96
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-
-156798.86
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
1606387.41
national policies and regulations enjoyed
according to determined standards and
have a continuous impact on the
Company's profits and losses)
Profits and losses from fair value
changes arising from the holding of
financial assets and financial liabilities
by non-financial enterprises as well as Mainly due to investment income and
the gains and losses arising from the 9451208.11 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
Reversal of the provision on receivables
with impairment test conducted on an 97177.50
individual basis
Other non-operating income and
-1139074.93
expenses other than the above items
Less: income tax impact 832560.81
Minority interest impact (after tax) 221695.63
Total 8804642.79 --
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.
289ZKTeco 2025 Half Year Report
Description on defining the non-recurring profit and loss items listed in the "Explanatory Announcement for Information Disclosure
by Companies that Issue Securities to the Public No. 1 - Non-recurring Profits and Losses" as recurring profit and loss items
□ Applicable □Not applicable
2. Net return on assets and earnings per share
Earnings per share
Profit during the reporting Weighted average return on
period net assets Basic earnings per share Diluted earnings per share
(RMB/share) (RMB/share)
Net profit attributable to
ordinary shareholders of the 2.75% 0.3999 0.3996
Company
Net profit attributable to
ordinary shareholders of the
Company after deducting 2.49% 0.3622 0.3618
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
(2) Differences in net profit and net assets in financial reports disclosed in accordance with foreign accounting
standards and Chinese accounting standards
□ Applicable □Not applicable
(3) Explanation of the reasons for differences in accounting data between domestic and foreign accounting
standards. If differences in data audited by an overseas audit institution have already been adjusted the
name of the overseas institution shall be indicated
□ Applicable □Not applicable
4. Others
290
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