ZKTeco 2025 Annual Report
ZKTECO CO. LTD.2025 Annual Report
Announcement No.: 2026-030
April 2026
1ZKTeco 2025 Annual Report
A Letter to Shareholders
AI empowers a better life reshaping a new realm of living
In 2025 amidst the wave of technological revolution and industrial transformation ZKTeco has always adhered to its original
aspiration of "technology for good". With AI cognitive space technology as the core driving force it has promoted the deep integration
of AI with various business segments continuously achieving breakthroughs in core areas such as smart space smart office and digital
identity authentication. Furthermore it has actively practiced in scenarios like smart commercial and smart living using technology to
reshape the way people connect with space scenarios and life outlining a new realm of existence that is warmer and more valuable.Every step of growth this year is inseparable from the trust and companionship of all shareholders. We hereby present a steadily
improving performance to express our most sincere gratitude to all shareholders!
In 2025 the Company achieved an operating revenue of RMB 2132.7897 million a YoY increase of 7.11% and a net profit
attributable to shareholders of the companies of RMB 214.7104 million a YoY increase of 17.30%. The net profit after deducting the
impact of share-based payment was RMB 261.8301 million a YoY increase of 24.99%.In 2025 the Company continuously navigated various uncertainties with two engine drivers: the digital transformation of its main
business and the development of innovative businesses. Its main business fully embraced digital cloud services and its smart
commercial business is poised for growth. The Company steadily carried out industry chain collaboration and frontier technology
exploration. The Company completed the strategic acquisition of Longzhiyuan Company to further optimize its product layout enhance
its scenario expansion capabilities and achieve complementary business resources. Meanwhile the Company prudently advanced the
integration of audio-visual AI human-computer interaction and brain-computer interface AI intention core technologies with the
company's multimodal BioCV core technologies. Transitioning from multimodal BioCV's "person recognition" to brain-computer
interface's "mind recognition" this will involve multimodal analysis of neuronal EEG data to manage emotional health using data
baselines. In areas such as depression Alzheimer's and attention analysis it will reasonably extend the layout of brain health
rehabilitation and biometrics eye-tracking technologies.In 2025 the Company incorporated brain-computer interface into its long-term technological strategic roadmap. Centered around
the clear main theme of "technological breakthroughs—scenario application—ecosystem co-construction—global layout" ZKTeco's
brain-computer innovation business completed a systematic advancement from capability building to industrial collaboration in 2025
marking a landmark year.The new round of industrial transformation in 2026 will once again reshape the development landscape as "AI+" has moved from
concept to practice deeply penetrating every scenario and every field. As a globally leading AI cognitive intelligent space evolution
service provider ZKTeco has been deeply cultivating the fields of AI applications and biometrics for nearly two decades and now
with a forward-looking vision is strategically deploying brain-computer interface and emotion cloud technologies. The Company
consistently focuses on BioCV TinyML edge model R&D deeply integrating spatial understanding autonomous decision-making and
electroencephalogram (EEG) signal processing. The Company will continue to optimize brain-computer interaction performance under
the multi-factor collaboration of "people vehicles objects and environment" laying the foundation for the wearable and scenario-
based applications of non-invasive brain-computer interfaces.ZKTeco identifies individuals through multimodal biometric technology from machine vision technology to attentive services
and further to brain-computer interfaces perceiving emotions. The Company always takes technological integration as its foundation
and scenario co-existence as its direction deepening the integrated application of AI cognitive space and brain-computer interaction
platforms adhering to its original aspiration of reconstructing the meaning of life and will not let down any investors!
Finally we always believe that all technologies must have their capability boundaries verified step by step in real-world scenarios.While technological breakthroughs are indeed exciting every step of commercialization must carefully calculate costs and returns. The
2ZKTeco 2025 Annual Report
essence of the AI era is the digitalization of experience and the answers provided by AI often remain at an average level. As a global
enterprise founded on innovation business development whether strategic or tactical must ultimately "grow" organically from the
recognition of end customers. Growth cannot be separated from land seeds and sunlight following the natural laws of spring sowing
summer growing autumn harvesting and winter storage; this is the fundamental way of development for all things. For ZKTeco land
represents our global service network seeds are our core technological innovations in "biometrics + brain-computer interface" and
sunshine symbolizes our belief and determination in pursuing dreams. We also deeply understand: "Knowledge transcends wealth and
status; true masterpieces are created under the solitary lamp." In 2026 all ZKTeco staff will continue to work diligently and cultivate
with dedication achieving sustained growth through long-term perseverance.ZKTECO CO. LTD.Chairman Che Quanhong
3ZKTeco 2025 Annual Report
2025 Annual Report
Section I Important Notes Contents and Definitions
The Board of Directors directors and senior managers guarantee that the
information presented in this report is true accurate and complete without any
false records misleading statements or material omissions and will undertake
individual and joint legal liabilities.The Company's legal representative Jin Hairong the person in charge of the
accounting work Wang Youwu and the person in charge of accounting institution
(accounting supervisor) Xu Ping hereby declare that the financial information in
this report is true accurate and complete.All directors have attended the board meeting to review this report.The forward-looking statements regarding future plans in this annual report
do not constitute substantial commitments of the Company to investors. Investors
are advised to pay attention to investment risks.Investors are advised to refer to the full text of this annual report and pay
special attention to the content of "Section III Management Discussion and
Analysis XI. Prospects for the Future Development of the Company (II) Risks and
Countermeasures" in this annual report.The profit distribution proposal passed upon deliberation at the meeting of
the Board of Directors is set out as follows: Based on the total share capital on the
registration date of future equity distribution after deducting the repurchased
4ZKTeco 2025 Annual Report
shares in the Company's repurchase account the Company proposed to distribute
cash dividend of RMB 4.8 (tax inclusive) per 10 shares to all shareholders. There
will be no bonus shares or conversion of capital reserve into share capital.
5ZKTeco 2025 Annual Report
Table of Contents
Section I Important Notes Contents and Definitions... 4
Section II Company Profile and Key Financial Indic.. 10
Section III Management Discussion and Analysis ..... 15
Section IV Corporate Governance Environment and So. 108
Section V Significant Events ...................... 135
Section VI Changes in Shares and Information about. 173
Section VII Bonds ................................. 184
Section VIII Financial Report ..................... 185
6ZKTeco 2025 Annual Report
Documents Available for Inspection
I. Financial statements affixed with official stamps and the signatures of the Company’s legal representative the person in
charge of accounting and the charge of accounting institution (accounting supervisor) of the Company.II. Original of the audit report affixed with the stamp of the accounting firm as well as stamps and signatures of the certified
public accountants.III. All original copies of the Company's documents and the original drafts of the Company's announcements as disclosed on
websites designated by the CSRC during the reporting period.IV. Other relevant documents.Place for document inspection: Office of the Company's Board of Directors
7ZKTeco 2025 Annual Report
Definitions
Terms Refers to Definitions
Company the
Company Refers to ZKTECO CO. LTD.ZKTeco
ZKTeco Times Refers to Shenzhen ZKTeco Times Investment Co. Ltd. a controlling shareholder of the Company
JYHY Refers to Shenzhen JYHY Investment Enterprise (Limited Partnership) a shareholder of the Company
JYSJ Refers to Shenzhen JYSJ Investment Enterprise (Limited Partnership) a shareholder of the Company
Dongguan LX Investment Partnership Enterprise (Limited Partnership) a shareholder of the
LX Investment Refers to
Company
JYLX Refers to Shenzhen JYLX Consulting Enterprise (Limited Partnership) a shareholder of the Company
Shenzhen JYQL Investment Consulting Enterprise (Limited Partnership) a shareholder of the
JYQL Refers to
Company
Guangdong
Refers to ZKTeco (Guangdong) Co. Ltd. a wholly-owned subsidiary of the Company
ZKTeco
Shenzhen Shenzhen ZKTeco Biometric Identification Technology Co. Ltd. a wholly-owned subsidiary of
Refers to
ZKTeco the Company
Xiamen ZKTeco Refers to Xiamen ZKTeco Co. Ltd. a wholly-owned subsidiary of the Company
Shenzhen Longzhiyuan Technology Company Limited by Shares (later renamed Shenzhen
Longzhiyuan Technology Co. Ltd.). The Company acquired 55% of its equity during the
Longzhiyuan Refers to
reporting period and it became a controlling subsidiary of the Company and was included in the
Company's consolidated financial statements.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
Refers to RMB RMB '0000
'0000
Reporting
Refers to January-December 2025
Period
End of
Reporting Refers to December 31 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
Biometrics Refers to computer technology with high-tech methods such as optics acoustics biosensors and
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
Computer human visual abilities capture and process three-dimensional information of the scene by using
Refers to
Vision 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
RF RFID Refers to specific targets and read and write relevant data through radio signals without 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 following
Internet of
Refers to agreed protocols. The object exchanges and communicates information through information
Things/IoT
dissemination media to achieve intelligent recognition positioning tracking supervision and
8ZKTeco 2025 Annual Report
other functions
Single Minute Exchange of Die a process improvement method that minimizes the product die
SMED Refers to 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 model that provides software services through the Internet
Material Requirement Planning the process in which a production enterprise gradually derives
the production and procurement plans for the components raw materials and other materials
MRP Refers to
required for the production of the main product based on the production plan the structure of the
main product and the inventory situation
SAM Refers to Secure Access Module a module used for encrypting and decrypting identity card 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) or
SMT Refers to
other substrates and then solder and assemble them through methods such as reflow soldering
or immersion soldering
Printed Circuit Board Assembly the process of soldering components onto a PCB substrate to
PCBA Refers to
form a printed circuit board (PCB)
A professional industry media company under the Messe Frankfurt Exhibition GmbH aiming to
provide market analysis technical information solution evaluation industry forecasting etc. for
asmag Refers to
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
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 organization
QMS Refers to 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 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.Hyper Text Transfer Protocol Secure a protocol for secure communication on the World Wide
HTTPS Refers to
Web and is the secure version of HTTP (Hypertext Transfer Protocol).ChatGPT Refers to The large language model developed by the American company OpenAI.SMB Refers to Small and Medium-sized Businesses.NVR Refers to Network Video Recorder
EEG Refers to Electroencephalogram
fNIRS Refers to Functional Near-Infrared Spectroscopy
Note: If there is a discrepancy between the total count and the sum of the sub item values in any table of this annual report it is due
to rounding reasons.
9ZKTeco 2025 Annual Report
Section II Company Profile and Key Financial Indicators
I. Company Information
Stock Abbreviation ZKTECO Stock code 301330
Chinese name of the熵基科技股份有限公司
Company
Chinese abbreviation of the熵基科技
Company
English name of the Company
ZKTECO CO.LTD.(if any)
English abbreviation of the
ZKTeco
Company (if any)
Legal representative of the
Jin Hairong
Company
Registered address No.32 Pingshan Industrial Road Tangxia Town Dongguan Guangdong China
Postal code of registered
523710
address
Historical changes in the
registered address of the The registered address of the Company has not changed since its listing
Company
Office address No.32 Pingshan Industrial Road Tangxia Town Dongguan Guangdong China
Postal code of office address 523710
Website www.zkteco.com
Email ir@zkteco.com
II. Contacts and Contact Information
Board Secretary Securities Affairs Representative
Name Guo Yanbo Wang Jia
No.32 Pingshan Industrial Road No.32 Pingshan Industrial Road
Contact address Tangxia Town Dongguan Guangdong Tangxia Town Dongguan Guangdong
China China
Tel. 0769-82618868 0769-82618868
Fax 0769-82618848 0769-82618848
Email ir@zkteco.com ir@zkteco.com
III. Information Disclosure and Place of the Report
Website of the stock exchange where the Company discloses its
Shenzhen Stock Exchange http://www.szse.cn
Annual Report
Securities Times China Securities Journal Securities Daily
media and website for the disclosure of the Annual Report
and CNINFO (http://www.cninfo.com.cn)
Office of the Board of Directors No.32 Pingshan Industrial
Location for inspection of the Annual Report
Road Tangxia Town Dongguan Guangdong China
10ZKTeco 2025 Annual Report
IV. Other Relevant Information
Accounting firm engaged by the Company
Zhonghui Certified Public Accountants (Special General
Name of the accounting firm
Partnership)
Room 601 Building A Hualian UDC Times Building No. 8
Office address of the accounting firm
Xinye Road Shangcheng District Hangzhou City
Name of signing accountant Yin WenwenYuan Zongzhi
Sponsor engaged by the Company to continuously perform its supervisory function during the reporting period
□Applicable □ Not applicable
Name of sponsor Period of continuous
Name of sponsor Office address of sponsor
representative supervision
12th floor (F1201-F1210
F1211B-F1215A F1231-
F1232) and 15th floor
(F1519-F1521 F1523-F1527) August 17 2022-December
UBS Securities Co. Ltd. Gong Qian Cai Zhiwei
Winland International Finance 31 2025
Center No. 7 Finance Street
Xicheng District Beijing
China
Financial advisor engaged by the Company to perform the duties of continuous supervision during the reporting period
□ Applicable □Not applicable
V. Main Accounting Data and Financial Indicators
Whether the Company performed a retroactive adjustment or restatement of the previous accounting data□ Yes □No
2025 2024 YoY change 2023
Operating revenue
2132789667.811991200391.757.11%1970183682.34
(RMB)
Net profit attributable
to shareholders of the 214710432.41 183045997.93 17.30% 177263675.15
companies (RMB)
Net profit attributable
to shareholders of the
companies after
197236740.99165283299.3019.33%178122838.64
deducting non-
recurring profits and
losses (RMB)
Net cash flows from
operating activities 382473030.81 228336583.05 67.50% 236000890.21
(RMB)
Basic EPS
0.91860.791316.09%0.7647
(RMB/share)
Diluted EPS
0.91490.791315.62%0.7611
(RMB/share)
Weighted average
6.30%5.60%0.70%5.63%
return on net assets
Increase or decrease at
At the end of 2025 At the end of 2024 At the end of 2023
the end of this year
11ZKTeco 2025 Annual Report
compared to the end of
the previous year
Total assets (RMB) 4954810629.48 4014623523.49 23.42% 3923900732.70
Net assets attributable
to shareholders of the 3481488420.71 3350349704.08 3.91% 3265413589.20
companies (RMB)
The lower of the Company's net profit before and after deducting non-recurring profits and losses in the past three fiscal years is
negative and the audit report in the last year shows that there is uncertainty in the Company's ability to continue as a going concern
□ Yes □No
The lowest of the Company's audited total profit net profit and net profit after deducting non-recurring profits and losses during the
reporting period is negative.□ Yes □No
Companies with equity incentives and employee stock ownership plans may disclose net profit after deducting the impact of share-
based payment.YoY change during the
Major Accounting Data 2025 2024 2023
current period (%)
Net profit excluding
the impact of share- 261830132.01 209483316.96 24.99 230521412.89
based payment (RMB)
VI. Main Financial Indicators by Quarter
Unit: RMB
First quarter Second quarter Third quarter Fourth quarter
Operating revenue 413684716.15 515574043.35 472049030.10 731481878.21
Net profit attributable
to shareholders of the 29462660.08 63772896.20 34979086.76 86495789.37
companies
Net profit attributable
to shareholders of the
companies after
25649468.4058781445.0931045595.8381760231.67
deducting non-
recurring profits and
losses
Net cash flows from 121694902.82
116640635.5052542518.0691594974.43
operating activities
Whether there is a significant difference between the above financial indicators or their total amount and the financial indicators
related to the disclosed quarterly and semi-annual reports of the Company
□ Yes □No
VII. Differences in Accounting Data under Domestic and Foreign Accounting Standards
1. Differences in net profit and net assets in financial reports disclosed in accordance with international
accounting standards and Chinese accounting standards
□ Applicable □Not applicable
During the reporting period there were no differences in net profit and net assets between the financial reports disclosed in
12ZKTeco 2025 Annual Report
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.VIII. Items and Amounts of Non-recurring Profits and Losses
□Applicable □ Not applicable
Unit: RMB
Item Amount in 2025 Amount in 2024 Amount in 2023 Remarks
Losses and gains from
disposal of non-current
assets (including the
-616071.00-1122946.12-626426.46
offsetting portion of the
provision for asset
impairment)
Government subsidies
included in current profits
and losses (except those
closely related to the normal
business of the Company
which are in line with
national policies and 3429031.25 6728971.26 6119808.45
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 Mainly due to
enterprises as well as the investment income and
gains and losses arising 18783279.32 16131575.37 -2644568.64 fair value changes
from the disposal of generated by financial
financial assets and financial products
liabilities except for
effective hedging business
related to the normal
operation of the Company
Capital occupancy fees
charged to non-financial
0.0042684.2850222.65
enterprises included in
current profits and losses
Reversal of the provision on
receivables with impairment 222847.35 409755.94 239389.68
test conducted on an
13ZKTeco 2025 Annual Report
individual basis
Other non-operating revenue
and expenses other than the -2290959.80 -715235.85 -4210700.05
above items
Less: income tax impact 1867993.80 2042311.18 -281003.45
Minority interest
186441.901669795.0767892.57
impact (after tax)
Total 17473691.42 17762698.63 -859163.49 --
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.
14ZKTeco 2025 Annual Report
Section III Management Discussion and Analysis
I. Main Businesses Engaged by the Company During the Reporting Period
(I) Overall layout of the Company's main business and core products during the reporting period
1. Business Overview
(1) Business overview
The Company is a globally leading smart space evolution service provider with AI cognition as its core driver. The Company
applies multimodal BioCV (computer vision and biometrics) and AI cognitive space computing technologies to build a comprehensive
perception system promoting the transformation of space from static management to autonomous decision-making and evolution and
bringing comfortable intelligent safe and sustainable scene experiences to global customers. The Company has deeply laid out in the
four strategic fields of smart space smart office digital identity authentication and smart business providing AI-empowered end-
cloud integrated solutions to help customers achieve efficiency leaps and value reshaping in the digital era. ZKTeco relying on its
profound accumulation in algorithms hardware data and scenario-based applications has prospectively incorporated brain-computer
interface into the Company's long-term strategic blueprint. The Company conducts technology R&D and scenario verification around
areas such as work safety health management smart office and human-computer interaction with focus on the integration of brain-
computer interface and multimodal AI technologies.During the reporting period the Company acquired 55% of the shares from the original shareholders of Longzhiyuan and obtained
controlling interest in Longzhiyuan. This acquisition expands the Company's smart living products into outdoor areas enriching the
product array in smart outdoor business scenarios.The main business income of the Company's various business segments during the reporting period is as follows:
Unit: RMB '0000
20252024
Item
Amount Proportion Amount Proportion
I. Smart space
159181.7974.96%149969.0575.62%
products
II. Smart office
33160.1015.62%30372.7715.31%
products
III. Digital identity
8913.644.20%11413.475.75%
authentication products
IV. Smart business
6695.573.15%6578.093.32%
products
V. Smart living
4398.262.07%--
products
Total 212349.36 100.00% 198333.38 100%
(2) Core businesses
* Smart space products: Upgrading from "Digitalized Management" to "Spatial Intelligence"
Leveraging AI cognitive spatial computing and a multimodal BioCV native technology foundation we build a full-domain all-
element digital twin perception system and intelligent evolution engine for people vehicles objects and the environment. This breaks
through the paradigm bottleneck of traditional passive control of space entrances/exits and post-event O&M creating a next-generation
smart space solution that integrates real-time full-domain perception spatiotemporal data analysis autonomous intelligent decision-
15ZKTeco 2025 Annual Report
making and closed-loop precise control. For all scenario types including enterprise campuses office buildings education healthcare
and communities we utilize a device-edge-cloud collaborative architecture to achieve full-link digital and intelligent autonomy for
access management energy consumption control security inspection environmental regulation and resource scheduling. This
empowers physical spaces with continuous evolution capabilities such as forward-looking prediction proactive adaptation and self-
driven iteration assisting clients in achieving core objectives like reducing costs and increasing efficiency in space operations and
improving quality and upgrading security control. This drives a comprehensive leap from traditional static physical spaces to
perceivable thinking iterative and self-evolving smart ecological spaces.* Smart office products: A new generation of digital productivity driven by AI intelligent agents
With AI intelligent agents at its core the Company reconstructs the entire process of office scenes creating an efficient convenient
secure and human-centric new generation of smart office system. Leveraging multimodal BioCV cloud-terminal collaboration and
intelligent scheduling technologies we break down barriers in office processes such as attendance management access control meeting
scheduling document circulation and logistics support achieving full-scenario intelligent services like frictionless access smart
attendance one-click meeting services and automated approval. By using AI intelligent agents to replace repetitive office operations
optimizing office workflows streamlining labor costs and breaking the spatiotemporal limitations of offline work and remote
collaboration we drive the transformation of office models from traditional manual control to an intelligent efficient and flexibly
collaborative digital productivity model fully empowering enterprises with office efficiency innovation and digital transformation.* Digital identity authentication products: Building the infrastructure for a trusted digital world
The Company's digital identity authentication business seamlessly integrates multimodal BioCV advanced large models and
blockchain technology to establish a precise secure and user-friendly identity authentication system laying a robust foundation of
trust for the digital world. By harnessing the distinctiveness of biometric features the advanced deep learning capabilities of large
models and the decentralized and immutable nature of blockchain technology the Company's digital identity authentication services
can ensure both precise identity verification and robust data security.* Smart business products : AI-driven leading business transformation
The Company's smart commercial business with multimodal large models and AI intelligent agents as its core engine deeply
integrates the "AI + digital signage" ecosystem. Focusing on the general retail and catering industries it assists traditional businesses
in upgrading from "hardware enablement" to "full-link digital and intelligent operations". The core business revolves around "people-
goods-places" full-domain synergy providing cloud service digital solutions and full-lifecycle operational services to build a new type
of comprehensive all-scenario and full-chain borderless retail platform. The solution is based on the ZKDIGIMAX Level3 platform
encompassing intelligent hardware terminals such as digital marketing screens electronic shelf labels AI shelves and smart shopping
carts. It deeply integrates core digital intelligence capabilities like AI agents virtual digital humans and intelligent customer service
adopting a cloud service hosting model to build an integrated smart commercial ecosystem of "hardware terminals + digital intelligence
capabilities + operational services". The solution enables real-time insights into consumer behavior dynamic product optimization and
automatic adjustment of marketing strategies helping merchants achieve refined operations and enhanced experiences and driving the
transformation of traditional retail towards a new paradigm of "borderless retail" and "AI-native commerce".* Smart living products: Expanding into the smart outdoor domain and optimizing the smart living product system
During the reporting period the Company acquired 55% of the shares from the original shareholders of Longzhiyuan and obtained
controlling interest in Longzhiyuan. Following the acquisition Longzhiyuan was included in the Company's consolidation scope.Longzhiyuan is a company specializing in audio-visual and optical equipment in the smart outdoor domain. It focuses on niche markets
aiming for smart living and is dedicated to developing smart products related to daily life. Currently Longzhiyuan's products primarily
include two major series: outdoor products and smart home with outdoor tracking cameras as its core product. Longzhiyuan's business
encompasses ID design software and hardware design and manufacturing. While providing ODM services for multiple professional
16ZKTeco 2025 Annual Report
outdoor brands it also sells its own branded products through overseas e-commerce channels. This acquisition expands the Company's
smart living products into outdoor areas enriching the product array in smart outdoor business scenarios.
2. Comprehensive product system and cloud O&M service ecosystem
The Company leverages multimodal BioCV models and AI cognitive spatial computing as its core engine to build a full-stack
technology system covering endpoint edge and cloud. This upgrades various smart terminals from single-perception devices to edge
intelligent nodes capable of real-time inference and autonomous decision-making while enabling model iteration data governance
and large-scale service delivery through a cloud platform. Building on this foundation the Company has established a unified technical
base and application synergy across four major domains: smart space smart office digital identity authentication and smart retail. This
drives the evolution of its product system from functional systems to task-driven AI agent networks enabling the system with closed-
loop capabilities of perception understanding decision-making and execution. Concurrently with cloud O&M services at its core the
Company builds a full lifecycle service system covering deployment O&M optimization and upgrades. This accelerates the
transformation of its business model towards SaaS and continuous services and through global multi-scenario data accumulation
forms a "data-model-application" positive flywheel. The Company is building next-generation digital infrastructure based on spatial
computing and multimodal intelligence enabling the physical world to gradually evolve into computable cognitive and evolvable
intelligent systems. This drives efficiency improvements security upgrades and operational model restructuring globally.
(1) Smart space business
ZKTeco is leveraging AI cognitive spatial computing as its core driving force integrating the ZKBio software platform and the
Mars Wisdom AI platform to build a full-element multimodal perception and understanding system covering people vehicles objects
and the environment. On this technical foundation the Company is upgrading its traditional system architecture which centered on
"physical space management" to a spatial intelligence system driven by data and models. This transforms space from a passive carrier
responding to commands into a "spatial intelligent agent" capable of perception understanding and decision-making. By introducing
an AI agent mechanism space no longer merely performs management functions but can conduct autonomous analysis and dynamic
optimization based on real-time data. This enables the synergistic evolution of security access control energy consumption and service
experience thereby transforming traditional spaces into "user-oriented intelligent agents" with continuous learning and adaptive
capabilities. This transformation not only redefines the interaction between people and space but also drives the upgrade of operational
models from human-driven to intelligent-driven. While significantly enhancing operational efficiency and user experience it provides
a quantifiable and optimizable technical path for green low-carbon and sustainable development.The comparison between traditional physical spaces and the Company's spatial intelligent agents in the smart space domain is
shown in the figure below:
17ZKTeco 2025 Annual Report
Persons Vehicles
Shangshang
Smart Assistant
Visual Perception
ZKBio
software
platform
Digital Butler
Elevator management
Apartment lock Video analysis
Visitor appointment Online consumption
Intrusion alarm Parking lot Smart Front
Video intercom Access security Desk
inspection Mars Wisdom
AI Platform
Thinking Decision
Patrol
Intelligent
Items Enviro Agent
nment
Traditional Physical Space Spatial Intelligent Agent
The Company's smart space business layout is as follows:
Access control
Intrusion alarm management Attendance
management
Locker
management Elevator control
Channel gate
management Visitor
management
Parking lot
Public address
management
Smart Scene Center Patrol
management
Energy Video
management surveillance
Consumer terminal
management
* 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 BioCV TinyML 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 the platform 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 and operations to energy consumption management.As the platform's capabilities continue to evolve the Company further introduced an AI Agent technology architecture building
18ZKTeco 2025 Annual Report
an enterprise-level AI Agent platform and a "Smart Space Assistant" tailored for smart spaces. This capability through natural language
interaction and intelligent task orchestration achieves intelligent collaboration across various business types including campus
management space operations and device control. This drives the transformation of space management from traditional system
operations to conversational space management and AI Agent collaborative management. The platform can automatically complete
office and space service processes such as visitor invitations meeting space management and permission and parking resource
allocation. It also integrates with video sensing and IoT devices to enable capabilities like environmental control anomaly analysis
and intelligent inspection. Concurrently based on the platform's accumulated data it generates campus operation analysis and
management reports.Leveraging AI Agent capabilities and its knowledge base system the platform has also built a smart space digital employee system
designed for O&M and security scenarios. This system through knowledge base Q&A and SOP (Standard Operating Procedure)
intelligent handling mechanisms provides O&M and security personnel with event analysis and handling suggestions. It also supports
linking with smart terminals such as patrol robots to execute inspection tasks thereby further enhancing campus operation efficiency
and safety management levels. Through the aforementioned technological upgrades the ZKBio platform is gradually evolving into a
spatial AI operating system for smart campuses and smart buildings offering enterprises and urban spaces more efficient and intelligent
digital management capabilities.The panoramic view of the ZKBio Intelligent Integrated Management Platform is as follows:
The main characteristics of the ZKBio Intelligent Integrated Management Platform are as follows:
19ZKTeco 2025 Annual Report
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 (Geographic Information System 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 BioCV TinyML technology IoT perception and Mars Wisdom platform it has constructed "one center"
and "four intelligent defense lines":
* One center: Monitoring Center (including video alarms real-time TV wall monitoring and custom dashboards);
? The first line: Physical space access control is achieved through seamless passage (multimodal BioCV recognition for
pedestrian and vehicle gates/channels);
? 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 standard API interfaces and custom data integration modules it can interface with third-party systems and support rapid
algorithm model iteration. Through a hybrid cloud technical architecture it supports LAN and WAN communication. 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
smart transformation.d. Mobile and cloud capabilities:
The ZKBio platform now features the ZKBio APP and ZKBio Assistant mini-program integrating core applications such as
attendance consumption access and visitor management in one stop deeply merging mobile and cloud technical capabilities to
provide users with a convenient and efficient one-stop smart service experience.* Access control products
In space management entrance and exit management is a crucial component. ZKTeco's access control products are smart terminals
that verify and logically judge the access rights of entrance and exit based on multimodal BioCV. Traditional access control products
depending on the biometric verification method can be divided into single biometrics devices and multimodal recognition products
combining multimodal BioCV methods. With the enhancement of product capabilities and changes in business models the Company's
access control products have iterated into three product forms: traditional products cloud access control product entry points and smart
network edge products.Traditional products: Smart identification access control terminals extending video intercom applications and doorbell three-in-
one capabilities without the need for software management or private server deployment.Cloud access control product entry points: Based on traditional access control products users are free from software deployment
connecting to cloud servers to simplify maintenance.Smart network edge products: Enhanced with AI capabilities enabling front-end voice interaction and back-end multi-device
collaboration to achieve edge intelligence.The Company's multimodal biometrics sensing terminal products are shown below:
20ZKTeco 2025 Annual Report
Private deployment Cloud deployment Cloud intelligence
ZKBio Agent
Video intercom Doorbell Voice
Access control interaction 4G data-free
Alcohol Front-end
detection intelligence
Face
Fingerprint Card QR code Palm Iris
During the reporting period the Company continued to optimize its biometrics solutions and launched 4G data-free products
front-end/cloud-based smart products supporting voice interaction and products supporting new alcohol detection solutions.Similarly in response to complex multi-access control interlocking scenarios the Company has launched access controller
products which are paired with multimodal BioCV 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 the industry's first palm reader PR1200 and the industry's first edge intelligent
video analysis hub InbioCV160 based on an access controller. This product is suitable for lightweight video analysis applications in
small to medium-sized scenarios with built-in access control management and NVR and possesses video analysis capabilities such as
text search helmet detection video anti-intrusion and absence detection. It also supports an online algorithm marketplace allowing
algorithms to be updated on demand.The main intelligent video analysis access controller scenarios of the Company are shown below:
21ZKTeco 2025 Annual Report
Lightweight Web Service
Platform
SATA Disk
Multimodal perception
Verification Passed Anti-tailgating Alarm
Intelligent Analysis
Mobile Web Hub
Edge Controller
Multimodal
perception
RF Sensing
* 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 RFID 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 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 access control application scenarios developed for school environments are shown below:
22ZKTeco 2025 Annual Report
Administration
Teacher's Office
Building
Laboratory Building
Teaching Building
Outdoor Sports
Field School Dormitory
Library
Campus Main
Entrance
* 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
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 LCD screen License plate recognition all-in-one machines (LPR80-LCD LPR100-Y-LCD and LPR8800-Y-LCD series) DC
brushless barrier gates (PBH6000-Y series and PBL700 series) advertising barrier gate products (PBG600 series) integrated license
plate recognition auxiliary machines (LPR-FZ01) and barrier gate anti-smash radar detectors (ZK-RD02-79). Concurrently the
Company launched the CP9-DC060&080&120&160 series second-generation DC charging piles. 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 Company's integrated charging and parking management scenarios are as follows:
23ZKTeco 2025 Annual Report
ZKTeco Cloud
Parking
LPR8800-Y-LCD & PBH6000-Y Series
LPR100-Y-LCD & PBG600 Series
Parking Driver Mini
Operations Program
Merchant
Management
CP9 Series 60 80 120 160kW CP9 Series 360 480 720 960kW
High-power DC charging pile Flexible Split Charging Stack
* 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 security inspection solutions for the security needs of various scenarios such as rail transit
large-scale events judicial institutions major venues and hospitals. In recent years it has further extended to industries such as logistics
sorting education and factories developing smart security inspection products with industry-specific adaptability such as X-ray
scanners mobile phone walk through metal detectors and high-precision walk through metal detectors to build professional products
and solutions covering specific fields.On December 18 2025 the General Office of the State Council issued the "Opinions of the General Office of the State Council
on Combating Tobacco-Related Illegal Activities Through Full-Chain Enforcement (GBF [2025] No. 44)" strictly cracking down on
cross-border smuggling and illegal activities in domestic logistics channels promoting the intelligent upgrade of logistics security
inspection and the growth potential for logistics security inspection products and solutions in segmented fields is significant.The Company's smart security inspection scenarios are shown below:
24ZKTeco 2025 Annual Report
Mobile Management
Platform Management
Smart Sensing Facial Recognition Locker
ZKBio Smart Authentication: Dual mode (facial recognition/card swipe) for
convenient access
IoT Connectivity: Unified device management categorized
Safety & Durability: Hard plastic material waterproof and corrosion-
configuration
resistant ensuring greater safety for students
Data Integration: Consolidated data for personnel vehicle and
Versatile Application: Centralized mobile phone management and daily
item inspections providing traceable reports
item storage multi-purpose cabinet
Security Inspection Closed-Loop: Intelligent Recognition +
Data Management: Traceable operations supporting refined campus
Alarm Linkage Process Closed-Loop
management
Security Enhancement: Visualized Dashboard Exportable
Data Secure and Controllable
First Line of Defense
The second line: Mobile phone detection & security check
Intelligent Roadblock Anti-Collision
Integrated Model
Rise Time: 3.5s Protection Rating: IP68 4 major detection modes for precise High-definition display
Lowering Time: 2.5s Power Unit: Integrated Electro-Hydraulic Actuator identification of electronic devices; 33 clear imaging
Bollard Interception Height: 600mm Equipment Dimensions: adjustable detection zones 1000 levels of Intelligent recognition
Φ357mm*H1100mm sensitivity; 29-inch ultrawide display for high accuracy
Bollard Material: 304 Stainless Steel information at a glance; security inspection People and bag association
linked turnstiles for unattended rapid efficient traceability
passage Intelligent video real-time
monitoring
Platform management
closed-loop security
inspection
* 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 background
music information notification 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 broadcasting audio scenarios are as follows:
25ZKTeco 2025 Annual Report
* Intrusion alarm
In the smart building space the intrusion alarm system plays a crucial role in safeguarding security. It integrates multiple detection
technologies such as infrared microwave sound waves and vibrations to ensure precise perception of abnormal situations. In terms
of communication methods it utilizes SBUS bus technology (Serial Bus i.e. serial bus technology) 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 video 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 intrusion alarm scenarios are as follows:
Intrusion alarm host Alarm keypad
ZKBio software
Finance office
Kitchen
Infrared sensor Alarm button
Gas sensor
Restroom
Warehouse
PIR sensor
Lobby Water leak sensor PIR sensor
Warehouse
PIR sensor
Perimeter electronic fence
Glass break sensor Door/Window Smoke detector
contact sensor
26ZKTeco 2025 Annual Report
* 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 scenarios are as follows:
Public areas
Meeting room
Reservation Electronic whiteboard
Video Video recognition information screen
surveillance alarm Energy management
IT computer room Elevator dispatching/call
ZKBio software platform Pedestrian gate Video intercom Elevator control
terminal host
Parking lot Security room
Handheld identity Video intercom
Vehicle gate LPR
verification device management machine
* Smart video
Computer vision 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 computer vision perception technology and combining the Company's long-term technological accumulation in deep
learning BioCV computer vision AI and Minerva IoT cloud platform the Company continuously has optimized its product array
layout enhanced user experience and provided a complete set of competitive smart video system product matrix mainly including:
front-end smart network cameras back-end smart network video 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
27ZKTeco 2025 Annual Report
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 professional smart video security
system.During the reporting period by further 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 system 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 empowerment of the
Mars Wisdom AI platform with the smart video subsystem the Company officially launched the RS Swiss Army Knife series AI edge
servers including multiple versions such as 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 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.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 in its smart video perception subsystem primarily
focused on developing and implementing solutions around the vertical niche scenario of smart parks launching Mars Wisdom AI-
powered intelligent algorithm solutions for production safety supervision and "Bright Kitchen" intelligent algorithm solutions further
delving into scenario-based demands for spatial intelligence and continuously implementing successful projects.The typical scenarios of the Company's smart video are illustrated as follows:
Mars Wisdom Platform Area around the park
Full-domain spatial Office building
intelligence coverage High-magnification PTZ
camera monitoring
Perimeter protection
High-magnification PTZ
solution for intrusion alarms
camera monitoring solution
Special materials storage area for key areas
Perimeter protection solution for
flame detection and area intrusion
alarm
In parks
Smart box behavior analysis
solution including behavior
analysis sleep-on-duty and absence
detection fire passage occupation
detection etc.Warehouse
Flame detection high-definition
full-color lamp and area intrusion
alarm Entrance and exit
Smart box vehicle recognition
solution Perimeter protection Facial recognition license plate
solution recognition and the linkage of face
and license plate for barrier opening
Smart box behavior analysis solution
Parking area
License plate recognition vehicle
attribute recognition vehicle Video Management Center
shape detection and illegal
parking alarm Shang'an Yuntong Integrated
Smart box vehicle recognition Management
solution
Wall
Perimeter protection human
shape detection and area
intrusion alarm Edge storage HD
Perimeter protection solution dashboard
* 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
28ZKTeco 2025 Annual Report
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 scenario diagram of the Company's smart building space solution is as follows:
Public areas
Meeting room
Reservation information Electronic whiteboard
Video Video recognition alarm screen
surveillance
Energy management
IT computer room Elevator dispatching/call
ZKBio software platform Pedestrian gate Video intercom Elevator control
terminal host
Parking lot Security room
Handheld identity Video intercom
verification device management machine
Vehicle gate LPR
* 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 multimodal BioCV
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 Annual Report
Public areas IT computer room
Video Video recognition alarm ZKBio Server ZKBio software platform
surveillance
Apartment owner residences Elevator dispatching management of Apartment Building
Video intercom indoor unit Corridor video Smart lock Guest app Video intercom call
Elevator control
terminal host
Entrances and exits of Apartment Building Gyms/Lounges/Meeting Rooms
Reservation IOT control panel + Air
SIP video intercom access control integrated machine information screen conditioner/Light/Curtain control
Main entrance and exit Apartment service front desk
Video intercom
Video intercom
LPR + Vehicle gate Pedestrian gate emergency Handheld identity
management machine
rescue machine verification device
(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 Annual Report
ZKTeco Interconnection
Connecting Creates a Better Future
Fully Connected Widely Connected and Smartly Connected providing
Fully Connected | Widely Connected |
"socialized automated intelligent and scenario-based" SaaS solutions for
Smartly Connected
SMEs.ZKTeco Interconnection AloT
Customer services Connecting service Aggregated Cloud Service Platform
providers
Space Management Operation Management Service Ecosystem
Service Ecosystem Connectivity Agent Distribution Platform Application Connectivity · Cloud attendance · Cloud video · Smart customer · Smart customer
Platform Platform · Cloud access · Cloud alarm service acquisition · Cloud API · Data push
control · Cloud store · Task · Efficiency · Device management
Ecosystem Applications · Group Meal · Cloud visitor inspection management analysis
Third-party SaaS Consumption · Cloud Attendance
System · Cloud Access Control · Cloud Visitor Management
· Cloud Video · Cloud Controller · Cloud Alarm Multi-scenario Smart Personnel Equipment O&M Smart office AI Agent service Smart space
Aggregated Application Access Management
ZKTeco Interconnection AloT Aggregated Cloud Service
Platform
Smart lock
· Payment Management Service · File Storage Service · Log Tracking
Service
· Account Authentication Service · Security Management Smart meeting
BI data analysis
Service · Subscription Service
· Organization Management Service · Device Management Service
AI video
Cloud video intercom
ZKTeco Cloud IoT Platform MinervaloT Group meal consumption
Smart access
· AWS · Tencent Cloud · Alibaba Cloud
IaaS infrastructure Visitor registration
Contactless attendance
Mobile Management
Smart access
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.? Scenario-based intelligent agent construction: Through a self-developed Agent development platform deeply
integrating large model capabilities such as DeepSeek Doubao and ChatGPT and combining with ZKTeco Interconnection's
currently launched business functions to build self-contained business intelligent agents such as intelligent customer service
visitor appointment approval workflow precise scheduling etc.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
WeCom and Lark is shown below:
31
Data connectivity
Developer scenarios Technology building
capabilities
Integrator
Distributor
Engineering
contractor
Installer
Co-creation and co-
building ecosystem
Cloud service scenarios
Data
interoperability
Flexible
combination
Pay-as-you-go
Online O&M
Managed
servicesZKTeco 2025 Annual Report
Multi-ecosystem Integration
Scheme I Scheme II
App availability:
Available on third-party app stores
Lark
Third-party Cloud Platform Standard API:
1. Provide APIs for third-party
applications
2. Develop according to third-party
standard APIs
WeCom
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
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.
32ZKTeco 2025 Annual Report
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 are shown below:
ZKTeco Cloud Commerce's Five Major Functional Modules
Workbench
It integrates interconnected enterprises my
order matching common tools for ZKTeco's
Service various product lines the resource center and Business Card
the service network of authorized service
providers among other functions and contents. Multi-dimensional information display and
Service providers can query the common minimalist business card creation. Users only need
problem-solving methods for general equipment to fill in four basic pieces of information: name
through this section. mobile phone number company and position to
generate a simple and professional digital business
card. It also supports multiple layout templates and
background customization. It offers a
comprehensive display of personal and company
business and the content can be updated at any
time to ensure its accuracy and timeliness.Home My
Content base enabling users to use marketing
materials easily serve customers drive new The user's personal center where all personal
sales service development quickly query information and data of the user on the platform are
product library view best-selling products gathered. Users can view and manage their potential
prominently select favorite products by one customer sources points mall my plans case
click and quickly switch to product detail management data analysis etc. here.page.Stock code: 301330
Home Service Workbench Co. Ltd. My
33ZKTeco 2025 Annual 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 (Frequently Asked Questions) 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.The ZKTeco Cloud Commerce Digital Marketing Service Tool Ecosystem Closed-Loop Diagram is as follows:
Marketing and Service Digitalization
ZKTeco
Manufacturing
Standardized Marketing
Product Requirements Materials
Online Service Capabilities
Core Partner
ZKTeco Cloud
Distributors/Engineering Customers by Scenario
Commerce
Contractors
Online Skills Training
Mobile Service Tools
Supply Chain
ZKTeco Ecosystem
Precise User Engagement
Stock code: 301330
In addition ZKTeco Cloud Commerce empowers B2B practitioners in marketing and service and in conjunction with the offline
[ZKTeco Smart Alliances] 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 [ZKTeco Smart Alliances] 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 an intelligent time management and productivity engine launched by the Company positioned as an "Organizational
Workload Structure Analysis Intelligent Agent". It evolves from "time management" to an "organizational and work intelligent agent"
providing enterprises with decision support and resource optimization capabilities through deep integration of its AI capability hub
with existing attendance hardware.
34ZKTeco 2025 Annual Report
Ralvie AI's core concept: Let time work for you. It emphasizes empowerment over monitoring focusing analysis on job roles and
organizational levels. By enhancing data transparency it improves management rigor reduces subjective bias and promotes
collaborative growth for organizations and individuals under clear objectives.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.? 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.The functional diagram of Ralvie AI is as follows:
March 23 - March 29 2025 All Departments All Members
Dashboard App Categories Project Time
Most Frequently Used Apps
Timesheets
Item
Tasks
Members Total Hours
09h20m
Tags
Integration
Report
Billing
Settings
Weekly Active Time Weekly Free Time
AI Assistant
Notification
Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sunday Monday Tuesday Wednesday Thursday Friday Saturday
Light Mode
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.The Ralvie AI Work Time Accounting Form Diagram is as follows:
35
Hour
HourZKTeco 2025 Annual Report
Timesheet
Day Day-Month-Year Week Month Sync Status Inactive
ZKTeco Biometrics
Options Recorded Hours
Record Hours
Home
Set Up Time
Timesheet Step 1: Basic Record Edit | Delete Record Billing Non-billable
Tasks
Enter Time
Step 2: Projects and Tasks Start time
Members
End time
RED00C Task
Item
Step 3: Document
Analysis
Settings
Step 4: Collaboration
Edit | Delete
Step 5: Event
+ New Record
Priscilla
Applicable scenarios of Ralvie AI: 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 of Ralvie AI: 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
Digital identity authentication business is one of ZKTeco's core business segments. The Company deeply integrates three core
technologies: multimodal BioCV large models and blockchain to build a precise secure convenient and traceable full-scenario
identity authentication system laying a solid foundation of trust for the digital world and assisting various industries in achieving
digital and intelligent upgrades for identity verification. Leveraging years of accumulated biometric technology expertise the Company
has developed a diversified product matrix and integrated solutions. By virtue of the uniqueness of biometric features the deep learning
and intelligent analysis capabilities of large models combined with the decentralized and immutable characteristics of blockchain it
effectively addresses pain points in traditional identity authentication such as low efficiency weak security and susceptibility to forgery
ensuring the accuracy security and trustworthiness of identity verification and comprehensively meeting the high-security identity
verification needs across multiple sectors including government enterprises and public services.* Smart terminal products:
36ZKTeco 2025 Annual Report
The Company's digital identity authentication product system is comprehensive primarily covering four major categories:
multimodal biometric products reading machine products trusted digital products and industry smart terminal products which can
adapt to the differentiated needs of various industries and scenarios. During the reporting period the Company continued to increase
R&D investment and launched a new generation of multimodal palm recognition products. This product features comprehensive
technological upgrades integrating high-definition visible light cameras and near-infrared cameras with a built-in high-performance
algorithm chip to achieve rapid acquisition and precise recognition of multimodal palm information. It boasts advantages such as
strong anti-interference capabilities fast recognition speed and high adaptability. This palm recognition product can be deeply
integrated with scenarios such as time and attendance access control and channel management and is widely applied in areas like
enterprise offices park management and public venues providing users with secure efficient and convenient identity verification
services. It further enriches the application scenarios of the Company's smart terminal products and enhances the product's market
competitiveness.* 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 BioCV technology addressing the core demand for "the integration of
people and certificates" across various industries. It is composed of two parts: the One Card Solution Cube Terminal Software (APP)
and the Identity Authentication Management Platform forming an integrated architecture of "terminal collection + platform
management". The system deeply integrates the Company's independently developed ZKLiveFace facial recognition algorithm and
ZKFinger V15.0 ID card fingerprint comparison algorithm. The algorithm accuracy is at an industry-leading level capable of quickly
reading information from various valid certificates such as 2nd-generation ID cards Residence Cards for Hong Kong Macao and
Taiwan Residents and foreign permanent residence permits. It performs real-time comparison of "the integration of people and
certificates" using biometric information (such as fingerprints and portraits) collected on site from the cardholder accurately and
quickly verifying the authenticity of user identity effectively preventing issues like impersonation and certificate forgery.The One Card Solution Cube Identity Authentication Management Platform has comprehensive functions such as intelligent
device management personnel information management blacklist/whitelist monitoring and data statistical analysis. It enables real-
time comprehensive multi-dimensional monitoring and visual analysis of terminal devices verification personnel and verification
data facilitating clients to stay informed of verification dynamics and optimize management processes. Meanwhile the system supports
access to large-capacity facial servers possessing backend facial verification capability for millions of faces. It can provide authoritative
trustworthy stable and secure identity authentication services to clients in different vertical sectors such as government education
healthcare and finance. It comprehensively covers the entire industry chain of "core algorithms + smart terminals + software platforms
+ scenario applications" providing clients with one-stop identity authentication industry solutions and further consolidating the
Company's core competitiveness in the identity authentication field.* Industry scenario solutions:
Based on its extensive identity verification product system and core technological advantages the Company deeply integrates the
actual needs of specific segmented scenarios in various industries continuously incubating highly adaptable and easily implementable
industry solutions. After years of dedicated effort it has established identity verification systems for several major core scenarios
including smart examination affairs smart healthcare smart new student reception smart visitor management and identity
authentication for plasma collection stations. These systems cover multiple high-security demand fields such as education healthcare
and public services having cumulatively served thousands of clients nationwide and gained widespread market recognition.In terms of smart examination affairs the Company focuses on the core need for candidate identity verification in various
examination scenarios creating a full-process smart examination affairs identity verification solution. This solution comprehensively
covers the entire business closed-loop of pre-examination candidate information collection in-examination identity verification and
post-examination data statistical analysis. This solution fully integrates the particularity of examination scenarios balancing security
and convenience. It can not only form a self-contained system and be directly deployed meeting the rapid application needs of various
examination places but also seamlessly integrate with third-party standardized examination place construction solutions adapting to
37ZKTeco 2025 Annual Report
examination scenarios of different scales and types (including college entrance examinations senior high school entrance examinations
various professional qualification examinations etc.). The solution offers core competitive advantages such as intelligence and
convenience flexible deployment and accurate verification. It effectively addresses issues like low efficiency proneness to errors and
difficult management in traditional examination affairs identity verification assisting examination affairs work in achieving digital and
standardized upgrades and ensuring fairness and impartiality in examinations. The Company's smart examination affairs application
scenarios are shown below:
* Registration data collection
Identity verification terminal equipment * Examination affairs arrangements
to authenticate and collect candidate
identity information
Distribute candidate information via the dedicated
examination network to the examination affairs
management platform and examination place terminal
equipment.Multifunctional Human
Certificate Verification Terminal
Desktop multifunctional Human
Certificate Verification Terminal
* Data reporting
* Examination place authentication
The platform automatically aggregates and
analyzes candidate data outputs reports and
synchronizes with the examination platform.Candidates use the examination place
terminal equipment to authenticate their
identity for entry.Handheld ID card reader
In the medical field the Company addresses the unique and stringent requirements of identity verification in the medical industry
focusing on core scenarios such as newborn birth certificate processing assisted reproduction management outpatient registration and
inpatient admission and has launched specialized smart healthcare identity verification solutions. This solution precisely matches the
information collection and identity verification needs of various hospital windows and can securely integrate with hospital HIS systems
electronic medical record systems and third-party medical service systems achieving seamless embedding of the identity verification
functional module without requiring extensive modifications to existing systems thereby reducing hospital deployment costs. Through
precise identity verification the solution effectively prevents issues such as fraudulent medical visits and impersonation for certificate
collection ensuring patient information security and standardized medical services helping major medical institutions optimize service
processes and improve service quality and providing patients with high-quality and compassionate medical services. Currently related
products and solutions have been deployed in hospitals of various levels across multiple provinces and cities nationwide providing
effective support for hospitals' standardized services and refined management.In terms of smart freshman orientation the Company is guided by the core business of university freshman orientation and
registration creating a comprehensive smart orientation management solution covering the entire process achieving front-end and
back-end integrated linkage between the orientation Human Certificate Verification Terminal and the orientation registration
management platform. The solution comprehensively covers all stages including information collection before freshman enrollment
identity verification and registration during enrollment and information archiving and management after enrollment effectively
addressing pain points in university orientation such as concentrated personnel cumbersome processes and data silos achieving
vertical data connectivity and efficient collaboration among various departments involved in orientation significantly improving the
overall efficiency and service quality of orientation work. This solution can be customized according to the operating scale and
management model of different universities meeting the differentiated needs of various universities for new student admission identity
38ZKTeco 2025 Annual Report
verification and comprehensive management and has become the preferred solution for the digital upgrade of university welcoming
processes.Regarding smart visitor management the Company focuses on the pain points of visitor management in scenarios such as
industrial parks office buildings government agencies and enterprise factories. The smart visitor identity authentication solution
developed by the Company builds a full-process visitor management system of "appointment registration + identity verification +
access control + full-process traceability" achieving digitalization intelligence and standardization of visitor management while
balancing security and visitor experience. The solution supports both online appointment (WeChat Mini Program enterprise official
account) and offline on-site registration modes. Visitors can upload certificate information in advance to complete appointments. On
site they can quickly complete "the integration of people and certificates" verification through multimodal biometrics (facial
recognition fingerprint ID card) eliminating the need for tedious manual registration. The system can be linked with access control
and channel devices automatically granting corresponding area access permissions based on visitor appointment permissions
monitoring visitor movement trajectories in real time and automatically revoking permissions after visitors leave. Meanwhile the
solution can seamlessly integrate with enterprise OA systems and park management systems enabling interoperability between visitor
data and internal management data and supporting visitor information archiving querying and statistical analysis facilitating
managers to accurately grasp visitor dynamics and strengthen security management. Currently this solution has been widely applied
in various industrial parks office buildings and government agencies effectively addressing issues such as low efficiency non-
standardized registration and significant security risks in traditional visitor management thereby enhancing the security level and
service quality of these venues. The Company's smart visitor business scenario diagram is as follows:
Visitor verification
Visitor appointment
Standing Self-Service Visitor
Terminal Visitor Gate Terminal
On-device on-site
appointment
Identity
verification
Mobile App
appointment
Admin console proactive
invitation
Visitor check-out
Visitor registration
ID card IC card facial recognition
QR code CTID trusted identity
authentication Data statistics
Desktop Visitor Terminal
For identity authentication at plasma collection stations in response to relevant regulatory requirements from the National Health
Commission the Company has exclusively developed an identity authentication solution for plasma collection stations specifically
addressing the identity verification pain points in the plasma collection industry. This solution covers key nodes throughout the entire
process of plasma donor registration and filing health check-ups and plasma collection establishing a four-fold security defense line
of "certificate verification + biometric features + liveness detection + full-process traceability" to eliminate illegal plasma donation
activities and ensure the safety of plasma sources and the rights and interests of plasma donors. The solution adopts proprietary
multimodal BioCV technology integrating functions such as ID card authenticity verification facial liveness detection and
fingerprint/palm print matching. It adapts to complex lighting environments at plasma stations with matching accuracy and speed
39ZKTeco 2025 Annual Report
meeting the retrieval demands of a million-level plasma donor database. It can seamlessly integrate with the plasma apheresis
information system (PAIS) achieving automated full-process identity verification. Verification data is stored on the blockchain and is
traceable helping plasma stations achieve 100% compliance with regulatory standards. Currently the solution has been implemented
in multiple plasma stations nationwide effectively standardizing the plasma supply order and ensuring the quality of plasma raw
materials.
(4) Smart business services
The Company adopts "AI+" as its core strategy iteratively applying TinyML and BioCV core technologies to products in retail
scenarios empowering end-users and continuously launching superior overall solutions to enhance customer experience.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.Smart business scenario solutions
A. Digital marketing solution for chain retail scenarios
The Company focuses on the convenience store industry within the chain retail scenario providing digital solutions for attracting
customers and increasing sales to operators as well as efficient and real-time marketing solutions to brand owners.The application scenario diagram of the digital marketing solution for chain retail scenarios is as follows:
40ZKTeco 2025 Annual Report
Vertical digital signage
In-store floor-standing
Electronic price tag colored
screen
Shelf digital signage
10.1-inch color display suspended
above the pile
LCD splicing screen Above store shelves
LCD ultra-narrow bezel video wall
Electronic price tag e-ink
screen
Shelves in black white and red
Smart shopping cart
Show window digital signage
for customer attraction
Shop window position
Intelligent shopping guide
robot
AI passenger flow sensor
Self-service POS terminal
Intelligent solutions for retail scenarios have five core capabilities:
a. Brand promotion and customer acquisition: Increase customer traffic through product or brand promotion and quickly
implement promotional plans in a timely manner.b. Product recognition: Smart electronic scales enable product recognition allowing for quick weighing and settlement at the
checkout counter.c. Shelf area interactive promotion: A complete set of smart shelves to enable customers' attention to products within the scene
and their recognition of advertisements and promotional schemes.d. Product price management: Product prices can be dynamically displayed for members/non-members according to promotional
schemes.e. Business data analysis: Provide diverse analysis reports displaying real-time customer traffic area popularity trajectory
movements dwell time and other data thereby achieving more scientific product display and presentation.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:
41ZKTeco 2025 Annual Report
The zero-carbon kiosk smart retail solution encompasses four major product clusters:
a. Clean energy: Using photovoltaic power generation and a complete energy storage system it provides 24/7 power supply for
core areas of the store's daily operations such as the checkout system and access control system ensuring that consumers can still shop
normally in case of abnormal mains power supply.b. Store integration: Using standard containerized cabinets the overall design and decoration of the store are completed in a
factory process and can be set up simply by transporting and placing them at the destination offering convenient delivery.c. Cloud agent store monitoring: Through self-checkout remote monitoring and personal credit authorization the overall concept
of unmanned retail is adopted to easily achieve store operation.d. Managed operation: On the basis of providing a supply chain the price tags and digital signage in the store are all managed
uniformly through the cloud enabling automatic price changes in the store regular updates of promotional content scenic area public
welfare content and brand advertisements on digital signage.
3. Global business layout and in-depth expansion
The Company has established a business layout of "core business deep cultivation + innovative business expansion + global
market coverage". The four core business segments have formed a mature commercialization system innovative businesses have
achieved technical verification and scenario pilots and the global marketing and service network has achieved localized
implementation and operation.Core businesses: The four major areas of smart space smart office digital identity authentication and smart business have
completed full-scenario product and solution layouts covering dozens of vertical industries such as government and enterprises retail
education healthcare and transportation.Innovative businesses: Brain-Computer Interface (BCI) technology has completed pilot verification focusing on livelihood
scenarios such as education health and elderly care healthcare and industrial safety; smart living has achieved a rich product array
and overseas channel implementation.Global layout: A grid-based global layout of "headquarters + branches/subsidiaries + service outlets" has been formed. As of
December 31 2025 the Company has established 27 branches and 16 subsidiaries domestically and 62 controlling subsidiaries
overseas located in 33 countries and regions worldwide achieving globalized and localized synergy in R&D production sales and
services.(II) The Company business model
1. Procurement model
42ZKTeco 2025 Annual Report
(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 Planning Department of the Company's Manufacturing Center
based on the production plan and Bill of Materials (BOM) calculates and analyzes raw material requirements prioritizes them
allocates resources in conjunction with existing inventory and subsequently derives the procurement plan for raw materials required
for production. For some common materials the Company sets a minimum safety stock threshold establishes an inventory early
warning mechanism and implements dynamic 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 introduced 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
43ZKTeco 2025 Annual Report
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 maintenance security protection and version updates and only
provides necessary after-sales technical support based on the sales contract. In the cloud subscription model users can access and use
the Company's application software and platform via the Internet without local deployment and maintenance. Users can choose the
subscription service that suits their actual needs. In the cloud subscription model the Company is responsible for the continuous
operation maintenance security protection and version updates of the software and provides customer support and technical services
to ensure a stable and reliable user experience.
3. Marketing and management models
The Company adopts a sales model that combines distribution and direct sales.
(1) Distribution model
In the distribution model the Company's customers are mainly dealers and the relationship between the Company and dealers
belongs to a purchase and sales relationship adopting a buyout sales method.
(2) Direct sales model
The Company's direct sales customers mainly include system integrators engineering contractors end users etc. On the one hand
the Company can provide smart terminal devices and application software platforms to system integrators and engineering contractors
which can integrate or include the aforementioned products in products systems or engineering services sold to downstream end users.On the other hand the Company can also directly sell to end users through offline direct sales or online self operated platforms.Normally the Company's direct sales business can be divided into two categories based on whether installation and O&M are
required: product sales and project implementation. For project implementation related businesses the Company will customize its
own smart terminals and application software platforms based on different engineering project requirements and provide O&M services.(III) Market position and brand influence of the Company's products during the reporting period
Leveraging its core technological advantages a full-scenario product system and global service capabilities the Company firmly
ranks among the industry's top tier with continuously improving brand influence and market recognition.The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for six consecutive years from 2020
to 2025. In 2025 it ranked 17th on the list and was awarded awards such as "Top 50 Innovation" and "Top 10 Brands in Smart Security"
in 2025 Global Security Industry Digital Innovation Ranking by asmag. It was recognized by the Department of Industry and
Information Technology of Guangdong Province as a "Guangdong Province 2025 Provincial Manufacturing Single Champion
Enterprise" and a "Seventh Batch of Provincial Industrial Design Centers". 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 10
consecutive years (ranking 202nd in 2025). It was selected by the DC World Organizing Committee and relevant institutions as "2025
DC World · DC World Awards - Top 10 Brands (AI)" and "2025 DC World · DC World Awards - Top 10 Brands (Security Inspection
and Explosive Disposal)". It was awarded by the China Intelligent Transportation Systems Association and the China Top 30 Intelligent
Transportation Organizing Committee the "2025 14th Top 30 Intelligent Transportation Enterprises in ITSMRS". It won the third place
in the "2025 Top 10 Access Control Brands Award" by China Intelligent Building and other entities. At the 2025 China IoT Industry
Conference and the 22nd Huicong Brand Festival it was awarded the 2025 "IoT Platform Excellent Service Award" and "Smart Passage
Technology Innovation Award". It was awarded by the Brand Power Nation Pioneer Project Organizing Committee the "2025 National
Brand Light Program Selected Brand (ZKTeco)".In terms of products and solutions the MG100 multimodal biometrics channel control module unattended scenario series
solutions and ZKTeco Interconnection Cloud Platform received the "20th China Public Security Expo (CPSE) Golden Tripod Award".The ZKTeco Longhu series swing barrier and smart cloud access control terminal were awarded the "China Top 10 Digital Security
New Product Award". New Generation Smart Scenic Spot Self-Service Ticketing Solution and Smart Security Inspection Solution won
the "2025 Ping An Shenzhen Construction Excellent Project Award"; "ZKTeco Mars Wisdom Platform" received the "a&s TOP Digital
Products & Solutions" award. The product "Facial and Palm Access Control Terminal Xpalm602" was selected by the GUANGDONG
44ZKTeco 2025 Annual Report
HIGH-TECH ENTERPRISE ASSOCIATION as the "2025 Guangdong Provincial Famous and Excellent High-tech Product" and the
Visible Light Facial and Fingerprint Access Control Terminal "nFace260" was selected by the Dongguan High-Tech Industry
Association as the "Dongguan High-Tech Products of 2025".During the reporting period Guangdong Zkteco passed the national high-tech enterprise re-certification and was recognized by
the Department of Industry and Information Technology of Guangdong Province as one of the seventh batch of SRDI "Little Giant"
enterprises in Guangdong Province; Xiamen ZKTeco obtained renewed certification certificates for ISO 9001:2015 Quality
Management System ISO/IEC 20000-1:2018 Information Technology Service Management System ISO/IEC 27001:2022 Information
Security Management System ISO/IEC 27017:2015 Cloud Service Security Management System ISO/IEC 27701:2019:2015 Privacy
Information Management System and GB/T29490-2023 Intellectual Property Compliance Management System.(IV) Key performance drivers
1. Continuous breakthroughs in multimodal BioCV technology
In-depth development of multimodal BioCV technology: Multimodal BioCV technology is accelerating its evolution from
traditional single biometrics capabilities towards a highly secure and robust composite identity recognition system becoming the
mainstream technical path amidst continuously upgrading information security demands. ZKTeco continues to achieve key
breakthroughs in the multimodal BioCV field building a new generation of multimodal palm recognition technology system by
integrating the advantages of visible light palm recognition and palm vein recognition performing multi-dimensional deep analysis of
palm shape texture and vein patterns significantly improving recognition accuracy while strengthening anti-spoofing capability and
security boundaries. The Company continuously optimizes its multimodal recognition algorithm system dynamically adjusting fusion
strategies and weight distribution based on different application scenarios and business needs achieving flexible collaboration from
the feature layer to the decision layer. Related products have been widely applied in diverse scenarios such as employee attendance
smart access control and smart payment providing users with identity authentication solutions of higher accuracy and security.The accelerated popularization of non-contact biometric technology: Non-contact biometric technology is accelerating its
popularization and gradually becoming an important form of next-generation identity interaction. Benefiting from advantages such as
efficiency hygiene and optimized user experience palm vein recognition as an emerging non-contact biometric technology is rapidly
becoming a key focus in the industry due to its high discretion and strong anti-replication capability. ZKTeco actively participates in
the formulation of group standards related to non-contact palm recognition promoting the application and deployment of this
technology in high-security scenarios such as finance. Concurrently the Company is advancing its patent layout and technology
reserves for non-contact fingerprint capture devices building multi-dimensional technical barriers. Simultaneously the Company
continuously strengthens its facial recognition technology capabilities leveraging AI algorithm optimization and enhanced liveness
detection capabilities enabling it to deliver higher value in scenarios such as real-name verification intelligent monitoring and risk
early warning further perfecting its multi-level identity security system.Deeper integration of multimodal BioCV technology in mobile terminals: In the field of mobile terminals multimodal BioCV
technology is accelerating its development towards portability and integration. ZKTeco uniformly encodes multimodal biometric
features such as fingerprints facial features and palms into BioCode which is then integrated into mobile devices in the form of a QR
code. This enables efficient carrying and convenient invocation of identity information enhancing user experience while ensuring
authentication security. Building on this the Company continues to explore the deep integration of mobile-end multimodal BioCV
technology with application scenarios such as mobile payment and smart office. This promotes the extension of identity authentication
capabilities from single functions to cross-scenario applications creating a more efficient convenient and secure integrated mobile
identity experience for users.
2. Deep empowerment of AI technology across all scenarios
Multimodal large models are accelerating their transition from perception layer capabilities to cognition and decision-making
layer capabilities becoming the core technical path for driving AI to achieve deep understanding and intelligent reasoning. ZKTeco is
seizing the opportunities presented by AI technology evolution continuously iterating its self-developed BioCV VLM/LLM
multimodal large model system and deeply integrating the Mars Wisdom AI cognitive computing platform general large models and
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edge AI technologies. This integration builds an integrated cloud-edge-device technical foundation connecting algorithmic capabilities
with all business scenarios and promoting the upgrade of the Company's core technology from traditional "identity recognition" to a
"full-domain cognitive service" system. Relying on this composite technical architecture the Company deeply applies cutting-edge AI
capabilities in the core domain of multimodal BioCV. While significantly improving recognition accuracy and response efficiency it
achieves multi-dimensional modeling and in-depth analysis of dynamic behavior trajectories complex environmental features and
scene interaction relationships breaking through the limitations of single-point perception in traditional visual recognition and building
a new generation of identity verification and scene analysis system with full-domain perception and intelligent judgment capabilities.At the same time the application of AI technology in smart spaces smart office digital identity authentication and smart
commerce continues to deepen becoming an important engine driving business efficiency and value creation. ZKTeco achieves the
automation and intelligence of security and operational processes through AI technology significantly improving overall operational
efficiency; in smart commerce scenarios based on in-depth mining and intelligent analysis of multi-source data it provides enterprises
with more forward-looking decision support capabilities. By combining natural language interaction technology it builds intelligent
Q&A and service systems widely applied in scenarios such as smart reception and intelligent customer service significantly optimizing
user experience and improving operational efficiency and promoting the continuous evolution of enterprises from digital to intelligent
operational models.
3. Dual drivers of policy and market
National industrial policies continue to provide support: Based on 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" the "Measures for the Security Management of the Application of Facial Recognition Technology"
effective from June 2025 further regulate industry development. This coupled with the continuous advancement of Digital China
construction and the implementation of the "AI+" initiative creates a more compliant and broader development environment for the
industry in which the company operates. At the same time the draft "15th Five-Year Plan" outline explicitly includes brain-computer
interfaces as a key focus for future industrial foresight. The Ministry of Science and Technology has clarified that during the "15th
Five-Year Plan" period it will strengthen scientific and technological research in areas such as brain-computer interfaces. Coupled
with the issuance of relevant implementation opinions by seven departments to promote the innovative development of the brain-
computer interface industry this provides new opportunities for the extended development of the industry. The Company responds to
the call of policies continuously increasing R&D investment in core technologies such as multimodal BioCV and multi-dimensional
sensing smart terminals. At the same time relying on the relevant technological layouts of its subsidiaries it explores the integrated
application of brain-computer interfaces and multimodal BioCV technologies aligning with policy compliance requirements
accelerating product iteration and contributing to the construction of the digital industry ecosystem.Continuous growth in market demand: With the deep penetration of digitalization and intelligence the demand for biometric and
AI technologies in various industries continues to increase. ZKTeco leveraging its core technological advantages in multimodal BioCV
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.Global biometric technology with the continuous iteration and upgrade of elements such as AI chips and algorithms coupled
with the increasing demand for security authentication across various industries sees its application scenarios continuously expanding.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 sectors with the increasing
application of biometric technologies such as palm vein identity theft and fraud risks are further reduced. In healthcare industrial and
other sectors biometric technology is deeply integrated into various scenarios ensuring security while improving management
efficiency. Furthermore the integration of biometrics with self-service and AI agents continues to increase balancing convenience and
security and driving global market demand growth.
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II. Industry of the Company during the reporting period
(I) Basic situation of the industry of the Company
As an international innovative enterprise the Company is deeply engaged in the AI perception and smart space service industry
which is a strategic emerging industry deeply integrating cutting-edge technologies such as AI IoT multimodal BioCV AI cognitive
spatial computing and edge intelligence. The Company has long focused on four core areas: smart space smart office digital identity
authentication and smart business proactively laying out future tracks such as brain-computer interfaces. Its core business revolves
around building a "people-vehicle-object-environment" full-element perception system driving the upgrade of various physical spaces
from traditional static management to intelligent forms of autonomous decision-making and continuous evolution through
technological innovation.The Company provides diverse customers in dozens of industries worldwide including government affairs finance retail
education healthcare transportation and enterprise office with smart terminals industry application software and platform solutions
that integrate identity recognition smart perception and scenario management. Ultimately it delivers comfortable smart secure and
sustainable full-scenario experiences deeply aligning with the core needs of digital transformation across various industries.Downstream end users in the industry are widely covered with diverse customer types ranging from large government and
enterprise clients chain enterprises to small and micro businesses and individual users. Application scenarios span across offline
physical spaces and online digital services with no obvious cyclical fluctuation characteristics. The current industry has formed a
mature development pattern driven by "technology leadership + scenario implementation": leading enterprises build core competitive
advantages by virtue of core algorithm barriers integrated software and hardware integration capabilities full-scenario solution
delivery experience and a global service network leading to a gradual increase in industry concentration; meanwhile emerging sectors
such as brain-computer interface generative AI and multimodal technology integration are in a critical stage of technological
breakthroughs and commercialization initiation becoming the core incremental engine for future industry growth. Overall industry
technology iteration continues to accelerate application scenarios are constantly expanding and business models are upgrading from
a single hardware sales model to an integrated model of "hardware + software + cloud services + operation services" maintaining a
high-speed growth trend in the long term and becoming an important support for the development of the digital economy.(II) Industry development status of the main application areas of the products
1. Global multimodal perception industry situation in 2025
(1) Global market overview
The global biometric market size was USD 51.6 billion in 2025 and is projected to grow to USD 175 billion by 2034 with a
compound annual growth rate (CAGR) of 14.54% from 2026 to 2034 (source: IMARC Group). The core growth drivers of the global
market include:
? The iterative upgrade of edge computing and AI chips has significantly enhanced recognition accuracy behavioral analysis
capabilities and scenario implementation efficiency providing computing power support for the application of multimodal
technology in complex scenarios;
? Multimodal fusion technology combining multiple biometric features (e.g. fingerprint + facial recognition + iris palmprint
+ palm vein) further enhances security and reliability. Multimodal fusion recognition compared to single-modal
recognition can reduce the error rate by approximately 20%~40% becoming the preferred solution for high-security
scenarios;
? Non-contact technology is deeply integrated with the financial industry. Digital currency and a cashless society are driving
biometric-bound payment verification. Applications such as Amazon's "Payment by Stretching out Your Hand" palm
recognition in cashierless stores and WeChat chain convenience store palm payment terminals are rapidly gaining popularity
driving a surge in consumer-side market demand;
47ZKTeco 2025 Annual Report
? Policy support and industry standardization are advancing. In February 2025 the first batch of prohibitions under the EU
AI Act came into effect restricting high-risk AI applications such as real-time facial recognition in public places thereby
promoting the industry's upgrade towards compliance and privacy-friendly directions. China's "Measures for the Security
Management of the Application of Facial Recognition Technology" came into effect in June 2025 opening a new chapter
in the secure and regulated governance of facial recognition technology applications.? Application scenarios are penetrating from traditional security and finance into emerging fields such as smart cities
healthcare and education. For example in the medical field iris recognition is used for patient identity authentication to
prevent medical record confusion. in education facial recognition is used for classroom attendance and examination
invigilation (such as in smart classrooms in some Chinese universities) and its application boundaries continue to expand.From a regional distribution perspective the Asia-Pacific region has emerged as one of the largest global markets for multimodal
perception technology driven primarily by demand from government governance financial services and public security sectors.Developed countries in Europe and America are active in applications across government management public security and financial
payments. Under the EU GDPR framework data privacy protection has become a key focus driving the implementation of data
anonymization localized storage and compliance solutions.
(2) China's market overview
At the national level multiple policies have been introduced to promote industry development: The implementation rules of the
"Personal Information Protection Law" clarify the norms for the collection and use of feature data requiring enterprises to strike a
balance between privacy protection and technological applications. The "Measures for the Security Management of the Application of
Facial Recognition Technology" regulate facial recognition technology applications forming a dual-track policy orientation of
"application popularization and standardized supervision" further regulating market order.In terms of market applications products are evolving towards multi-camera and multimodal integration. Identity authentication
has expanded from public security to sectors such as transportation finance social security education and healthcare. Many regions
across the country are accelerating the adoption of electronic ID card applications which are expected to further expand to high-
frequency scenarios like finance taxation healthcare transportation and education comprehensively improving service efficiency.
2. Development of the smart retail industry in 2025
In 2025 driven by policies such as boosting consumption and trade-in programs consumption growth is expected to rebound.Digital investment by retail enterprises will further upgrade from "informatization and online presence" to an "intelligent digitalization"
transformation centered on AI and automation. From product selection pricing and member operations to supply chain forecasting
content production and store operations AI is gradually embedding itself across the entire retail value chain. Multiple institutions
predict that the market size for AI-related solutions targeting retail scenarios will reach hundreds of billions of RMB by 2025 becoming
a key investment direction for retail enterprises in the medium to long term.For chain retail enterprises the intelligent digitalization transformation of stores has elevated from a single-point project to a core
strategic issue. Large and medium-sized chains generally include smart store construction as a key investment direction for the next 3
years conducting systematic upgrades centered on "improving human efficiency optimizing floor efficiency and enhancing user
experience".
3. Development of the brain-computer interface industry in 2025
(1) Overall industry overview
Brain-Computer Interface (BCI) is a cutting-edge technology that achieves information interaction between the brain and external
devices by collecting and decoding brain electrical or neural signals integrating multidisciplinary achievements in neuroscience
microelectronics materials science artificial intelligence and computer vision. In 2025 the global BCI industry is still in a transitional
phase from experimental research to early commercialization exploration. The Chinese market is primarily characterized by research-
driven development and policy guidance; its overall market size is still relatively small compared to the biometrics and computer vision
industries but its strategic value and capital attention continue to rise.
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Globally BCI companies continue to advance clinical trials and engineering validation. Representative companies such as
Neuralink and Synchron have made phased progress in invasive technology pathways. China has also seen the emergence of a number
of innovative enterprises and research teams focusing on medical rehabilitation neuromodulation and scientific research equipment.Overall the industry is still in a parallel phase of technological validation and regulatory refinement and is some distance away from
large-scale consumer-grade applications.
(2) Policy and regulatory environment
In 2025 Brain-Computer Interface (BCI) was incorporated as a key direction in the national future industry layout. Focusing on
areas such as brain-inspired intelligence high-end medical devices and neuroengineering national and local governments have
successively introduced special support policies to promote the localization of core components breakthroughs in key algorithms and
the development of clinical translation capabilities.At the regulatory level BCIs especially invasive products are classified as high-risk medical devices with strict approval
processes involving ethical review clinical trials data security personal information protection and other multiple compliance
requirements. The relevant regulatory system is gradually aligning with international standards while also emphasizing the secure
management of highly sensitive information such as EEG data and physiological signals. This policy environment of "encouraging
innovation and prudent regulation" makes the industry's development pace more rational and stable.
(3) Application scenarios and commercialization progress
In 2025 BCI applications still primarily focus on medical and healthcare while also extending to scientific research and specific
industry scenarios:
* Medical rehabilitation field
In areas such as post-stroke motor function recovery assistive control for spinal cord injury and communication assistance for
Amyotrophic Lateral Sclerosis (ALS) Brain-Computer Interface (BCI) technology has entered clinical trials or small-scale
demonstration phases. Driving exoskeletons robotic arms or virtual interfaces through brain signals to achieve "mind control" has
become the scenario with the most practical application value.* Neuromodulation and mental health
Some invasive or semi-invasive technologies are used in neuromodulation research for diseases such as Parkinson's disease and
epilepsy. This sector is deeply intertwined with high-end medical devices characterized by long approval cycles but high entry barriers.* Scientific research and education
Universities and research institutions show a steadily growing demand for BCI devices primarily used for cognitive science
research human-computer interaction experiments and algorithm development thus forming a stable but limited market segment.* Industry and special sector exploration
In scenarios such as high-risk operation monitoring and pilot/driver state monitoring electroencephalography (EEG) monitoring
has begun pilot applications as a safety auxiliary tool but it is still in the validation phase.
(4) Industry challenges and risks
BCI still faces multiple challenges specifically manifested in the following aspects:
* Technical reliability and repeatability need improvement especially long-term stability in complex environments;
* The business model is still unclear and the return cycle for medical applications is relatively long;
* Ethical and privacy issues are highly sensitive and public awareness needs to be gradually established;
* High-end chips and core materials rely on imports and supply chain security needs to be strengthened.Overall in 2025 the BCI industry is in a development stage characterized by "a critical period for technological breakthroughs
an initial phase of industrialization exploration and a gradual improvement in regulation". It remains a strategic frontier industry but
its integration trend with AI and multimodal perception technologies is clear with broad long-term growth potential.In the future with improved algorithmic capabilities reduced hardware costs and a perfected policy system BCIs are expected
to achieve phased large-scale breakthroughs in areas such as smart living medical rehabilitation and human-computer interaction and
gradually extend to broader intelligent application scenarios.
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(III) Overview and development trends of major technologies in the industry in 2026
There are various types of multimodal perception technologies including fingerprint recognition facial recognition palmprint
recognition palm vein recognition finger vein recognition iris recognition voiceprint recognition etc. Due to the development of AI
technology big data and cloud computing multimodal perception is closely combined with computer vision and it has developed
from simple identification to the empathetic experience ecology of scene interaction such as "Who are you What kind of service
should I provide for you" as well as the empathetic experience ecology of scene interaction.
1. Overview and trends of global multimodal perception technology development
(1) Technology development overview
Multimodal fusion technology continues to upgrade: evolving from "feature superposition" to "deep fusion" achieving cross-
modal correlation analysis such as palmprint + palm vein facial + iris through multi-dimensional information fusion at sensor feature
and decision levels enhancing recognition accuracy and anti-attack capabilities. Hardware architecture innovation has made
breakthroughs with ultra-wide-angle binocular camera architecture enabling multi-biometric shared collection devices significantly
improving integration efficiency and reducing deployment costs.Non-contact technology is maturing: relying on machine sensors for identity verification with no human contact required
throughout the process. It continuously optimizes adaptability in complex environments and signal acquisition accuracy. Devices are
evolving towards miniaturization mobility and high throughput and have been widely applied in smart cities financial payments and
other fields meeting diverse and personalized needs.Deep integration of AI and edge intelligence: AI technologies such as deep learning and computer vision optimize data processing
workflows reduce misjudgment rates and increase recognition accuracy by 20%-30% in complex environments. The popularization
of edge computing architectures transfers most computation and storage to local edge devices reducing network latency by over 50%
and mitigating privacy risks associated with sensitive data transmission across networks. Architectures like BioCV TinyML enable
model lightweighting adapting to low-power devices.Rapid development of compliance technologies: adopting "feature template + dynamic encryption" transmission data
anonymization localized storage and other technologies to meet regulatory requirements like the "Personal Information Protection
Law". Privacy-enhancing AI technologies are emerging achieving privacy protection while ensuring algorithm performance and
promoting compliant and sustainable industry development.
(2) Development trends
Mainstreaming of multimodal fusion: The integration of multimodal technologies such as fingerprint facial palmprint and palm
vein is becoming mainstream in the market. Non-contact identity authentication demand continues to rise flexibly adapting to scenarios
like government affairs finance and hotels promoting the popularization of self-service terminals and covering more application
scenarios and populations.Deep empowerment by AI and computer vision: transitioning from traditional algorithms to deep learning-driven approaches
generative AI technology optimizes algorithms through simulated data further enhancing performance while ensuring compliance with
privacy regulations. Supporting precise detection of biometric and object features strengthening recognition speed and robustness and
injecting new momentum into multimodal perception technology.Accelerated scenario-based innovation: combining AI and IoT to create "people-centric" OMO (Online-Merge-Offline) micro-
scenario experiences continuously unleashing application potential in healthcare retail transportation education government affairs
and other fields. Solutions such as smart access control and digital identity verification are rapidly being implemented driving the
industry's upgrade from "tool attributes" to "infrastructure".Acceleration of domestic substitution: Independent R&D capabilities in core links such as core algorithms and edge computing
chips continue to improve and key components gradually achieve domestic substitution industry chain collaboration strengthens
forming a localized ecosystem from technology R&D hardware manufacturing to scenario application enhancing industry supply
chain security and core competitiveness.
2. Overview and development trends of technologies in the smart retail industry
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(1) Digital display terminals (LCD/LED): From "Video Player" to "Interactive Operations Center"
As consumers' demands for information density visual experience and interactivity continue to increase the promotional methods
of offline retail are rapidly upgrading from static posters to digitalization videoization and operationalization. Digital display terminals
(LCD/LED shelf screens traffic-attracting screens etc.) are no longer just simple "video players" but are gradually evolving into
"store digital operation hubs" that carry brand content promotional information member benefits and real-time operational strategies.On the one hand terminal displays are evolving from high-definition to immersive with 4K/8K displays 3D visual effects and
immersive content gradually being applied in key business districts and flagship stores. On the other hand the application of generative
AI in aspects such as ad creative product image and short video generation has significantly reduced content production costs and
shortened the cycle from "idea to screen" making "multi-category multi-time slot personalized content operations across thousands
of stores" possible.In terms of technical architecture digital display terminals are evolving towards a "front-end terminal + cloud-edge integrated
platform + AI decision model + third-party application ecosystem": front-end screens and players are responsible for content
presentation and basic sensing the cloud platform is responsible for content distribution strategy orchestration and data aggregation
AI models make intelligent product selection and placement decisions based on customer traffic sales and member data while third-
party applications provide extended capabilities in areas such as ad monetization interactive marketing and new member acquisition.
(2) Cloud monitoring systems and smart self-service terminals: From "Unmanned" to "24H Smart Fulfillment"
Early unmanned retail models represented by "fully unmanned stores" revealed in practice problems such as long investment
payback periods complex operation and maintenance and high risk control pressure. The current mainstream direction in the industry
is shifting from an "absolute unmanned" model to a "lean staffing + cloud monitoring" smart fulfillment model."24H Cloud Monitoring" achieves real-time monitoring remote service and anomaly handling for stores and terminals through a
combination of "AI vision + smart sensing + remote human customer service": AI is responsible for identifying customer traffic queues
abnormal behaviors and loss prevention risks while remote customer service intervenes at critical junctures to provide consultation
and answers identity verification and dispute resolution. Compared to early purely unmanned stores this model achieves a better
balance between safety service experience and labor costs—one remote customer service agent can simultaneously monitor multiple
stores or terminals significantly improving human efficiency during nighttime and low-traffic periods.Building on this smart self-service terminals (e.g. self-checkout machines smart lockers front-end warehouse pickup lockers)
form a synergy with the cloud monitoring system: the front-end terminals handle transaction and fulfillment touchpoints while the
cloud system is responsible for unified monitoring remote O&M and data-driven operational optimization collectively supporting the
smart fulfillment capabilities of "24-hour operation differentiated services and controllable costs".
3. Overview and development trends of BCI technology
(1) Industry overview: From conceptual exploration to the eve of commercial implementation
Brain-Computer Interface (BCI) technology as a representative of new quality productive forces in the digital economy and AI
fields is undergoing a critical transition from laboratory research and exploration to commercial application implementation. With the
synergistic advancements in AI algorithms neuroscience new materials and chip technologies the BCI industry scale is showing
explosive growth. According to industry research institutions' forecasts the global BCI market size will maintain a high compound
annual growth rate over the next five years.
(2) Evolution of technology roadmaps: Non-invasive approaches are becoming the mainstream trend.
Currently BCI technology is primarily categorized into three major technical routes: invasive semi-invasive and non-invasive.Key development trends are as follows:
Advantages of non-invasive technology are prominent: Considering safety portability and public acceptance non-invasive BCIs
(e.g. technologies based on electroencephalography (EEG) and functional near-infrared spectroscopy (fNIRS)) leverage their non-
invasive low-cost and easy-to-wear characteristics to demonstrate broader commercialization prospects in fields such as consumer
electronics smart health and smart office becoming the mainstream direction for industry development.
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The rise of multimodal fusion technology: Single electroencephalogram (EEG) signal recognition still presents limitations in
complex scenarios. The industry is trending towards combining BCI technology with eye-tracking electromyography (EMG) signals
voice recognition and other biometric technologies to form "multimodal fusion interaction" solutions significantly improving the
accuracy of intent recognition and the robustness of the system.
(3) Expansion of application scenarios: Penetrating from medical rehabilitation into diversified scenarios.
The application boundaries of BCIs are continuously expanding having formed a pattern of "medical applications taking the lead
with consumer electronics and industry applications following suit":
Smart healthcare and rehabilitation: Neurological rehabilitation sleep monitoring and auxiliary diagnosis of depression are still
core application scenarios with high technological maturity.Smart office and human-computer interaction: With the iteration of flexible sensors and wearable devices BCIs are beginning to
penetrate into the smart office domain. For example by monitoring mental workload to achieve intelligent workflow adjustment
thought-to-text typing or even combining with virtual reality (VR/AR) to build immersive meeting experiences this provides a new
dimension for the intelligent upgrade of office equipment.Smart security and identity verification: As a highly unique biometric feature brainwaves' potential value in high-security identity
authentication is being explored. In the future it is expected to complement technologies such as fingerprint facial and vein recognition
building a more stringent biometric security system.
(4) Policy environment and industrial ecosystem
At the national level great importance is attached to the development of the BCI industry listing it as a key cultivation direction
for "future industries". Relevant regulatory authorities are accelerating the formulation of industry standards and ethical norms to
safeguard the compliant application of the technology. Collaboration across the upstream and downstream of the industry chain is
becoming increasingly close. From chip design and electrode manufacturing to algorithm software and system integration the
localization substitution process is accelerating and domestic enterprises are securing an important position in the global BCI
competition.III. Analysis of Core Competitiveness
(I) Core technology system
As of December 31 2025 the Company and its consolidated subsidiaries collectively hold 1193 patents including 220 invention
patents. obtained 829 computer software copyrights and 87 work copyrights with strong ability for continuous innovation. As of the
end of the reporting period the Company has actively participated in the formulation of 41 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. The Company's core technological advantages are demonstrated in the following aspects:
1. Multimodal BioCV fusion technology
ZKTeco has been deeply engaged in the field of multimodal BioCV and smart perception for many years building a
comprehensive multimodal BioCV technology system covering all categories of recognition modalities including fingerprint palm
(palmprint + palm vein) facial iris and finger vein. The Company's independently developed core algorithms combine high precision
high speed and high security. They maintain excellent recognition performance even in special scenarios with complex lighting or
harsh environments demonstrating profound technological accumulation.In terms of hardware and core technology innovation the Company has made a breakthrough by adopting an ultra-wide-angle
binocular camera architecture enabling palm recognition and facial recognition to share the same hardware acquisition device. This
efficiently integrates bimodal capabilities and significantly enhances device integration efficiency. Specifically palm recognition
employs a hybrid solution of palmprint + palm vein relying on near-infrared imaging technology to capture vein information combined
with palmprint texture details to form a dual security guarantee and is complemented by image enhancement algorithms to optimize
feature acquisition in complex environments; facial recognition adopts a near-infrared + visible light hybrid mode flexibly adapting to
52ZKTeco 2025 Annual Report
all-scenario lighting. In low-light environments dedicated algorithms restore key details to ensure recognition stability.The facial and palm live detection modules are simultaneously upgraded utilizing RGB+IR bimodal fusion and deep learning
algorithms. This effectively defends against spoofing attacks such as photos videos and 3D masks maintaining stable discrimination
capabilities even in low-light environments through detail restoration algorithms. Concurrently the Company has launched a cross-
platform adaptation solution fully supporting mobile terminals such as HarmonyOS Android and iOS as well as various desktop and
dedicated device terminals. By employing unified feature template extraction and encryption standards secure interoperability across
devices is achieved eliminating the need for users to register repeatedly. Furthermore the transmission process only conveys feature
templates not raw biometric data which combined with dynamic encryption and decentralized storage technologies fully safeguards
user privacy and data security.At the algorithm optimization level we innovatively integrate deep learning with traditional pattern recognition algorithms. Deep
learning addresses challenges posed by complex scenarios and high-dimensional data while traditional pattern recognition ensures
system operational efficiency achieving an optimal balance between recognition accuracy and speed. This significantly enhances the
system's generalization capability and reliability further solidifying our industry technical advantages.
2. Mars Wisdom AI Cognitive Computing Platform
The Company has proposed the "cognitive space computing" theory in advance and built the Mars Wisdom AI platform with a
multimodal AI cognitive computing framework achieving a full-chain intelligent evolution from perception understanding prediction
to decision-making. Relying on its self-developed space computing engine the system can analyze in real time the behavior
characteristics relationship networks and spatiotemporal trajectories of people vehicles and objects within the physical space and
form a scenario-based cognitive decision-making system by combining commercial intelligence algorithms. Different from the
traditional focus on physical control in entrance and exit management ZKTeco has surpassed the physical management of Baiaruida
and the digital upgrade of general entrance and exit of ZKBio. Through AI cognitive space computing technology it has broken the
boundaries between physical and digital spaces and moved towards a higher-dimensional intelligent cognitive era. For example in
large commercial complexes the system not only accurately identifies customers and vehicles but also analyzes trajectories and dwell
times to understand consumption preferences and potential demands providing precise decision support for operations and achieving
intelligent marketing and resource optimization.Based on the technical architecture of "AIoT multi-dimensional perception + large model empowerment middleground + industry
scenario application" the Company has built a three-level technical system covering smart terminals edge computing and cloud
services. Through its self-developed Agent development platform it deeply integrates the capabilities of DeepSeek DouBao ChatGPT
and other large models to achieve cross-modal knowledge transfer and scenario-based intelligent generation promoting the digital
transformation of traditional industries into a new stage of cognitive intelligence.
3. AIoT technology
ZKTeco's self-developed AIoT solution Minerva IoT The platform adopts a cloud-native architecture 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.
4. BCI technology
ZKTeco establishes a core EEG interface technology system through multimodal AI and edge-cloud synergy empowering a new
future for human-computer interaction. This technology system based on non-invasive brain-computer interaction with multimodal
AI integration as its core and supported by edge-cloud integration focuses on livelihood scenarios such as improving educational
concentration early screening for neurological diseases rehabilitation assistance and smart elder care. It deeply integrates biosensing
edge computing and brain science laying a solid foundation for the transition of BCI technology from laboratories to large-scale
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civilian applications.ZKTeco's EEG interface technology system adheres to a safe non-invasive approach. Based on the precise acquisition of
microvolt-level weak EEG signals it develops flexible sensor arrays and lightweight wearable hardware balancing signal stability
wearing comfort and portability making it adaptable to daily long-term monitoring and large-scale popular applications. Leveraging
the Company's long-term technological accumulation in multimodal BioCV the system innovatively achieves multi-dimensional
integrated perception of EEG EOG EMG iris and retinal images and clinical health data. This breaks through industry bottlenecks
such as single-modal signals being susceptible to interference and limited recognition accuracy. Through deep learning and correlated
feature mining it achieves stable analysis of concentration relaxation emotional states fatigue levels and movement intentions.(II) Scenario-based R&D model achieving precise alignment of technology with scenarios
The Company uses a scenario-based R&D model driven by "technology foundation + scenario traction" as its engine with an
integrated edge-cloud R&D technology ecosystem as its foundation. Centered around the core needs of various scenarios it builds
specialized business capability platforms deeply integrating core technologies with specific scenarios. This achieves rapid
industrialization of technological achievements and scenario-based innovation creating an R&D system where "technology is
implementable products are adaptable and solutions are valuable" thereby achieving precise adaptation of technology to scenarios.The Company's core advantages in scenario-based R&D are reflected in the following aspects:
1. Construction of specialized business capability platforms
Building a series of specialized business capability platforms including Smart Space Management Platform Brain-Computer
Sovereign Cloud Platform Smart Audio-Video Platform and Digital Marketing Platform. These platforms serve as a connecting hub
between technology and scenarios enabling modular and standardized output of core technologies and rapidly adapting to the
personalized needs of different industries and scenarios.
2. Smart space scenarios + Large model application technology + Edge AI
Integrating the Mars Wisdom AI cognitive computing platform with BioCV TinyML edge AI technology into smart space
scenarios we create an AI cognitive spatial computing solution achieving an upgrade from "physical control" to "intelligent decision-
making" and evolving from "perception" to "autonomous decision-making". Encompassing all scenarios including campuses buildings
communities and transportation it enables integrated smart management for access optimization energy management security
protection and improved operational efficiency.
3. Smart office scenarios + Large model application technology
We launched the Ralvie AI Agent Platform integrating large model technology to achieve an upgrade from "time management"
to "organizational performance management". Through intelligent analysis of workload structure it provides enterprises with decision
support for resource optimization and performance improvement creating a smart office ecosystem of "empowerment rather than
monitoring" and realizing a dual enhancement in office efficiency and organizational value.
4. Smart retail scenarios + AI Agent
In smart retail scenarios we integrate VLM/LLM large models and AI Agent technology to create the ZKDIGIMAX Level3
Digital Marketing Solution enabling consumer behavior analysis merchandise display optimization intelligent generation of
marketing content and cloud monitoring smart services. This builds a full-scenario full-chain boundless retail ecosystem providing
retail enterprises with precision operations and digital transformation capabilities.
5. Smart identity verification scenarios + BioCV fusion technology
Combining multimodal BioCV fusion technology with blockchain and large model technology we create identity authentication
solutions such as Human Certificate Rubik's Cube achieving precise verification for "the integration of people and certificates". This
covers segmented scenarios like smart examination management smart healthcare and smart new student/employee onboarding
fortifying the digital world with a secure and trustworthy identity authentication foundation.
6. Smart life service scenarios
Leveraging the Company's advantages in multimodal BioCV and AIoT technologies and products we are deploying smart
outdoor smart home and other smart life service scenarios creating core products such as outdoor tracking cameras and smart audio-
54ZKTeco 2025 Annual Report
visual devices to achieve intelligent and convenient upgrades for smart life scenarios and expand the application boundaries of the
Company's technologies and products.
7. Education health and elderly care and medical service scenarios
Integrating BCI technology with multimodal BioCV technology we focus on livelihood scenarios such as improving educational
concentration health monitoring for elderly care early screening for neurological diseases and rehabilitation assistance creating
customized solutions to lay the technical and scenario foundation for future big health and smart education tracks.(III) Pan-scenario capability support
The Company has built a full-dimensional scenario product support system of smart terminal + software platform system + cloud
operation subscription services. With multimodal BioCV technology as the core foundation and digitalization and intelligence as the
main connecting line it breaks down software and hardware collaboration barriers and deeply integrates cloud-native service
capabilities creating pan-scenario solutions covering all fields such as smart space smart office digital identity authentication and
smart commerce. Meanwhile relying on cloud-native technology platforms like ZKTeco Interconnection it deeply strengthens cloud
operation core capabilities and a diversified subscription service system achieving a product model upgrade from the traditional
"hardware product sales + one-time service" model to "cloud operation full-cycle O&M + subscription-based on-demand service" thus
forming pan-scenario support capabilities that combine scenario breadth technical depth and service stickiness.Regarding software systems and platforms the Company highly values the integrated development and design of software and
hardware focusing on building a software-hardware integrated AIoT ecosystem that can provide diversified personalized and
customized system software and platform services for different users different application scenarios and different vertical fields. On
one hand we are deploying the ZKTeco Cloud IoT Platform MinervaIoT based on the Amazon Web Services technology stack to
provide deployment-free SaaS application products for smart space smart office smart life and other scenarios. At the same time we
specifically develop platforms for segmented fields providing ZKBio Smart Park Integrated Management Platform V8800 and ZKBio
Intelligent Integrated Management Platform V6600 for large park-type enterprise customers; ZKBio Netxis Cloud middleware
development platform and Time and Security Refined Service Platform E-ZKEco Pro for medium and large enterprise customers;
ZKTeco Cloud Attendance and Access Control Management System BioTime 8.0 for overseas customers; and ZKBio Partner ZKTeco
Cloud Commerce Smart Marketing Management Tool Platform for channel partners comprehensively empowering partners to achieve
digital business operations and refined management. On the other hand based on the mature technical modules and software
middleware of various platforms we provide combined applications and flexible platform function customization and development
services to users precisely meeting personalized needs and establishing good brand awareness.Regarding smart terminals the Company has built a full-category highly adaptable hardware product matrix which can provide
smart perception and control terminals covering multiple fields: 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. In the
field of smart business we focus on the needs of chain customers providing hardware products such as smart perception terminals and
commercial interactive terminals along with business system development and data analysis capabilities for people products and
places. By empowering with technology we help retail enterprises improve sales efficiency optimize consumer experience and loyalty
reduce operating costs and risks and achieve sustainable growth.In terms of cloud operations and subscription services the Company with ZKTeco Interconnection Ralvie AI and other cloud-
native technology platforms at its core has built a diversified subscription service system covering basic cloud services value-added
cloud services and industry-customized cloud services thereby deeply strengthening core cloud operation capabilities such as
centralized cloud device management intelligent data analysis and operation continuous system iteration and upgrade and scenario-
based intelligent O&M. We have launched subscription packages deeply integrating smart terminals with full-lifecycle cloud O&M
services while also offering lightweight and flexibly expandable subscription options to meet the low-threshold digitalization needs of
SMEs and the customized service needs of large enterprises thereby achieving a transformation from "product delivery" to "full-
55ZKTeco 2025 Annual Report
lifecycle value services".The Company's full-dimensional product array is built upon multimodal BioCV core technology with deep synergy between
software and hardware and efficient integration of cloud network and edge forming a general-purpose scenario support capability
that covers all scenarios and adapts to multiple industries. In the future as the boundaries of user application scenarios continue to
expand and extend the Company will continue to enrich and improve its hardware terminal software platform and cloud service
product matrix deepen its cloud operation and subscription service capabilities and continuously enhance product scenario adaptability
and service value to provide customers with more comprehensive professional and high-quality end-to-end solutions.(IV) Synergistic advantages of the global service operation network
After years of development the Company has accumulated rich experience in operating channel products has a large number of
customer resources and has established a relatively complete global marketing service network system. Sales channels and service
networks cover major cities in China and in multiple countries and regions around the world. Moreover the Company actively expands
its online sales channels and has established a comprehensive online marketing network on major e-commerce platforms and self built
shopping malls. The integration and complementarity of international and domestic online and offline operations have formed a strong
marketing and service network advantage. Furthermore the global marketing and service network continues to deepen its penetration
and the cloud service system is continuously improving further solidifying the foundation for all-scenario full-coverage service
assurance.As of December 31 2025 the Company has established 27 branches and 16 subsidiaries across China mainland with a sales and
service system covering the whole country. The Company has established a total of 62 controlling subsidiaries overseas located in 33
countries and regions worldwide with product sales covering over 100 countries and regions. Through the aforementioned arrangement
globalized and localized synergy in R&D production sales and service has been achieved.Domestically the Company takes "regional deep cultivation + structural penetration" as its core strategic focus continuously
strengthening its synergistic capabilities with core partners and distribution systems. Through the construction of a terminal brand
system and multi-dimensional touchpoints such as industry exhibitions and professional forums it systematically enhances brand
penetration and industry influence. Meanwhile the Company is accelerating the build-out of its marketing service center network and
digital marketing platform driving its sales and service capabilities to extend deeply into tier-three tier-four and tier-five cities as
well as county-level markets further unleashing the growth potential of the lower-tier markets. Building on this the Company is
actively exploring a new digital marketing model of "short video + live streaming + e-commerce" achieving a transformation and
upgrade from traditional channel-driven to data-driven and content-driven approaches continuously improving customer acquisition
efficiency and conversion rate. The integrated online and offline convergence continues to deepen not only effectively expanding
market coverage but also significantly enhancing channel operational efficiency and resource allocation capabilities enabling the
Company to build a more resilient growth curve in the domestic market.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 optimizing
the revenue structure and enhancing profitability and anti-cyclical capabilities.(V) Intelligent manufacturing advantages ensuring efficient product delivery
The Company builds a "fully integrated customized and flexible lean and intelligent" production and manufacturing system
and has established a global manufacturing system.
56ZKTeco 2025 Annual Report
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
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. Advantages in global manufacturing synergy
The Company continues to optimize its global intelligent manufacturing layout establishing a three-in-one global production
system comprising the Dongguan Manufacturing Headquarters the Thai overseas manufacturing hub and the US high-end intelligent
manufacturing base. The Dongguan Headquarters Manufacturing Base serves as the core manufacturing base solidifying the
foundation of global production capacity and mass production capabilities; the Thai factory is positioned as a core overseas
manufacturing hub coordinating global cross-regional capacity allocation and playing a central role in the supply chain; the US factory
focuses on localized manufacturing of high-end products and the transformation of technological achievements deeply serving the
North American regional market and strengthening local rapid delivery and technical support.(VI) Advantages of high-value brands building a global market reputation
Leveraging its core technological advantages a full-scenario product system and global service capabilities the Company firmly
ranks among the industry's top tier with continuously improving brand influence and market recognition.The Company has been listed as one of the "Top 50 Global Security Companies" by asmag for six consecutive years from 2020
to 2025. In 2025 it ranked 17th on the list and was awarded awards such as "Top 50 Innovation" and "Top 10 Brands in Smart Security"
in 2025 Global Security Industry Digital Innovation Ranking by asmag. It was recognized by the Department of Industry and
Information Technology of Guangdong Province as a "Guangdong Province 2025 Provincial Manufacturing Single Champion
Enterprise" and a "Seventh Batch of Provincial Industrial Design Centers". Since 2016 the Company has been awarded the title of
57ZKTeco 2025 Annual Report
"Top 500 Manufacturing Enterprises in Guangdong Province" by Guangdong Manufacturers Association and other entities for 10
consecutive years (ranking 202nd in 2025). It was selected by the DC World Organizing Committee and relevant institutions as "2025
DC World · DC World Awards - Top 10 Brands (AI)" and "2025 DC World · DC World Awards - Top 10 Brands (Security Inspection
and Explosive Disposal)". It was awarded by the China Intelligent Transportation Systems Association and the China Top 30 Intelligent
Transportation Organizing Committee the "2025 14th Top 30 Intelligent Transportation Enterprises in ITSMRS". It won the third place
in the "2025 Top 10 Access Control Brands Award" by China Intelligent Building and other entities. At the 2025 China IoT Industry
Conference and the 22nd Huicong Brand Festival it was awarded the 2025 "IoT Platform Excellent Service Award" and "Smart Passage
Technology Innovation Award". It was awarded by the Brand Power Nation Pioneer Project Organizing Committee the "2025 National
Brand Light Program Selected Brand (ZKTeco)".In terms of products and solutions the MG100 multimodal BioCV channel control module unattended scenario series solutions
and ZKTeco Interconnection Cloud Platform received the "20th China Public Security Expo (CPSE) Golden Tripod Award". The
ZKTeco Longhu series swing barrier and smart cloud access control terminal were awarded the "China Top 10 Digital Security New
Product Award". New Generation Smart Scenic Spot Self-Service Ticketing Solution and Smart Security Inspection Solution won the
"2025 Ping An Shenzhen Construction Excellent Project Award"; "ZKTeco Mars Wisdom Platform" received the "a&s TOP Digital
Products & Solutions" award. The product "Facial and Palm Access Control Terminal Xpalm602" was selected by the GUANGDONG
HIGH-TECH ENTERPRISE ASSOCIATION as the "2025 Guangdong Provincial Famous and Excellent High-tech Product" and the
Visible Light Facial and Fingerprint Access Control Terminal "nFace260" was selected by the Dongguan High-Tech Industry
Association as the "Dongguan High-Tech Products of 2025".During the reporting period Guangdong Zkteco passed the national high-tech enterprise re-certification and was recognized by
the Department of Industry and Information Technology of Guangdong Province as one of the seventh batch of SRDI "Little Giant"
enterprises in Guangdong Province; Xiamen ZKTeco obtained renewed certification certificates for ISO 9001:2015 Quality
Management System ISO/IEC 20000-1:2018 Information Technology Service Management System ISO/IEC 27001:2022 Information
Security Management System ISO/IEC 27017:2015 Cloud Service Security Management System ISO/IEC 27701:2019:2015 Privacy
Information Management System and GB/T29490-2023 Intellectual Property Compliance Management System.(VII) Continuously building a talent ecosystem stimulating organizational innovation vitality
With "talent as the core ecosystem as the support and incentives as the guarantee" the Company continues to build a diversified
and professional talent ecosystem. The core team of the Company has over two decades of industry experience and has a deep
understanding of the development trends of 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.(VIII) Full-process quality control advantage solidifying product and service quality
The Company always regards quality as its core development driver taking the entire chain of R&D procurement production
and after-sales as control dimensions to build a refined quality control system that covers all software and hardware categories and
spans the entire product lifecycle. While integrating AI technology to empower R&D quality control and through the dual assurance
of technological innovation and process standardization it continuously strengthens product and service quality thereby building an
industry-leading quality competitive barrier.In the R&D and design phase the Company strictly adheres to the "Design and Development Management Control Procedure"
introducing a cross-departmental collaboration mechanism from project initiation and review integrating the professional advantages
58ZKTeco 2025 Annual Report
of R&D production quality control and marketing to achieve a deep match between design requirements and scenario applications
as well as production implementation. For the software R&D process an innovative AI-assisted programming quality control system
is introduced leveraging tools like CodeRider for intelligent code review. Through AI algorithms it achieves comprehensive control
across dimensions such as code vulnerability detection logical compliance verification performance optimization analysis and coding
standard unification significantly improving code writing quality and R&D efficiency avoiding potential software product issues from
the technical source and ensuring the stability and reliability of software and hardware collaborative development.In the procurement process the Company establishes a standardized "Supplier Management Control Procedure" building a
comprehensive supplier screening evaluation and dynamic management system. It conducts strict qualification audits capacity
verification and sample testing for core raw material and component suppliers while simultaneously establishing monthly and annual
supplier evaluation mechanisms to achieve precise control over supply-side quality ensuring the quality stability of production
materials from the source.In the production and manufacturing process the Company strictly implements the "Production Process Control Procedure"
leveraging industry-leading automated production equipment lean production model and digital management systems such as MES
and QMS to conduct refined and standardized control over various processes such as injection molding SMT placement algorithm
burning finished product assembly and full-process testing. This achieves full data traceability and quality control at every stage of
the production process ensuring the consistency and stability of product manufacturing quality.Regarding quality after-sales service the Company adheres to the "customer first" service philosophy establishing an efficient
global after-sales service system. It collects customer issues and suggestions during product use in real time through a multi-channel
feedback system establishes a tiered problem-handling and closed-loop tracking mechanism and simultaneously conducts in-depth
analysis of customer feedback data. Quality improvement suggestions are fed back to the R&D and production processes forming an
"after-sales feedback - problem rectification - technical optimization" quality improvement closed loop.Leveraging its full-process standardized quality control system and innovative control capabilities assisted by AI technology the
Company has achieved full-chain quality control from R&D and design to after-sales service forming a strong quality competitive
advantage. In the future the Company will continue to uphold the principle of quality first continuously integrating cutting-edge
technologies to optimize its quality control system deepening its full-chain quality control capabilities and continuously improving
product and service quality to provide global customers with more reliable and higher-quality products and solutions and create long-
term value for shareholders.IV. Main Business Analysis
1. Overview
See relevant contents of "I. Main Businesses Engaged by the Company During the Reporting Period".
2. Revenue and costs
(1) Composition of operating revenue
Composition of operating revenue
Unit: RMB
20252024
Proportion in Proportion in YoY change
Amount Amount
operating revenue operating revenue
Total operating
2132789667.81100%1991200391.75100%7.11%
revenue
59ZKTeco 2025 Annual Report
By industry
By product
Smart office
331601012.2015.55%303727652.0915.25%9.18%
products
Smart space
1591817912.1374.63%1499690452.9575.32%6.14%
products
Digital identity
authentication 89136398.95 4.18% 114134724.26 5.73% -21.90%
products
Smart business
66955688.173.14%65780942.953.30%1.79%
products
Smart living
43982625.672.06%
products
Other products 9296030.69 0.44% 7866619.50 0.40% 18.17%
By region
Domestic sales 523570689.10 24.55% 578972159.13 29.08% -9.57%
Overseas sales 1609218978.71 75.45% 1412228232.62 70.92% 13.95%
By sales model
Distribution 1436407854.82 67.35% 1375597572.70 69.08% 4.42%
Direct sales 687085782.30 32.21% 607736199.55 30.52% 13.06%
Others 9296030.69 0.44% 7866619.50 0.40% 18.17%
(2) Industries products regions or sales models that accounted for more than 10% of the Company's operating revenue or
profit
□Applicable □ Not applicable
Unit: RMB
YoY change of YoY change of
Operating Gross profit YoY change of
Operating cost operating gross profit
revenue margin operating costs
revenue margin
By industry
By product
Smart office
331601012.2099056957.6270.13%9.18%0.74%2.50%
products
Including:
attendance 198909422.83 78618106.45 60.48% 1.23% -4.44% 2.35%
products
Other
132691589.3720438851.1784.60%23.74%27.31%-0.43%
products
Smart space
1591817912.13827410480.0648.02%6.14%6.12%0.01%
products
Including:
access control 1051421341.50 515396340.35 50.98% 10.17% 10.90% -0.32%
products
Other
540396570.63312014139.7142.26%-0.90%-0.94%0.02%
products
Digital identity
authentication 89136398.95 60533511.82 32.09% -21.90% -22.64% 0.65%
products
Including:
biometrics 35488694.92 15378992.49 56.67% 0.41% 3.46% -1.27%
sensor products
Including: 46925120.49 43611157.48 7.06% -33.47% -28.90% -5.97%
60ZKTeco 2025 Annual Report
card products
Other
6722583.541543361.8577.04%-18.60%-24.56%1.81%
products
Smart business
66955688.1751700091.9722.78%1.79%2.78%-0.75%
products
Including:
commercial 24572910.84 18352926.30 25.31% -13.23% -7.67% -4.50%
products
Including:
digital signage 31119035.91 24691088.47 20.66% 136.34% 112.71% 8.82%
products
Other
11263741.428656077.2023.15%-53.64%-54.00%0.60%
products
Smart living
43982625.6723594508.2746.35%
products
Including:
35768093.1218838107.5747.33%
Outdoor
Including:
8214532.554756400.7042.10%
Smart home
Other products 9296030.69 1656759.15 82.18% 18.17% 0.95% 3.04%
By region
Domestic sales 523570689.10 363081502.73 30.65% -9.57% -8.23% -1.01%
Overseas sales 1609218978.71 700870806.16 56.45% 13.95% 14.41% -0.17%
By sales model
44.75%0.27%
Distribution 4.42% 3.90%
1436407854.82793553448.15
60.89%0.84%
Direct sales 687085782.30 13.06% 10.68%
268742101.59
82.18%3.04%
Others 9296030.69 1656759.15 18.17% 0.95%
In the event that the statistical scope of the Company's main business data is adjusted during the reporting period the main business
data of the Company has been adjusted according to the scope at the end of the reporting period in the past year
□ Applicable □Not applicable
(3) Whether the Company's physical products sales greater than revenue from labor services
□Yes □ No
Industry
Item Unit 2025 2024 YoY change
classification
Computer Sales volume Pcs./Set 2836517.00 2611717.00 8.61%
communication
Production Pcs./Set 2842565.00 2616073.00 8.66%
and other
electronic
equipment
Inventories Pcs./Set 625050.00 466029.00 34.12%
manufacturing
industry
Description of the reasons for the year-on-year change of over 30% in relevant data
□Applicable □ Not applicable
Due to the acquisition of subsidiary Longzhiyuan in the current period the relevant data changed significantly year-on-year.
(4) Performance status of major sales and procurement contracts signed by the Company as of this reporting period
□ Applicable □Not applicable
61ZKTeco 2025 Annual Report
(5) Composition of operating costs
Industry classification
Unit: RMB
20252024
Industry
Item Proportion in Proportion in YoY change classification Amount Amount
operating costs operating costs
Computer
communication
and other
957119911.6189.96%915878563.4090.84%4.50%
electronic Raw materials
equipment
manufacturing
industry
Computer
communication
and other
34043803.533.20%27850655.112.76%22.24%
electronic Labor cost
equipment
manufacturing
industry
Computer
communication
and other
Manufacture 72788593.75 6.84% 64513427.48 6.40% 12.83%
electronic
cost
equipment
manufacturing
industry
1063952308.1008242645.
100.00%100.00%5.53%
Total 89 99
Remarks
No major change
(6) Any change in consolidation scope during the reporting period
□Yes □ No
1. Business merger not under common control in the current period
Time point for equity Cost for equity Percentage of acquired Means for equity
Name of the acquiree
acquisition acquisition equity (%) acquisition
Shenzhen Longzhiyuan
Technology Co. Ltd. 11/18/2025 RMB 416.35 million 55.00 Purchase
and its subsidiaries
Continued:
Revenue of the Net profit of the Cash flow of the
Determination
Name of the acquiree from the acquiree from the acquiree from the
Acquisition date basis for
acquiree acquisition date to acquisition date to date of acquisition
acquisition date
the end of term the end of term to the end of term
62ZKTeco 2025 Annual Report
Shenzhen
Longzhiyuan Date of obtaining
November 18
Technology Co. control over the 44651064.61 7802920.54 15500616.41
2025 [Note 1]
Ltd. and its target company
subsidiaries
Note 1: According to the 22nd Session of the Third Board Meeting of the Company the Company Yu Mengchu Li Weihua Shenzhen
Chengtian Enterprise Management Co. Ltd. (hereinafter referred to as "Chengtian Limited") Shenzhen Longdingxing Enterprise
Management Partnership (Limited Partnership) (hereinafter referred to as "Longdingxing") Shenzhen Longjuxin Investment
Partnership (Limited Partnership) (hereinafter referred to as "Longjuxin") Shenzhen Longhexin Investment Partnership (Limited
Partnership) (hereinafter referred to as "Longhexin") Shenzhen Longyixin Investment Partnership (Limited Partnership) (hereinafter
referred to as "Longyixin") Shenzhen Wolonghui Investment Partnership (Limited Partnership) (hereinafter referred to as
"Wolonghui") and Li Weixiong signed the "Equity Acquisition Agreement for Shenzhen Longzhiyuan Technology Co. Ltd."
(hereinafter referred to as the "Equity Acquisition Agreement") on October 17 2025. The Company acquired 55% equity interest in
Shenzhen Longzhiyuan Technology Co. Ltd. collectively held by Yu Mengchu Li Weihua Chengtian Limited Longdingxing
Longjuxin Longhexin Longyixin Wolonghui and Li Weixiong for RMB 416350000. The Company had paid 50% of the equity
transfer payment RMB 208175000 by December 31 2025. Shenzhen Longzhiyuan Technology Co. Ltd. completed the industrial
and commercial change registration procedures on November 18 2025. Concurrently the new Board of Directors of Shenzhen
Longzhiyuan Technology Co. Ltd. was established on November 18 2025 and the directors dispatched by the Company constituted
a majority in the new Board of Directors. The Company obtained substantive control over the company on November 18 2025. For
accounting convenience it was included in the scope of consolidated financial statements effective from December 1 2025.
2. Changes in the scope of consolidation due to other reasons
Percentage
Establishment Reason for
S/N Company Name Registered Capital of shares
Date Change
（%）
September 8 Cancellation
1 ZKTECO ROMANIAS.R.L. RON 250.00 100.00
2022 [Note 1]
NUR ALTTKNWLWJIA August 14
2 SAR 5625000.00 60.00 Establishment
COMPANY 2025
Note 1: On April 23 2025 ZKTECO ROMANIA S.R.L. completed its company deregistration.
(7) Significant changes or adjustments of the Company's business products or services during the reporting period
□Applicable □ Not applicable
During the reporting period the Company acquired a controlling interest in Longzhiyuan by acquiring 55% of its equity. Longzhiyuan
primarily engages in smart outdoor audio-visual and optical equipment with outdoor tracking cameras as its core product. This
acquisition diversified the Company's revenue categories and added smart living revenue scenarios.
(8) Major customers and suppliers
Major sales customers of the Company
Total sales amount of the top five customers (RMB) 225069329.82
Proportion of the total sales amount to the annual total sales
10.56%
amount among the top five customers
Proportion of related party sales to annual total sales among the
0.00%
top five customers
Information of top five customers of the Company
Proportion to Annual Total
S/N Customer Name Sales Amount (RMB)
Sales
1 Customer 1 96549282.31 4.53%
Advance International company for Communication
237035944.411.74%
and Information technology
3 Customer 3 34085196.22 1.60%
63ZKTeco 2025 Annual Report
4 Customer 4 30421636.04 1.43%
5 Customer 5 26977270.84 1.26%
Total -- 225069329.82 10.56%
Other information of major customers
□ Applicable □Not applicable
Main suppliers of the Company
Total procurement amount of the top five suppliers (RMB) 143561502.82
Proportion of the total procurement amount to the total annual
14.36%
procurement amount among the top five suppliers
Proportion of related party procurement amount to annual total
0.00%
procurement amount among the top five suppliers
Information of top five suppliers of the Company
Proportion to Annual Total
S/N Supplier Name Procurement Amount (RMB)
Procurement Amount
1 Supplier 1 38298677.73 3.83%
2 Supplier 2 28751369.67 2.88%
3 Supplier 3 28305775.02 2.83%
Shenzhen G-SPEED Industrial Development Co.
424244199.682.42%
Ltd.
5 Xiamen Holder Electronics Co. Ltd. 23961480.72 2.40%
Total -- 143561502.82 14.36%
Other information of major suppliers
□ Applicable □Not applicable
During the reporting period the Company's trade business revenue exceeded 10% of its operating revenue.□ Applicable □Not applicable
3. Expenses
Unit: RMB
2025 2024 YoY change Note of significant change
Mainly due to the increase in rental expenses
Selling depreciation and amortization advertising and
469389517.11446509619.845.12%
expenses promotional expenses and share-based
payment in the current period.Administr
Mainly due to the increase in payroll and
ative 131948221.69 117559541.39 12.24%
depreciation and amortization.expenses
Mainly due to the decrease in interest income
Financial
-21015077.76 -34273821.14 38.68% from cash deposits and time deposit products in
expenses
the current period.Mainly due to the decrease in R&D personnel
R&D
184608110.11 215470991.40 -14.32% in the current period which led to a reduction
expenses
in compensation.
64ZKTeco 2025 Annual Report
4. R&D Investment
□Applicable □ Not applicable
Project Expected Impact on the Company's Future
Main R&D Project Name Project Objective Proposed Objective
Progress Development
This project significantly enhances the
reliability and accuracy of biometric
systems by adopting multispectral
information acquisition technology and
multimodal fusion biometric recognition
1. Research on multispectral biometric 1. Multimodal data fusion and adaptability to
methods. Multispectral technology
technology specifically the study of complex environments offer significant
effectively addresses the problem of
multispectral feature image acquisition advantages significantly enhancing the
high-dimensional information loss in
technology for biometric information security and accuracy of biometrics and
traditional single-spectral imaging
recognition. 2. Research on multimodal contraband detection through advanced deep
Research and Industrial technology by capturing spectral
feature acquisition technology for biometric learning technology and multimodal feature
Application of Key information across multiple bands while
information recognition. 3. Research on fast fusion. 2. Multimodality can link multiple
Technologies for Biometric multimodal fusion integrates facial iris Ongoing
analysis and recognition algorithms for biometrics together breaking through the
Fusion Recognition Based palmprint and vein features enhancing projects
multimodal biometrics. 4. Construction of limitations of single modality and improving
on Multispectral Multimodal the system's anti-counterfeiting capability
multimodal biometric large model the security performance of multimodal
Large Models and recognition accuracy. The project
frameworks and research on situation biometric recognition systems. 3. Deep
innovatively combines deep learning and
assessment algorithms. 5. Research on learning technology and multimodal feature
feature vector generation models to
integrated systems for biometric fusion fusion have significantly enhanced the security
construct deep feature extraction
recognition using multispectral multimodal and accuracy of biometrics and contraband
modules local region extraction modules
large models. detection.and feature alignment transformation and
splicing modules for multimodal
biometric matching achieving fast and
accurate extraction of biometric
parameters.With the rapid development of computer 1. To ensure that the Company remains at the 1. Enhancing the Company's technological
vision and natural language processing forefront of multimodal visual model strength in the field of computer vision
Research on Application
multimodal vision model has become a technology we will continue to track the improving the intelligence level of products
Technologies Based on
research direction of great concern and Project latest technological developments in this providing customers with better and more
BioCV Mars Multimodal
one of the most promising and potential completed. field and continuously optimize and improve efficient solutions and consolidating the
Computer Vision Model and
fields in recent years. The innovative BioCV VLM 4.0. Advance research on Mars Company's competitive advantage in the
Edge Language Model
model combines computer vision and AI multimodal computer vision models and industry. 2. Promoting the Company's
natural language processing capabilities their application technologies. 2. Establish innovation and development in the field of AI
65ZKTeco 2025 Annual Report
and can process images videos and text R&D for edge-end multimodal language and providing strong technical support for the
information at the same time to achieve model technology and a private corpus Company's long-term strategic goals. 3.more efficient and intelligent image and providing voice interaction capabilities for Accelerating the Company's technological
video recognition and understanding. The terminal devices. 3. We will explore the iteration and innovation in the field of
goal of this project is to further enhance application of multimodal vision models in computer vision improving the application
the intelligent understanding and various fields such as security monitoring ability of computer vision algorithms in various
reasoning capabilities of multimodal smart home office automation etc. to scenarios and laying a solid foundation for
computer vision models build more provide technical support for the Company business expansion in the global market.powerful vision-language joint to expand into new business areas. 4.representations and improve the model's Empower the next-generation Mars Wisdom
ability to understand complex scenes. AI Cognitive Space Platform. 5. Develop
Improve inference efficiency and more efficient model compression and
optimize the model's deployment acceleration strategies optimize edge-side
capability on edge devices. deployment solutions and achieve cloud-
edge-end collaborative computing.Break through the bottleneck of 1. Enhance SDK processing speed and 1. Building technical barriers and a business
traditional detection technologies being reduce resource consumption enabling it to moat: The cross-domain generality of all-object
limited to specific domains and build a run efficiently on edge devices (e.g. A380) detection algorithms will transform the
cross-domain highly generalizable and expand application scenarios. 2. Rapid Company's "one-solution-per-case" service
intelligent detection system. Traditional algorithm expansion based on small samples: model. Through a self-developed unified
methods are typically customized for By building a small sample incremental detection framework it can cover 20+ industry
single scenarios relying on manually learning framework we break through the scenarios such as industrial security and
designed features and limited data for limitations of traditional algorithms that rely agriculture reducing algorithm development
training which makes them difficult to on massive annotated data. Users only need costs by 50%. Core patents can form a
Research on Edge adapt to the diverse object forms to provide 10-20 target images to generate a technical moat making it difficult for
Computing-driven All- environmental conditions and detection highly discriminative feature space. competitors to achieve the same level of cross-
Project
Object Detection Computer targets in the physical world. With the Combined with a data augmentation engine scenario generalization capability within 3-5
completed.Vision Algorithms and initiation of this project we adopt a it automatically synthesizes extended years. 2. Enriching the algorithm product
Application Technologies dynamic feature extraction network to samples for complex scenarios such as matrix: The all-object detection algorithm
learn cross-domain general lighting variations occlusions and multiple continuously enriches its algorithm product
representations through self-supervised viewpoints. Utilizing transfer learning matrix through dynamic architecture upgrades
pre-training. Combined with a spatial- technology it can quickly complete model and multimodal compatible design deriving
semantic dual attention mechanism this adaptation for new target categories other vertical product lines based on a unified
enables the system to automatically focus significantly reducing algorithm iteration underlying detection engine. Through
on key regions and analyze complex costs and deployment cycles. Customers can lightweight models and scene-adaptive
spatial relationships achieving add new detection categories themselves via interfaces customers can freely combine
comprehensive detection of various a web interface fostering a user co-creation detection modules. For instance smart park
objects in the physical world (e.g. ecosystem. solutions can concurrently run algorithms such
66ZKTeco 2025 Annual Report
objects organisms environments). It is as facial recognition vehicle trajectory
capable of precisely locating various tracking and environmental anomaly early
objects in complex scenes providing warning. The innovatively R&D-driven
standardized solutions for multi-object interactive annotation toolchain combined with
detection in complex environments and small sample transfer learning technology can
promoting the evolution of detection significantly shorten the development cycle for
technology from "single-function" to new scene algorithms. This technology system
"general intelligence". It can be applied is applicable to strategic emerging industries
in scenarios such as industrial quality such as smart manufacturing and smart cities.inspection environmental monitoring
and security surveillance.Vehicle-Road-Cloud Integration as a
1. Promoting Cloud Platform Technology
core architecture for intelligent
1. By leveraging next-generation information Innovation: Vehicle-Road-Cloud Integration
transportation achieves the
and communication technologies it places higher demands on cloud platform
comprehensive digitalization and
integrates the physical space and cyberspace performance reliability and security driving
intelligentization of transportation
of people vehicles roads and clouds into a cloud service providers to continuously
systems by integrating vehicles road
unified entity. 2. A cyber-physical system is innovate and upgrade their technologies
Vehicle-Road-Cloud infrastructure and cloud computing Project
realized which based on system-level thereby enhancing cloud platform service
Integration System Platform resources. ZKTeco leveraging its core completed.collaborative perception decision-making capabilities and competitiveness. 2. Vehicle-
products such as edge computing NVRs
and control enables safe energy-efficient Road-Cloud Integration will generate a large
video AI analysis and the Mars Wisdom
comfortable and highly efficient operation volume of data which can meet enterprises'
Platform provides efficient data
of intelligent connected vehicle data management needs thereby expanding
collection real-time analysis and
transportation systems. their business scope and increasing revenue
intelligent decision support for vehicle-
from data services.road-cloud scenarios.ZKTeco Cloud Brain-Computer Interface 1. Development of Foundational Smart 1. Through intelligent upgrades and
(BCI) specializes in Brain-Computer Brain-Computer Interface Technology empowerment enhancing the real-time
Interface (BCI) technology and related (BioCV Brain++ Technology): Integrated processing and decision-making capabilities of
research committed to exploring application of retinal and iris recognition ZKTeco's entrance and exit management
interaction technologies between the technologies which enables early prevention products. 2. Actively exploring innovative
ZKTeco Cloud Brain-
brain and external devices. Main of Alzheimer's disease through retinal research and industrial transformation
Computer Interface Project
researches include neural signal imaging AI analysis multimodal data empowered by Vehicle-to-Everything (V2X)
Foundational Technology completed.acquisition and processing brain- fusion and behavioral and linguistic feature collaboration cloud-edge integration and
Development
computer interface technology R&D analysis. It will also integrate with ZKTeco brain-computer interface (BCI) human-
neurofeedback and rehabilitation therapy NGTeco's "elderly care" product series machine "wet computing" by leveraging the
as well as brain function and cognitive leveraging precise biometric technology to technological advantages of BioCV and
science research. It enables early provide higher quality life support and health TinyML. 3. Enriching the technology
prevention of Alzheimer's disease monitoring for the elderly while ecosystem and application scenarios leading
67ZKTeco 2025 Annual Report
through retinal imaging AI analysis simultaneously protecting their data privacy. the integration of intelligent technology and
multimodal data fusion and behavioral 2. ZKTeco Glasses eye tracker accessory biocomputing and opening a new chapter.and linguistic feature analysis. It will also suitable for multiple scenarios records eye
integrate with ZKTeco NGTeco's "elderly movement data and provides behavioral
care" product series leveraging precise research and analysis tools. 3. Algorithm
biometric technology to provide higher development: optimize video structuring
quality life support and health monitoring algorithms for various platforms port the
for the elderly while simultaneously latest open-source models and continuously
protecting their data privacy. enhance algorithm performance on low-
compute platforms.
1. Unified Device Access Standard: Relying 1. Technological leadership: The successful
on the advanced Tiny protocol designed implementation of this project will position the
This project is dedicated to building a with device models it can precisely extract Company firmly at the technological forefront
cutting-edge general device management common device features and establish a set in the IoT domain especially in device access
platform based on device model and of highly universal and compatible and management establishing a unique
smart edge integration. It innovatively standardized access specifications strongly competitive advantage and becoming a leader
designs an ultra-lightweight Tiny supporting the rapid and stable access of in industry technological innovation. The
protocol deeply applying the concept of various complex devices to the platform. groundbreaking design of the Tiny protocol
device models to comprehensively Leveraging the powerful flexibility of device will become a core technological asset for the
revolutionize device access management models it easily adapts to diverse device company providing a powerful technical
and data interaction processes achieving types including but not limited to high- engine for the R&D of a series of subsequent
end-to-end standardization and ultimate precision sensors smart controllers and products and services continuously driving the
General Device Management efficiency. The core of this project is to multi-functional smart terminals effectively Company's technological innovation and
Platform Based on Device establish a highly flexible and high- Project resolving complex challenges arising from upgrading. 2. Business growth potential: By
Model and Smart Edge performance protocol architecture with completed. device differences and achieving convenient significantly lowering the barrier to device
Integration the device model as its cornerstone. This and efficient device access. 2. Support access and substantially improving
architecture seamlessly adapts to seamless switching between online and management efficiency it will attract more
complex and diverse online and offline offline scenarios: From its initial design the partners and customers to integrate into the
business scenarios significantly reducing Tiny protocol deeply considers the platform ecosystem rapidly expand market
the cumbersome workload of device differentiated needs of devices in various share and achieve explosive growth in
access and comprehensively improving scenarios. Whether deployed in demanding business scale. The platform's powerful
device management efficiency. This lays offline industrial environments or in large- versatility and flexibility enable the Company
a solid foundation for the Company's scale elastic cloud deployments it ensures to rapidly respond to changes in market
long-term strategic layout in the IoT consistent and smooth interaction logic demand customize and develop various
field helping it to be the first to seize guaranteeing the stability and reliability of innovative solutions meet the personalized
new heights in industry development. device operation. Devices can intelligently needs of different customers and further
adapt to online and offline scenarios without enhance market competitiveness. 3. Ecosystem
needing to switch modes completely construction: The next-generation general
68ZKTeco 2025 Annual Report
avoiding compatibility risks caused by device management platform based on object
frequent switching in traditional solutions models will attract a large number of third-
and significantly enhancing user experience party developers to actively participate jointly
and system operational efficiency. 3. Lower building a prosperous and open IoT ecosystem
device access costs: By ingeniously and promoting technological innovation and
simplifying protocol design and deeply application expansion. The vigorous
optimizing the access process it significantly development of the ecosystem will further
lowers the technical barrier and learning cost consolidate the Company's core position in the
for device developers making device access industry promote deep collaboration between
more convenient and efficient. General upstream and downstream of the industry
SDKs and toolchains are provided chain and achieve a win-win situation for
supporting rapid generation of device mutual benefit. 4. Operating cost optimization:
drivers shortening development cycles and Unified protocol standards and efficient
reducing access workload. 4. Enhance device management tools will significantly reduce
management efficiency: The platform based device access and maintenance costs
on the device model achieves dynamic substantially improve overall operational
management of device status and real-time efficiency and achieve optimized allocation
data synchronization providing visualized and efficient utilization of resources.monitoring and O&M capabilities. Support Effectively reduce resource waste caused by
full device lifecycle management including diverse equipment types and complex
functions such as registration configuration scenarios achieve refined operational
upgrades and fault diagnosis thereby management and enhance the Company's
enhancing overall management efficiency. 5. profitability and sustainable development
Enhance system scalability and capabilities. 5. Strategic layout support: The
compatibility: The Tiny protocol boasts successful implementation of the project will
excellent scalability capable of proactively provide strong support for the Company's
addressing future new device types and development in strategic areas such as smart
complex functional requirements ensuring cities industrial internet and intelligent
the platform always maintains leading transportation helping the Company seize
technological adaptability. Compatible with opportunities in emerging markets. By
mainstream IoT communication protocols accumulating massive device data and rich
(e.g. MQTT) ensuring interoperability with operational experience a solid foundation will
other systems. be laid for future intelligent decision-making
and innovative applications promoting the
Company's transformation towards
digitalization and intelligence.Development of intelligent Based on video intercom technology and Project Implement the Company's strategic goals With smart devices based on video intercom
devices based on video large model AI technology develop completed. integrate the Company's technological technology and large model AI technology
69ZKTeco 2025 Annual Report
intercom technology and intelligent devices integrating attendance accumulation in areas such as video intercom innovatively offering a combination of services
large model AI technology access control and video intercom capabilities large model intelligent agents such as professional time attendance and access
expanding new modes of multimodal AI professional attendance access control control professional video intercom and AI
access control management. management and edge-side intelligent agents to meet the business needs of the
analysis to create a forward-looking market and customers. The launch of the new
multimodal AI entrance and exit access product series positions the Company at the
control solution and release intelligent forefront of industry development enriches its
devices based on video intercom technology product matrix and provides competitive and
and large model AI technology. cost-effective smart devices contributing to the
Company's performance growth.
1. Leverage intelligent agent technology and
the SaaS model to profoundly transform
ZKBioTime Cloud is a time attendance
traditional workforce management
management platform powered by LLM
approaches empowering them with
applications focusing on the Workforce
intelligent analytical capabilities. By
Management (WFM) domain. Built on a
optimizing processes with intelligent agents 1. The widespread application of the platform
SaaS platform it aims to provide
achieve efficient human resource will help the Company provide more
enterprises with flexible and intelligent
management operations and enable precise comprehensive and intelligent workforce
scheduling optimize workforce
digital control over workforce costs and management solutions in medium and large
allocation monitor employee workload in
performance fully meeting the diverse and enterprise service projects precisely meeting
real time reasonably adjust and balance
dynamic application scenario requirements customers' diverse human resource
the work of overloaded/underloaded
of enterprises. 2. Focusing on data-driven management needs thereby significantly
employees and integrate TinyML agent
Enterprise-grade Time and intelligent empowerment leverage enhancing the Company's market
interaction features to achieve real-time
Attendance Cloud SaaS Project technological innovation and an integrated competitiveness in the enterprise service sector.localized intelligent interaction. Facilitate
Platform Powered by LLM completed. design philosophy to build a standardized 2. By successfully addressing the workforce
more convenient and seamless
Applications powerful workforce management platform management challenges of cross-regional
communication between employees and
continuously leading the innovative multi-organizational enterprises the Company
systems enabling managers to promptly
development trend of industry applications. will be able to integrate internal and external
collect employee feedback and perform
3. Continuously strengthen the platform's resources more efficiently significantly
flexible workforce scheduling and task
underlying capabilities deeply integrate improving operational efficiency and
adjustments. Enterprises can more
them into various industry sectors and management levels and creating more
accurately plan their workforce reduce
provide high-quality customized services to economic benefits and brand value for the
operating costs enhance employee
partners consistently refining outstanding Company.satisfaction and work efficiency thereby
industry solutions to meet the evolving
providing robust human resource support
demands of the market. 4. Built upon an
and decision-making insights for
advanced cloud architecture foundation it
enterprises in fierce market competition.effectively resolves the conflict between
autonomous management of branch offices
70ZKTeco 2025 Annual Report
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.This project plans to develop a new
generation AI access control management
terminal integrating multimodal BioCV
R&D of a New Generation technology and AI agent platform
1. Integrating the AI agent platform it 1. Brand value appreciation reshaping the
of Access Control Smart technology. This terminal is based on
supports proactive service capabilities such "technological warmth" brand image through
Terminal Based on ZKTeco's multimodal biometric
as voice interaction intent understanding humanized interactive design and enhancing
Multimodal Biometric algorithm technology and integrates with
and abnormal behavior prediction achieving market premium capability. 2. Promote the
Technology and AI Agent the AI agent platform possessing more
"seamless passage" and "emotional intelligent upgrade of the industry driving
Technology (Modified to: intelligent management functions. Project
feedback". 2. Comprehensive upgrade of more enterprises to focus on the importance of
R&D of a New Generation Visitors using this management terminal completed.product experience simplified visitor smart office and management facilitating the
of Access Control Smart can easily and pleasantly achieve
procedures and enhanced management development and application of related
Terminal Based on permission authentication through
efficiency with AI agents automatically technologies and solutions and pushing the
Multimodal BioCV intelligent interaction methods. Through
completing tasks traditionally handled by entire industry towards a smarter and more
Technology and AI Agent the integration of these technologies
administrators. efficient direction.Technology) users will be able to experience more
humanized and empathetic interaction
scenarios while managers will also have
more intelligent management modes.This project involves the R&D of a smart This project plans to develop a multimodal 1. The application of next-generation palm
attendance terminal based on multimodal high-precision high-security level palm recognition technology in attendance terminals
non-contact palm acquisition and recognition attendance terminal. This brings new challenges and opportunities for
R&D of Smart Attendance
recognition technology. This terminal is a terminal utilizes palmprint and palm vein market expansion and the enhancement of new
Terminal V3.0 Based on Project
comprehensive upgrade from existing multi-factor fusion recognition to enhance scenario experiences. 2. Equipped with digital
Multimodal Palm completed.palm attendance terminal versions recognition accuracy and liveness detection visual intercom function supporting digital
Recognition Technology
capable of multi-angle close-range high- capability. It also incorporates audio and service operation functions such as
precision palmprint and palm vein hybrid video visual intercom technology offers advertisement O&M it provides a front-end
recognition. It also features a digital visual intercom functionality and carrier for the Company's digital operation
71ZKTeco 2025 Annual Report
comprehensive upgrade in interaction supports digital service operation functions strategic layout.and specifically implements audio and such as advertisement O&M.video visual intercom technology in the
smart office domain offering digital
visual intercom functionality and
supporting digital service operation
functions such as advertisement O&M.Provide one-stop O2O solutions for
enterprise smart office. It is mainly used
in smart office scenarios.The Spatial Digital Integration Platform 1. Build a new benchmark for intelligent 1. Enhancing market competitiveness: The
is built around ZKTeco's independently security protection: Leverage AI and large application of the Spatial Digital Integration
developed BioCV multimodal model model technologies to achieve smart Platform will enable the Company to provide
deeply integrating cutting-edge perception real-time monitoring and in- more comprehensive and intelligent solutions
technologies such as AI large model depth analysis of entry and exit scenarios in medium to large-scale security projects
algorithms large-capacity facial thereby building a comprehensive and precisely meeting diverse customer needs and
recognition intelligent broadcasting intelligent security protection system. * By significantly enhancing the Company's market
systems intrusion alarms intelligent utilizing large-capacity facial recognition competitiveness in the security sector. 2.agent interaction image retrieval and capabilities provide efficient and accurate Improving operational efficiency: By
knowledge base Q&A to identity verification services ensuring the effectively addressing management challenges
comprehensively create an intelligent and security and convenience of personnel in cross-regional multi-organizational projects
efficient entrance and exit management access. 2. Develop an efficient emergency the Company will be able to more efficiently
and security protection system. A major response and intelligent broadcasting system: integrate internal and external resources
Spatial Digital Integration highlight of this phase is that the platform Project Integrate an intelligent broadcasting system improving operational efficiency and
Platform deeply integrates AI and large model completed. to enable instant notifications and command management levels and creating more value
technologies achieving millisecond-level dissemination enhancing the flexibility and for the Company. 3. Expanding business scope:
response for large-capacity facial efficiency of emergency response. * In Newly added features such as AI intelligent
recognition ensuring efficient and emergencies it can quickly convey critical agents million-face comparison and local
precise personnel identity verification. information ensuring personnel evacuation large model retrieval will enable the Company
This capability not only enhances and order maintenance. 3. Drive the to expand into more business areas such as
security levels but also achieves a intelligent upgrade of image retrieval and smart city and smart security achieving
qualitative leap in user experience. data analysis: Provide image retrieval diversified business development. 4. Promoting
Through seamless integration with the functionality enabling users to quickly localization process: Fully supporting system
broadcasting system the platform can locate and review key event videos thereby and hardware localization not only complies
instantly issue notifications or offering robust support for decision-making. with national information security strategic
commands enhancing the flexibility of * By leveraging big data analysis and AI requirements but will also win the trust and
emergency response and daily algorithms deeply mine the value of cooperation of more government and state-
management. The platform's built-in entrance and exit data providing users with owned enterprise customers for the company
72ZKTeco 2025 Annual Report
intelligent agents utilize advanced AI valuable insights and recommendations. 4. driving the Company's continuous and healthy
algorithms to intelligently analyze Build a knowledge base Q&A system to business development.business big data such as attendance enhance user experience: Offer a built-in
reports supporting the output of precise knowledge base Q&A system which can
business data based on dynamic user instantly answer user queries regarding
needs truly achieving intelligent system operations feature applications and
interaction and zero-code development more. * Reduce user learning costs enhance
capabilities. Furthermore by integrating user satisfaction and loyalty and create an
image retrieval functionality users can excellent entrance and exit management
quickly locate and review key events service experience. 5. Achieve
providing robust support for decision- comprehensive intelligence and efficiency in
making. Moreover the platform's entrance and exit management: Deeply
integrated knowledge base Q&A system integrate multiple business subsystems such
can instantly answer user queries as HR access control attendance
regarding system operations feature consumption visitor management parking
applications and more further enhancing elevator control and patrol to achieve one-
user satisfaction and self-service stop management. * Achieve seamless
capabilities. 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.Mars Wisdom AI Cognitive Mars Wisdom AI Cognitive Space Project Mars Wisdom AI Cognitive Space Platform 1. Intelligent transformation of traditional
Space Platform Platform as a leading intelligent agent completed. deeply integrates a multi-dimensional systems: Through the technological
73ZKTeco 2025 Annual Report
visual analysis platform derives its core cutting-edge AI technology matrix building empowerment of Mars Wisdom AI Cognitive
competitiveness from an innovative dual- a comprehensive technical system that Space Platform we drive traditional business
model technical architecture: The front- covers voice interaction multimodal image systems to achieve architectural upgrades and
end is equipped with BioCV TinyML and text analysis intelligent visual analysis functional evolution deeply integrating an AI
lightweight small model technology autonomous decision-making intelligent capability matrix building intelligent agent
which with extremely low computing agents high-precision vector retrieval full applications with multimodal perception
power requirements and efficient real- lifecycle model governance and dynamic autonomous decision-making and continuous
time processing capabilities can quickly workflow orchestration. This innovative learning capabilities and significantly
complete basic visual analysis at the architecture equips the platform with core enhancing the automation and intelligence level
edge; while the back-end relies on a capabilities such as cross-modal perception of business scenarios. 2. Edge computing
powerful large model analysis engine complex task decoupling and adaptive product matrix innovation: Based on the
and through deep learning and decision-making efficiently addressing full- hardware encapsulation of the AI technology
multimodal fusion technology achieves scenario demands from structured data stack from Mars Wisdom AI Cognitive Space
accurate cognition and decision-making processing to unstructured scene Platform we are launching a series of edge
in complex scenarios. This collaborative understanding providing users with end-to- intelligent devices for vertical scenarios: smart
"small front-end + large back-end" end customizable intelligent solutions and NVR RS1: focusing on video structured
architecture not only ensures millisecond- redefining the performance boundaries of analysis achieving real-time event detection
level response speed and low-power intelligent services. and early warning; large model smart brain
operation of terminal devices but also RS2: integrating hundreds of billions of
empowers the platform with exceptional parameters for semantic understanding
capabilities for processing high- capabilities supporting complex scenario
dimensional visual data and can flexibly decision-making; training-inference super brain
adapt to diverse scenario requirements RS3: creating a lightweight model training-
such as smart office smart retail and inference integrated terminal lowering the
smart campus setting a dual benchmark threshold for AI application. Forming a full-
for efficiency and accuracy in the link hardware ecosystem covering data
industry's intelligent transformation. collection processing and decision-making. 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
74ZKTeco 2025 Annual Report
mechanism and accelerating the large-scale
deployment of AI technology in fragmented
scenarios.Product technology innovation: Successfully
develop and launch the BioCV X60 Edge
Market share growth: By launching the BioCV
Analysis Controller which supports 1 door
X60 Edge Analysis Controller the Company
by default and can flexibly expand the
will be able to more effectively capture the
number of doors via TCP/IP and RS485
access control and video fusion controller
protocols to meet the needs of enterprises of
market especially the SME market thereby
different scales. Efficient real-time
expanding market share and enhancing brand
processing: By leveraging BioCV TinyML
This project aims to address the usage influence. Driving technological innovation:
lightweight small model technology we
scenarios of access control and video The application of BioCV TinyML lightweight
ensure that the BioCV X60 Edge Analysis
integration developing and launching an small model technology will provide the
Controller can quickly complete basic visual
innovative edge analysis controller— Company with a competitive edge in
analysis at the edge achieving efficient
BioCV X60. This controller integrates technological innovation solidifying its
linkage between access control and video
advanced BioCV TinyML lightweight technological leadership in the smart access
analysis. Rich functionality: Ensure that the
small model technology aiming to control domain. Enhanced customer
BioCV X60 Edge Analysis Controller
provide through its extremely low satisfaction: The BioCV X60 Edge Analysis
possesses two core functions: access control
computing power requirements and Controller's efficient real-time processing rich
and visual analysis and achieves ultra-high
BioCV X60 Edge Analysis efficient real-time processing capabilities Project functionality and ease of installation will
real-time linkage at the firmware level.Controller an efficient convenient and powerful completed. significantly boost customer satisfaction and
Access control events can be linked with
access control and video integration foster greater customer loyalty to the Company.video for clip capture pre-recording and
solution for SMEs. Through the Business expansion opportunities: With the
video feature extraction while also
implementation of this project we expect successful launch of the BioCV X60 Edge
supporting intelligent video analysis
to enhance the Company's Analysis Controller the Company will have the
functions such as line crossing detection
competitiveness in the access control and opportunity to further expand its business into
region detection target structuring (gender
video fusion controller market and meet related fields such as smart security smart
age group clothing color eyes hat) and
the urgent market demand for intelligent cities etc. laying a solid foundation for the
people counting to assist access control in
and efficient access control management company's long-term development. Enhanced
making more accurate entry and exit
systems. competitive advantage: By enhancing key
judgments. Convenience and compatibility:
competitive capabilities such as PoE power
Replace the previous generation Atlas offline
supply and video storage functions as well as
mode controller products meeting the quick
product design that complies with international
installation needs of SMEs. Additionally
standards the Company will be able to stand
ensure that the BioCV X60 Edge Analysis
out in fierce market competition thereby
Controller offers higher cost-effectiveness
strengthening its competitive advantage.and competitiveness compared to major
competitors. Enhanced key competitiveness:
75ZKTeco 2025 Annual Report
By 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.
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
As a comprehensive digital marketing
not only provide services to small and medium-
solution specifically designed for small
sized retail enterprises and brand owners but
and medium-sized retail enterprises and
also leveraging accumulated technology and
brand owners the main R&D direction is
experience it can expand into other related
to innovate in the interactive value
industries such as large chain retail enterprises
between people and scenarios and the Leveraging the Company's MinervaIoT
and fast-moving consumer goods (FMCG)
value of scenario empowerment through platform as a foundational capability and
companies achieving diversified business
Full-domain Smart Retail technologies such as IoT machine vision focusing on smart retail scenarios the
development. 2. Enhanced market
Scenario Solution Platform big data analysis and AIoT integration. solution combines large models with edge-
competitiveness: Compared with competitors
based on the Deep The solution performs multi-dimensional Project side AI application technology to lower the
the Company relying on advanced technology
Integration of AIoT data AI business analysis based on front- completed. barrier to using AI technology enabling
one-stop services and a precise understanding
(Formerly: ZKDIGIMAX L3 end intelligent sensing devices and back- more retail enterprises to quickly deploy and
of customer needs coupled with the integration
V4.0) end data warehouses providing retailers apply AI technology and providing users
of AI technology applications will occupy a
and brand owners with one-stop services with one-stop AI solutions based on different
leading position in the smart retail sector
such as precision marketing intelligent market segments and customer groups.consolidating and increasing market share and
store analysis and operational
further enhancing the Company's reputation
optimization aiming to enhance customer
and influence within the industry. 3. Enhanced
experience optimize operational
technical strength: Through the R&D of this
efficiency and boost the business growth
comprehensive digital marketing solution the
of retailers and brand owners.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
76ZKTeco 2025 Annual Report
applications continuously accumulating
technical experience and 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
Apply computer vision and Tiny Model scenarios offering experiential value to
to products provide high-quality services customers enhancing spatial management
to customers using intelligent Provide mobile service robots for offices cognitive capabilities providing users with
technologies and collect multi- Project shopping malls and supermarkets with highly competitive products and high-quality
Mobile Service Robots
dimensional data through more sensors to completed. functions including product and advertising services thereby boosting the core
provide a basis for operational decisions promotion and intelligent interaction. competitiveness of the Company's smart
saving user resources and improving commercial solutions and offering strong
operational efficiency of users. support for expanding market share and
optimizing user operating costs.R&D of high-performance multimodal
recognition touchless access technology
to create safe convenient and efficient Technology leadership enhancing core
next-generation access solutions. Specific competitiveness by seizing technological high
goals include: Improving access ground: Master high-performance multimodal
efficiency: Through multimodal recognition touchless access core technology
recognition technology achieve rapid and become an industry technology leader and
accurate identification of personnel and enhance the Company's technical strength in
Based on high-performance multimodal
vehicles significantly shortening access AI computer vision and other fields. Build
R&D of Touchless Access recognition touchless access technology
time and improving access efficiency. technological barriers: Form an independent
Terminal V1.0 Based on Project enable touchless access applications in
Optimize user experience: No active intellectual property system build
Multimodal Biometric completed. various scenarios such as smart cities smart
cooperation required enabling touchless technological barriers enhance the Company's
Technology transportation smart parks and smart
access bringing users a convenient and core competitiveness and consolidate its
buildings.comfortable access experience. Enhance market leading position. Expand technical
security: Utilizing multimodal application areas: Apply multimodal
recognition technology build a recognition technology to more fields such as
comprehensive multi-dimensional smart security smart finance smart healthcare
security protection system to effectively etc. to expand the Company's business scope
prevent security risks. Promote industry and create new growth points.upgrade: Lead the development of
multimodal recognition technology
77ZKTeco 2025 Annual Report
promote the upgrade of related industry
chain and contribute to the construction
of smart cities smart transportation and
other fields.
1. Perform automated management to reduce Cloud parking contributes to the Company's
labor requirements combining cloud enhanced core competitiveness expanded
This project aims to research and develop computing IoT and big data technologies. 2. market share optimized operational efficiency
Cloud Parking Smart
cloud-based parking solutions creating Project Provide convenient booking and payment improved user experience driven business
Connected Space
greater business value for customers in completed. services. 3. Global adaptability: Support model innovation fostered cooperation and
Management Platform
overseas markets. multiple languages currencies and payment ecosystem building addressed market
methods to meet the needs of different challenges and achieved sustainable
countries and regions. development.
1. Build a localized full-stack technology
system and develop a multimodal identity
This project aims to develop a device for
authentication device with fully localized
nationwide production of hardware
hardware operating system and software
applications operating system and
covering chip-level security algorithms
software which can achieve multimodal
smart terminals and cloud verification
identity recognition and authentication
platforms to ensure information security in
such as fingerprint facial recognition iris
critical identity verification scenarios. 2.recognition card swiping palm
Achieve multimodal biometric feature fusion
recognition QR code and OCR. Through 1. Strengthen industry competitiveness and
R&D of Domestic verification integrating multimodal
full-link localization technology we aim seize the high ground of localized technology.Multimodal Identity biometric technology such as fingerprints
to solve the problem of critical identity Project 2. Expand diversified markets and enhance
Authentication Device Based facial features iris and palm prints and
information being intercepted or completed. business growth space. 3. Promote the
on Smart Identity supporting compatible recognition of
tampered with during transmission and construction of an industrial ecosystem and
Verification Scenario 2.0 traditional credentials such as ID cards
storage driving industry chain gain policy and capital support.passports and QR codes to create a
development through technological
"biometric + digital credential" hybrid
breakthroughs forming an ecological
verification mode improving the accuracy of
closed loop covering chips terminals
identity authentication in complex scenarios.and cloud services and promoting the
3. Break through high concurrency and
intelligent transformation of government
extreme environment adaptability achieving
affairs security transportation and other
stable operation even in harsh environments
fields.such as high temperature high humidity and
strong light.Integrated Facial Feature Achieving cross-platform This project aims to conduct R&D on an 1. Through the innovation of integrated facial
Project
Solution Based on Cloud interoperability secure and fast integrated facial feature solution based on feature values across cloud mobile and edge
completed.Mobile and Device Ends transmission and unified features across cloud mobile and edge devices to enhance devices leading the industry in solving facial
78ZKTeco 2025 Annual Report
mobile devices (such as HarmonyOS recognition accuracy and liveness detection information security in sectors such as smart
Android and iOS) X86 Windows X86 capabilities address compatibility and access control smart attendance and smart
Linux and edge devices effectively information security issues for global ethnic passages and driving the adoption of facial
addressing user information security facial recognition with significant recognition in more application scenarios and
concerns. Mobile facial recognition improvements in security stability and countries; 2. Enriching the usage scenarios of
supports active live detection passive usability. product line of facial recognition algorithms
live detection facial detection facial facial recognition modules and panel
feature extraction large-capacity facial machines and improving the core
comparison attribute recognition and competitiveness of the products; 3. Responding
more; x86 Windows and X86 Linux to the Company's strategic plan and launching
support passive live detection facial a strategic deployment of intelligent
detection facial feature extraction large- recognition solutions that meet market
capacity facial comparison attribute demands based on cloud and mobile platforms.recognition and more; edge devices
support monocular live detection
binocular live detection facial detection
facial feature extraction large-capacity
facial comparison attribute recognition
and more.This project aims to develop a
1. Leading the industry to gradually promote
multimodal non-contact palm acquisition
the application of new biometrics in payment
and recognition system which can
This project aims to develop a multimodal smart access control smart attendance smart
achieve multi-angle close range high-
high-precision payment grade security level channels and other industries through the
precision palmprint and palm vein hydrid
palm recognition solution. This device further update of palm recognition technology;
R&D of Non-contact Palm recognition. It simultaneously supports
adopts palmprint and palm vein multiple 2. Enriching the usage scenarios of product line
Recognition Technology RFID and QR codes etc. It realizes cross Project
fusion recognition to improve recognition of biometric modules and panel machines and
Based on Multimodal Palm platform system registration and completed.accuracy and live recognition ability solve improving the core competitiveness of the
Acquisition and Recognition application and adapts to indoor semi-
the problems of user height compatibility products; 3. Responding to the Company's
outdoor and outdoor application
and twin misidentification and greatly strategic plan and launching a strategic
environments mainly used for non-
improve safety stability and usability. deployment of intelligent recognition terminals
contact identity recognition in various
that meet market demand based on new
entrance and exit scenarios such as smart
platforms and technologies.attendance and smart access control.This project centered on the Company's Device connection and communication: This project will be a key pillar of the
"End-Edge-Cloud" strategy continuously Support multi-protocol (MQTT HTTP Company's IoT strategy driving the upgrade of
Cloud-Edge-End AIoT Project
develops the Cloud IoT Platform. It WebSocket etc.) access achieving efficient an end-edge-cloud integrated IoT platform and
Platform V2.0 completed.provides efficient intelligent and secure and stable connectivity for massive devices. by combining AI multimodal and data
Cloud IoT foundational capabilities and Payment and subscription system: Support analysis capabilities it will enhance market
79ZKTeco 2025 Annual Report
services to the Company and enterprise- subscription-based business models for IoT competitiveness and business value. In the
level customers thereby facilitating the devices providing flexible billing and future the Company will leverage this platform
construction of a cloud-edge-end settlement capabilities. Multi-company to expand into more AIoT application
integrated ecosystem. multi-tenant architecture: Support multiple scenarios forming core advantages of
enterprises sharing the platform ensuring technological barriers business model
tenant data isolation and enhancing the innovation and deep industry integration
adaptability of enterprise-grade IoT thereby contributing to the development of the
solutions. Identity authentication and global IoT ecosystem.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 multimodal
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 intelligent processing capability of IoT
data.Ralvie AI leverages Large Language 1. Intelligent driven: Based on Large As the complexity of modern enterprise
Models (LLM) and AI Agents to provide Language Models (LLM) it possesses operations increases employees and
enterprises and individuals with capabilities in natural language management require more efficient time
LLM and AI Agents-based
automated time management intelligent understanding pattern recognition and task management and intelligent data analysis tools.Automated Time Project
data analysis and business optimization. automation facilitating intelligent decision- Traditional time tracking methods fail to
Management and Business completed.Its core functions include: 1. Smart Time making and efficient execution. 2. Smart provide sufficient business insights while
Optimization System V1.0
Recording: Automatically track and Knowledge Base: Build exclusive cumbersome manual work logs and reporting
categorize user work activities without knowledge bases for enterprises and processes waste a significant amount of
manual input. 2. Personalized Work individuals automatically organize store valuable time. Ralvie AI as an intelligent agent
80ZKTeco 2025 Annual Report
Reports: AI generates detailed time and extract key information enhancing the system for time management and analysis
management reports helping users intelligence level of work. 3. Efficient AI tools is dedicated to helping enterprises and
optimize their work methods and improve Agents: Deploy various types of AI agents individuals optimize work efficiency enhance
efficiency. 3. Data-Driven Optimization: that precisely adapt to different scenario productivity and support business decisions.Utilize cloud computing and machine requirements facilitating task execution and Addressing the shortcomings of traditional time
learning for in-depth analysis providing efficiency improvement. 4. Automated Work management which only records clock-in/out
precise recommendations for productivity Logging: Intelligently track user work times and work durations it provides more
improvement. 4. Privacy Protection: Data activities automatically classify and granular work insights helping managers and
is for the user's sole use and does not organize them eliminating the need for employees adjust strategies in real-time
record keyboard input or screen content manual input and ensuring data integrity and promoting internal data sharing within
avoiding monitoring risks. 5. Smart usability. 5. Data-Driven Optimization: enterprises and optimizing overall workflows.Project Management: Realize real-time Combining cloud computing and machine Utilizing AI for business trend analysis
progress monitoring optimizing resource learning deeply analyze user data and provides enterprises with more precise strategic
allocation reducing operational costs provide intelligent optimization suggestions planning. Ralvie AI aims to enhance the time
and enhancing decision-making facilitating productivity enhancement. 6. management capabilities of enterprises and
efficiency. 6. Personalized Growth Personalized Learning: Realize adaptive individuals through AI technology while
Support: Provide dashboard data learning based on user habits continuously simultaneously offering intelligent data
intelligent planning suggestions and optimize time management strategies and analysis to optimize decision-making
career growth analysis to help employees provide more precise work suggestions processes. It is not only an efficient time
continuously optimize their work enhancing individual and enterprise management tool but also an intelligent
methods. Ralvie AI makes time efficiency. decision support system helping users break
management more efficient empowering free from inefficient manual operations focus
enterprises and individuals to unleash on truly important work tasks and create
maximum productivity. greater value for the Company in the field of AI
intelligent agents.
81ZKTeco 2025 Annual Report
R&D personnel of the Company
2025 2024 Change ratio
Number of R&D staff
9511118-14.94%
(person)
Proportion of R&D personnel 27.57% 31.42% -3.85%
Education background of R&D personnel
Bachelor's degree 660 761 -13.27%
Master's degree 62 64 -3.13%
Age composition of R&D personnel
Under 30 years old 395 497 -20.52%
30~40 years old 434 501 -13.37%
Amount of R&D investment and its proportion in operating revenue of the Company in the past three years
202520242023
R&D investment amount
184608110.11215470991.40213613414.56
(RMB)
Ratio of R&D investment to
8.66%10.82%10.84%
operating revenue
Amount of R&D expenditure
0.000.000.00
capitalization (RMB)
Ratio of capitalized R&D
expenditure to R&D 0.00% 0.00% 0.00%
investment
Proportion of capitalized
R&D expenditure to current 0.00% 0.00% 0.00%
net profit
Reasons and impacts of significant changes in the composition of R&D personnel in the Company
□ Applicable □Not applicable
Reasons for significant changes in the proportion of total R&D investment to operating revenue compared to the previous year
□ Applicable □Not applicable
Reasons for significant changes in the capitalization rate of R&D investment and their rationality explanation
□ Applicable □Not applicable
5. Cash flow
Unit: RMB
Item 2025 2024 YoY change
Subtotal of cash inflows from 2350618627.37 2394049601.81 -1.81%
operating activities
Subtotal of cash outflows 1968145596.56 2165713018.76 -9.12%
from operating activities
Net cash flows from operating 382473030.81 228336583.05 67.50%
activities
Subtotal of cash inflows from 3159089716.26 1663237967.53 89.94%
investing activities
3608459716.581829043721.4497.29%
Subtotal of cash outflows
82ZKTeco 2025 Annual Report
from investing activities
Net cash flows from investing -449370000.32 -165805753.91 -171.02%
activities
Subtotal of cash inflows from 171682520.65 23810988.13 621.02%
financing activities
Subtotal of cash outflows 227951572.52 199897055.95 14.03%
from financing activities
Net cash flows from financing -56269051.87 -176086067.82 68.04%
activities
Net increase in cash and cash -128625194.95 -102676225.59 -25.27%
equivalents
Main influencing factors for significant year-on-year changes in relevant data
□Applicable □ Not applicable
(1) The net cash flow generated from operating activities increased by 67.50% year-on-yearmainly due to an increase in cash received
from selling goods and providing services in the current period and a decrease in cash paid for purchasing goods and receiving services.
(2) The net cash flow from investing activities decreased by 171.02% year-on-year mainly due to the increase in the acquisition of
financial products and structured deposits in the current period compared with the same period of the previous year as well as the
payment for the acquisition of Longzhiyuan this period.
(3) The net cash flow generated by financing activities increased by 68.04% year-on-year mainly due to the notes receivable
discounted letters of credit and payments for share repurchases made in the previous period.Description of the significant difference between the net cash flow generated by the Company's operating activities and the net profit
of the current year during the reporting period
? Applicable □ Not applicable
During the reporting period the difference between the net cash flow from the Company's operating activities and net profit was
mainly due to adjustments for non-cash gains and losses such as asset depreciation changes in operating accounts receivable and
accounts payable and changes in inventory. For details please refer to "Section VIII Financial Report" "VII. Notes to the
consolidated financial statements" "62. Supplementary information of cash flow statement".V. Non-main Business
□Applicable □ Not applicable
Unit: RMB
Proportion to Total Sustainable or
Amount Description of Reason
Profit Not
Mainly due to the profit and loss
arising from the maturity of
Investment income 2637301.43 0.98% No
financial products purchased in the
current period
Mainly due to the profit and loss
Profits and losses from generated during the holding period
15102322.02 5.59% No
fair value changes of the financial products purchased
in the current period
Mainly due to the provision for
Asset impairment -15091760.31 -5.58% inventory impairment in the current No
period
Mainly due to gains from
Non-operating revenue 1934540.52 0.72% impairment and retirement of non- No
current assets
Non-operating 5153791.42 1.91% Mainly due to expenses such as the No
83ZKTeco 2025 Annual Report
expenditure disposal of obsolete materials and
charitable donations in the current
period
Mainly due to other income arising
from government subsidies
Other income 11545929.17 4.27% No
additional VAT deductions and
similar items in the current period
Mainly due to the provision of bad
Losses from credit
-21053880.50 -7.79% debt reserves for accounts No
impairment
receivable in the current period
Mainly due to gains from disposal
Gains from disposal of
312220.10 0.12% of non-current assets in the current No
assets
period
VI. Analysis of Assets and Liabilities
1. Significant changes of asset items
Unit: RMB
At the end of 2025 At the beginning of 2025 Proportion
Note of
Proportion to Proportion to increase or
Amount Amount significant change
total assets total assets decrease
Mainly due to the
purchase of
financial
products
investment
expenditures for
construction
projects
Monetary
1243119411.23 25.09% 1473334905.97 36.70% -11.61% implementation of
funds
profit distribution
for the previous
year (cash
dividends) and
payment for
subsidiary
acquisition in the
current period
Increase in
overseas business
resulting in
accounts
Accounts
676383210.14 13.65% 519014337.89 12.93% 0.72% receivable
receivable
increase due to
the relatively long
collection cycle of
overseas business
Contract assets 26949.78 0.00% 212795.14 0.01% -0.01% No major change
Mainly due to an
increase in
strategic raw
Inventories 468837064.12 9.46% 335306397.14 8.35% 1.11%
material reserves
this year and an
increase in
84ZKTeco 2025 Annual Report
inventory of
acquired
companies at
period-end
Investment real
19863144.69 0.40% 21504316.77 0.54% -0.14% No major change
estate
Long-term
equity 25112854.58 0.51% 28982092.23 0.72% -0.21% No major change
investment
Mainly due to the
partial
capitalization of
the Multimodal
Biometrics
Digitalization
Fixed assets 723300476.82 14.60% 535337384.82 13.33% 1.27% Industrial Base
Construction
Project and the
capitalization of
the Thai factory
construction
project
Mainly due to the
capitalization of
the Multimodal
Biometrics
Digitalization
Construction in Industrial Base
113147627.972.28%226445932.025.64%-3.36%
progress Construction
Project and the
capitalization of
the Thai factory
construction
project
Right-of-use
55789456.58 1.13% 48352214.14 1.20% -0.07% No major change
assets
Mainly due to
newly added
proceeds from
Short-term
81101188.00 1.64% 1.64% discounting bank
loan
acceptance bills
and letters of
credit
Contract
76516595.89 1.54% 71168318.91 1.77% -0.23% No major change
liabilities
Long-term
139871.08 0.00% 7021328.89 0.17% -0.17% No major change
borrowings
Lease
25370074.36 0.51% 29108076.76 0.73% -0.22% No major change
liabilities
Mainly due to the
Trading
800444410.21 16.15% 491331815.79 12.24% 3.91% increase in
financial assets
financial products
Mainly due to
Intangible
271465068.24 5.48% 99844396.80 2.49% 2.99% newly added
assets
patented
85ZKTeco 2025 Annual Report
technology
trademarks and
customer
relationships from
the acquired
subsidiary in the
current period
Mainly due to
goodwill arising
Goodwill 239061688.95 4.82% 512337.25 0.01% 4.81% from the acquired
subsidiary in the
current period
Mainly due to
contingent
Trading consideration
financial 208175000.00 4.20% 4.20% arising from the
liabilities acquired
subsidiary in the
current period
High proportion of 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
ZK Wholly-
Overseas Control by
INVESTME owned 21339.41 America 4701.76 5.82% No
investment subsidiary
NTS INC. subsidiary
ZK
Controlling Overseas Control by
TECHNOL 9339.47 America 9654.42 2.55% No
subsidiary sales subsidiary
OGY LLC
ZKTECO Wholly-
Hong Overseas Control by
CO. owned 63354.17 1116.21 17.28% No
Kong sales subsidiary
LIMITED subsidiary
R&D
ARMATUR Wholly- manufactur
Control by
A TECH owned 25487.85 Thailand ing and 2624.78 6.95% No
subsidiary
CO.LTD. subsidiary sales of
products
ZKTECO Wholly-
Overseas Control by
SECURITY owned 14301.36 UAE 2613.04 3.90% No
sales subsidiary
L.L.C subsidiary
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
2. Assets and liabilities measured at fair value
□Applicable □ Not applicable
Unit: RMB
Opening Profits and Cumulative Impairment Purchase Sales Other Ending
Item
balance losses from changes in accrued in amount in amount in changes balance
86ZKTeco 2025 Annual Report
fair value fair value the current the current current
changes in recognized period period period
the current in equity
period
Financial assets
1. Trading
financial
assets - 80044441
491331815102322.3124002628290337
(excluding 958622.59 0.21
15.790210.7715.78
derivative
financial
assets)
2. Derivative
25167850.25496603.
financial 328753.23
0023
assets
3. Other debt
0.00
investments
4. Other
equity
0.00
instrument
investments
5. Other
non-current
0.00
financial
assets
Subtotal of - 80044441
financial 4913318 15102322. - - 31491704 28545303 629869.36 0.21
assets 15.79 02 60.77 19.01
Investment
0.00
real estate
Productive
biological 0.00
assets
Others 0.00
-80044441
Total 4913318 15102322. - - 31491704 28545303 629869.36 0.21
15.790260.7719.01
Financial 20817500 20817500
0.000.000.000.000.000.00
liabilities 0.00 0.00
Other changes
Other changes in financial assets were primarily attributable to exchange rate fluctuations while other changes in financial liabilities
represented contingent consideration arising from the acquisition of subsidiaries during the current period.Has there been any major change in the measurement attributes of the Company's main assets during the reporting period
□ Yes □No
3. Assets right restrictions as of the end of the reporting period
Please refer to "Section VIII Financial Report VII. Notes to Consolidated Financial Statements 23. Assets with Restricted Ownership
or Use Rights" in this report for details
87ZKTeco 2025 Annual Report
VII. Investment Analysis
1. Overall
□Applicable □ Not applicable
Investment in the reporting period Investment in the same period of the
YoY
(RMB) previous year (RMB)
3177512110.991725309509.0684.17%
2. Significant equity investments obtained during the reporting period
□Applicable □ Not applicable
88ZKTeco 2025 Annual Report
Unit: RMB
Investment
Gains and
Source Progress as of Whether Disclosure
Name of Main Investment Investment Percentage Investment Product Expected Losses for Disclosure
of Partner the Balance it is a Date (if
investee business Mode amount of shares Term type Income the Index (if any)
Funds Sheet Date litigation any)
Current
Period
As of
December 31
2025 the
Company has
paid the first
installment of
Domestic the
Shenzhen
trade; transaction
Longzhiyuan
engage price RMB
Technology Own Not Not October Announcement
in import Acquisition 416350000.00 55.00% None Long term Investment 208175000 No
Co. Ltd. and funds applicable applicable 17 2025 No.: 2025-091
and which is
its
export 50.00% of the
subsidiaries
business transaction
consideration
and the
equity
transfer has
been
completed.Not Not
Total -- -- 416350000.00 -- -- -- -- -- -- -- -- --
applicable applicable
3. Significant non-equity investments during the reporting period
□Applicable □ Not applicable
Unit: RMB
Investment Fixed Asset Investment Investment Accumulated Source Project Expected Accumulated Reasons Disclosure Disclosure
Project Name
Mode Assessment Project Amount Actual of Progress Income Realized for Not Date (if Index (if
89ZKTeco 2025 Annual Report
or Not Industry During the Investment Funds Income As of Achieving any) any)
Reporting Amount As of the End of the Planned
Period the End of the Reporting Progress
Reporting Period and
Period Expected
Benefits
Own
Hybrid funds
Biometrics Plant and bank
Under Not Not
IoT Intelligent Self-built Yes supporting 226519519.55 loans 67623830.00
construction applicable applicable
Industrial facilities and
Base Project raised
funds
Multimodal
Biometrics Own
Digitalization Plant and funds
Under Not Not
Industrial Self-built Yes supporting 7197754.87 195525972.88 and
construction applicable applicable
Base facilities raised
Construction funds
Project
Thai factory
Plant and
construction Own Not Not
Self-built Yes supporting 3160217.63 83027405.00 Completed
and office funds applicable applicable
facilities
buildings
American Own
Manufacturing Plant and funds
Under Not Not
Factory Self-built Yes supporting 43151527.72 49690642.68 and
construction applicable applicable
Construction facilities raised
Project funds
554763540.11 Not
Total -- -- -- 53509500.22 -- -- 67623830.00 -- -- --
applicable
90ZKTeco 2025 Annual Report
4. Financial asset investment
(1) Securities investment
□ Applicable □Not applicable
There were no securities investments during the Company's reporting period.
(2) Derivative investment
□Applicable □ Not applicable
1) Derivative investments for hedging purposes during the reporting period
□Applicable □ Not applicable
Unit: RMB '0000
Ratio of
ending
investment
Profits and
Cumulative Purchase Sales amount to
losses from
Types of Initial changes in amount amount 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
the current
in equity period period at the end
period
of the
reporting
period
Forward
foreign
exchange 0 0 0 0 2516.79 2516.79 0 0.00%
settlement
and sales
Total 0 0 0 0 2516.79 2516.79 0 0.00%
Accounting
policies and
specific
accounting
principles
for hedging
business
during the
reporting
period as
well as No major change
description
on whether
there have
been
significant
changes
compared to
the previous
reporting
period
91ZKTeco 2025 Annual Report
Description
of actual
profit and During the reporting period the Company obtained investment income of RMB 285.8 thousand through forward
loss during foreign 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
business related to daily operation needs according to specific circumstances to reduce the risk of exchange rate or
of hedging
interest rate fluctuations that the Company continues to face. The Company's forward foreign exchange settlement
effect
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 for the forward foreign exchange settlement and sales is lower than the real-time exchange
rate.
2. Risk of payment collection prediction: Business departments make payment prediction based on customer
orders and expected orders. During the actual execution process customers may adjust their own orders and
predictions resulting in inaccurate company payment prediction and the risk of delayed delivery of forward
Risk exchange settlement.analysis and 3. Internal control risk: Forward foreign exchange settlement and sales transactions are highly specialized and
control complex which may result in risks due to imperfect internal control systems.measures of 4. Customer default risk: If the customer's accounts receivable are overdue and the payment cannot be collected
derivatives within the predicted payment period it will cause a delay in forward exchange settlement and result in losses to
positions the Company.during the 5. Transaction performance risk: Conducting financial derivative trading business carries the risk of default caused
reporting by the inability of counterparties to perform when the contract expires.period II. Preparation work and risk control measures for hedging by the Company
(including The Company follows the principle of hedging when conducting forward foreign exchange settlement and sales
but not transactions and does not engage in speculative arbitrage transactions. The main risk control measures are as
limited to follows:
market risk 1. When signing forward foreign exchange settlement and sales contracts transactions are carried out in strict
liquidity accordance with the Company's predicted collection amount and all forward foreign exchange settlement and
risk credit sales businesses have a true trade background.risk 2. The Company has formulated the "Management System for Forward Foreign Exchange Settlement and Sales of
operational ZKTECO CO. LTD." which clearly stipulates the amount variety approval authority internal audit process
risk legal information disclosure and other aspects of forward foreign exchange settlement and sales. Moreover the
risk etc.) 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.
92ZKTeco 2025 Annual Report
Changes in
market price
or fair value
of products
during the
reporting
period of the
invested
derivatives.The analysis The Company's accounting for the fair value of derivatives mainly focuses on the unexpired contracts for forward
of the fair foreign exchange settlement and sales transactions signed between the Company and banks during the reporting
value of period. Trading financial assets or trading financial liabilities are recognized based on the difference between the
derivatives quoted price of the unexpired forward foreign exchange settlement and sales contract at the end of the period and
shall the forward foreign exchange price.disclose the
specific
methods
used and the
setting of
relevant
assumptions
and
parameters
Litigation
situation (if None
applicable)
Disclosure
date of
announceme
nt by the
Board of
April 23 2025
Directors for
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.VIII. Disposal of Significant Assets and Equity
1. Disposal of significant assets
□ Applicable □Not applicable
There is no disposal of significant asset for the Company during the reporting period.
2. Disposal of significant equity
□ Applicable □Not applicable
93ZKTeco 2025 Annual Report
IX. 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 Company Main Registered Operating Operating
Total assets Net assets Net profit
Name type business Capital revenue profit
ZKTECO
Sales of AED 14301355 12705257 11803643 29438622. 27824178.SECURIT Subsidiaries
goods 300000.00 3.47 4.39 0.05 56 84
Y L.L.C
ZK
TECHNO Sales of Not 93394743. 37507801. 18315917 96112449. 96544212.Subsidiaries
LOGY goods applicable 51 47 4.37 95 19
LLC
ZK
INVESTM USD 21339410 21228512 64439759. 47017560.Subsidiaries Investment 0.00
ENTS 100.00 6.88 7.77 97 45
INC.ARMATU THB
Sales of 25487850 20073654 15681513 26107044. 26247769.RA TECH Subsidiaries 60298320
goods 4.59 5.16 7.35 40 15
CO.LTD. 0.00
R&D
ZKTeco production
(Guangdo and sales of 80000000 18188600 10196180 12175198 71253240. 69050213.Subsidiaries
ng) Co. products 0.00 99.77 32.31 70.15 53 04
Ltd. and
software
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
Shenzhen Longzhiyuan Technology Co.Acquisition production operation and performance
Ltd. and its subsidiaries
of the Company;
With no significant impact on the overall
ZKTECO ROMANIA S.R.L. Cancellation production operation and performance
of the Company;
New establishment with no significant
impact on the overall production
NUR ALTTKNWLWJIA COMPANY Establishment
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
X. Structured Entities Controlled by the Company
□ Applicable □Not applicable
94ZKTeco 2025 Annual Report
XI. Outlook for the Future Development of the Company
(I) The Company's future development strategy and plans
1. Overall business development strategy of the Company - Deepen the development of BioCV core technology expand the
cloud subscription ecosystem and lead the global upgrade of intelligent spaces
In the era of rapid technological advancement ZKTeco with its deep accumulation in multimodal BioCV technology is leveraging
its core multimodal BioCV technology as the engine to actively embrace the AI wave and drive intelligent transformation across various
industries. ZKTeco will continue to increase R&D investment attract top AI talents integrate cutting-edge algorithms and technologies
optimize product performance expand application boundaries and reshape industry standards. Driven by AI technology the Company
will focus on core technologies empower more industries to undergo intelligent transformation create greater value on the global stage
and lead the industry towards a brilliant future. The Company is committed to becoming a global leader in smart space evolution
services and leading the industry to new heights.In the future the Company will comprehensively deepen the transformation and upgrading of its business model firmly
transitioning strategically towards cloud business and cloud subscription services. Relying on cloud-native technology foundations
such as the Minerva IoT ZKTeco Cloud IoT platform the Company aims to build an integrated edge-cloud-device cloud operation
system and establish a full-dimensional subscription product matrix covering basic services value-added services and industry-
customized services. We are gradually moving away from the traditional one-time hardware sales model and shifting towards a cloud-
based full-lifecycle O&M and pay-as-you-go subscription service model deeply binding customers to their full lifecycle value
continuously enhancing user stickiness while also opening up cloud ecosystem cooperation to create a new engine for sustainable
high-stickiness and high-value-added long-term growth.
2. Core business development planning
(1) Smart space: Intelligent upgrade spanning physical and digital worlds
Centered on the AI cognitive computing platform it upgrades smart spaces from "full-element perception" to "autonomous
decision-making and continuous evolution".Under the digital wave entrance and exit management is transitioning from traditional models to intelligent ones. Unlike
traditional systems that only focus on human and vehicle passage control ZKTeco's Baiaruida focuses on physical space computing
and its ZKBio makes initial breakthroughs in the digitalization of the general entrance and exit. ZKTeco's AI space cognition computing
technology achieves a qualitative leap. This technology integrates full-scenario perception of people vehicles objects and the
environment endowing the space management system with a "smart brain" to deeply analyze behavior patterns and correlations.In terms of efficient passage the system integrates video visual perception and high-precision radar technologies to quickly and
accurately identify people vehicles and objects optimizing the passage verification process. Whether in busy commercial centers or
high-density office areas it can effectively alleviate congestion and improve circulation efficiency. In terms of energy conservation
and environmental protection the system senses environmental factors such as light and temperature in real time intelligently regulates
lighting and ventilation equipment to reduce energy consumption; and optimizes material circulation to reduce transportation carbon
emissions.Taking large commercial complexes as an example the system analyzes the trajectories and dwell times of people vehicles and
objects to gain insights into consumer preferences and operational needs assisting in precise marketing and resource allocation thereby
enhancing economic benefits and promoting green development. Additionally users can make remote reservations and self-service
passage through mobile devices enjoying convenient services. In the future entrance and exit management will further evolve towards
intelligence and humanization.
(2) Smart office: Driving a revolution in organizational efficiency with AI Agents
In the smart office domain centered on multimodal BioCV technology and IoT perception technology the ZKTeco
Interconnection AIoT Cloud Scene Ecosystem Platform through the multi-technology integration of "end-edge-cloud + AI" can
95ZKTeco 2025 Annual Report
achieve comprehensive perception intelligent analysis and efficient management. The Company provides intelligent solutions for
enterprises and institutions covering scenarios such as attendance visitors meetings and consumption aiming to optimize time
management and operational efficiency.ZKTeco Interconnection's smart solutions integrate AI agents and cloud technology centered on Ralvie AI technology to achieve
a profound upgrade from "time management" to "organizational efficiency management". The Company innovates time management
models by accurately recording and analyzing employees' working hours and efficiency it converts time into quantifiable value
certificates. This not only provides a basis for performance evaluation but also helps enterprises optimize processes and resource
allocation enhancing operational efficiency creating smart time management solutions and a one-stop smart office ecosystem and
giving time management a new meaning.
(3) Digital identity authentication: Fusion innovation of multimodal BioCV and blockchain
In the digital age identity authentication is the cornerstone of security. ZKTeco continuously upgrades its multimodal BioCV
fusion technology deepening its integration with blockchain and large model technologies to build a "precise secure trustworthy and
cross-scenario" digital identity authentication system. Biometric recognition accurately captures user identities AI intelligent analysis
quickly verifies the identities and blockchain ensures decentralized storage and immutability of data. In the financial sector this system
effectively prevents identity fraud and ensures fund security; in access control scenarios it enables fast passage and efficient
management providing security for various venues.
(4) Smart business: AI Agents driving a full-link marketing revolution
Centering on the ZKDIGIMAX Level3 platform and integrating AI agents large models and computer vision technology we
build intelligent full-link solutions for smart business.In the smart business sector ZKTeco with the ZKDIGIMAX Level3 platform as its core integrates AI agents large models and
computer vision technology to build intelligent full-link solutions for smart business. Leveraging smart digital signage we drive
innovation in digital advertising operations. By deeply analyzing consumer behavior data it accurately identifies needs and achieves
personalized marketing enhancing effectiveness and satisfaction. The digital signage management service integrates AI large models
achieving full-process intelligence from content creation to precise placement and effect tracking and injecting new energy into smart
business.
(5) Operations and subscription services: Building a full-lifecycle O&M ecosystem centered on cloud operations and
establishing long-term value stickiness through a subscription model.The Company positions cloud services as its core strategic business relying on self-developed cloud-native technology
foundations such as the ZKTeco Cloud IoT Platform Minerva IoT and ZKTeco Interconnection. It deeply strengthens its core cloud
operation capabilities and diversified subscription service system transforming from the traditional "hardware sales + one-time service"
model to a high-value business model of "full-lifecycle cloud operations O&M + subscription-based on-demand services". By
providing customers with continuous professional and customized cloud-based operations and O&M services the Company deeply
binds to customers' full lifecycle needs builds irreplaceable long-term cooperative relationships continuously enhances user stickiness
and customer lifetime value and creates a sustainable new engine for its performance growth.In building core cloud operation capabilities the Company based on an edge-cloud-device integrated technical architecture has
established a comprehensive cloud operation service system covering "full device lifecycle management intelligent data analysis and
operations continuous system iteration and upgrades and scenario-based intelligent O&M". This provides customers with one-stop
cloud-based operation support from device deployment to daily operations from data collection to value mining and from fault
handling to intelligent optimization.First it achieves centralized cloud-based operational management of devices supporting concurrent access for hundreds of
millions of devices. It provides customers with services such as real-time device status monitoring remote fault diagnosis batch
parameter configuration and remote device firmware upgrades significantly reducing customer device O&M costs and improving
device operational stability and utilization efficiency.Second it builds intelligent data analysis and operation capabilities. Relying on the multimodal cognitive computing capabilities
96ZKTeco 2025 Annual Report
of the Mars Wisdom AI platform it conducts in-depth analysis of multi-dimensional data collected by devices including people
vehicles objects and environment. This provides customers with value-added services such as operational decision reports resource
optimization suggestions and risk early warning alerts transforming data resources into operational value for customers.Third it provides full-stack iterative system operations continuously upgrading and optimizing cloud platforms industry software
and intelligent algorithms. It timely integrates cutting-edge technological capabilities such as large models and edge AI ensuring
customers can always enjoy industry-leading technology and services without incurring the costs of independent R&D and upgrades.Fourth it implements scenario-based customized O&M operations. For personalized services catering to customers in various
scenarios such as smart spaces smart office smart business and digital identity authentication a professional cloud operation service
team is formed. This team provides services such as 24/7 online response customized O&M solutions and on-site technical support
coordination achieving scenario-based precise and efficient O&M services.In building its diversified subscription service system the Company adheres to the principles of "customer-centricity on-demand
subscription and flexible expansion" creating a full-category subscription product matrix that covers basic cloud services value-added
cloud services and industry-specific customized cloud services. This approach meets the differentiated cloud service needs of
customers of various sizes and industries achieving long-term value binding with customers through the subscription model.The Company continuously strengthens the technical barriers and ecological advantages of its cloud services taking the ZKTeco
Cloud IoT Platform Minerva IoT as its core. This platform enables interconnection with the Company's full range of intelligent
hardware and industry software platforms achieving deep synergy and data sharing between cloud services hardware and software.Through methods such as "Cloud-to-Cloud Direct Connection" "Cloud API Openness" and "Application Availability" the Company
collaborates with ecological partners like WeCom and Lark to build an open and win-win cloud service ecosystem enriching
subscription service content and application scenarios. Relying on the Company's global marketing and service network it achieves
localized implementation and operation of cloud services providing undifferentiated high-quality cloud subscription services to global
customers further expanding the coverage and customer base of subscription services.
3. Business plan of the Company for 2026
In 2026 ZKTeco will closely adhere to the core goal of "cost reduction and efficiency enhancement" uphold the strategic guidance
of its "Change-Maker" culture and promote the deep integration of AI technology cloud services brain-computer interfaces and AIoT.Relying on existing technological and ecological advantages the Company aims to achieve business breakthroughs and high-quality
sustainable growth continuously advancing towards becoming a global leading intelligent space evolution service provider.
(1) Leading by strategies to anchor core goals
Taking "cost reduction and efficiency enhancement" as the core leverage the "Change-Maker" strategy will be integrated
throughout the entire operation process. By synergistically exerting efforts through strategic traction business focus and organizational
adaptation the Company aims to build differentiated competitive advantages. Simultaneously it will advance the overseas issuance of
H-shares for listing expanding financing channels and providing financial support for strategic implementation.
(2) Deeply cultivating global business and innovating business models
The Company will coordinate both domestic and international markets synergistically promoting business development. The
domestic market will focus on upgrading the channel ecosystem implementing innovative business models meticulously cultivating
core businesses making key breakthroughs in the BCI field and optimizing organizational efficiency. Cloudify international market
promotion channels strengthen efforts in the SI market strategically deploy cloud monitoring services and upgrade the Token
subscription model thereby achieving the transformation from "selling products" to "selling services".
(3) Strengthening talent support to energize organizational vitality
Guided by the "Change-Maker: culture strengthen positive incentives and stimulate the innovative drive of organizations and
employees. Complete the upgrade of HR System 2.0 implement various human resource initiatives attract core talent solidify the
organizational foundation and facilitate the realization of "cost reduction and efficiency enhancement" objectives.
(4) Focusing on technological innovation to build core competitive advantages
Adhere to the strategy of "AI cognitive drive technology platformization scenario-based products and subscription-based
97ZKTeco 2025 Annual Report
services" solidify core technological advantages and promote the upgrade of the technology system towards "cognitive intelligence
and intentional intelligence". Focus on tackling BCI technology expand into the smart living sector accelerate the implementation of
AI-native applications and improve the technology and product ecosystem.
(5) Upgrading the manufacturing system to strengthen supply chain resilience
Promote the establishment of global production capacity advance the construction of US factories and accelerate the release of
production capacity at the Thai factory. Advance smart manufacturing and the digitalization of the entire production process strengthen
quality control improve production efficiency and product quality and enhance the core competitiveness of the global supply chain.
(6) Deepening informatization to empower global operations
Expand the global coverage of systems such as SAP SRM and MES optimize system functions promote the intelligent upgrade
of financial management achieve efficient synergy in operational management and support the realization of globalization strategy
and "cost reduction and efficiency enhancement" goals.(II) 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 BioCV technology and
continuously expanding and enriching the types of BioCV products and services. With the development of AI the Company pays more
attention to the application of AI technology in business and its integration into products 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 2025 the Company's overseas sales revenue from countries and regions was RMB 1.607625 billion accounting for 75.71%
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 stagnation of maritime transport caused by geopolitical
conflicts 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
98ZKTeco 2025 Annual Report
economic environment geopolitics trade policies with China tariff and non-tariff barriers and industry standards in the future it will
have a negative impact on the Company's export business.In addition to the risks of economic and political environment changes trade frictions and tariffs that the Company may face
the multinational enterprise business model of the Company will increase the difficulty of operating financial management and
personnel management and the operation will be influenced by the legal and regulatory environments and business environments of
different countries and systems. Although the Company has accumulated rich experience in international business development if the
Company's management personnel and various systems cannot meet the requirements of global operation cross regional management
and standardized operation it will also affect its operational efficiency and profitability.
(3) Tax compliance risks caused by transfer pricing arrangements between various tax entities within the Company both
domestically and internationally
As of December 31 2025 the Company has a total of 62 overseas controlling subsidiaries located in countries and regions such
as Hong Kong Thailand the United States Mexico 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 and has
maintained long-term cooperation with professional data compliance law firms 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.
99ZKTeco 2025 Annual Report
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 BioCV. 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 multimodal BioCV 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 2025 the Company's R&D expenses were RMB 184.6081 million accounting for 8.66% of operating
revenue.As of December 31 2025 the Company and its consolidated subsidiaries collectively hold 1193 patents including 220 invention
patents. Obtained 829 computer software copyrights and 87 work copyrights with strong ability for continuous innovation. However
if the Company cannot keep up with the development trends of domestic and foreign multimodal BioCV 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 Company's global marketing network R&D Center and manufacturing factories the Company's
scale will also constantly expand and the number of global 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 2025 the Company achieved a revenue of RMB 1.4364079 billion through the
distribution model accounting for 67.64% of the Company's main business income in 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
100ZKTeco 2025 Annual Report
At the end of the reporting period the book balance of the Company's accounts receivable was RMB 753.1891 million
accounting for 35.31% 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 468.8371 million accounting for 13.93% 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 6.16%. The Company's inventory mainly consists of raw materials inventory goods etc. The Company has
always maintained a good cooperative relationship with raw material suppliers and customers and reasonably arranged the inventory
of raw materials and inventory goods. However with the further growth of the Company's sales revenue and asset size the Company's
inventory also increases accordingly which may lead to a decline in price backlog and unsold inventory due to market changes
resulting in the risk of deteriorating financial position and declining profitability.
(3) Risk of RMB exchange rate fluctuations
The Company's current business layout is highly internationalized and there are many local controlling subsidiaries and
participating companies in the overseas export market. The majority of export sales are settled in USD or EUR resulting in significant
exchange rate fluctuations in production and operation. On the one hand the fluctuations of the RMB exchange rate will directly affect
the gross profit margin of the Company's export products after conversion to RMB thereby affecting the profit of the Company's
products; on the other hand fluctuations of the RMB exchange rate may also affect changes in the Company's RMB revenue. If the
RMB further appreciates in the future it will have a significant adverse impact on the Company's operating performance.
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 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 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.
101ZKTeco 2025 Annual Report
6. Risks of BCI innovation business
The Company's BCI innovation business relies on EEG and fNIRS non-invasive brain electrical perception technologies for its
R&D layout. It is currently in the stages of technology R&D prototype verification and market cultivation and has not yet generated
large-scale commercial revenue. This field is characterized by rapid technological iteration and high interdisciplinary thresholds posing
risks such as neural signal decoding accuracy individual adaptability and long-term stability in technology R&D falling short of
expectations; at the same time it faces uncertainties such as ununified industry standards strict ethical review continuously improving
regulatory policies and slow implementation of market application scenarios. The business requires continuous high R&D investment
which will put certain pressure on the Company's profitability in the short term; furthermore factors such as intensified global market
competition technological route iteration cross-border data compliance and intellectual property protection may all lead to business
progress falling short of expectations and uncertainty in investment returns.
102ZKTeco 2025 Annual Report
XII. Reception of Activities including Research Communication and Interviews During the Reporting Period
□Applicable □ Not applicable
The main content of the
Reception Reception Reception Index of basic information
Reception location Reception object discussion and the
time methods object type of research
materials provided
CNINFO
http://www.cninfo.com.cn
Announcement date:
CHINA EVERWIN Guoxin Investment First
February Xiamen ZKTeco Co. See CNINFO February 27 2025
Field research Institution State Cinda Ping An Asset Caitong Fund CSC
27 2025 Ltd. Meeting Room (http://www.cninfo.com.cn) Investor Relations
Multiply Capital
Activity Record Form of
ZKTECO CO. LTD. (No.
2025-01)
CNINFO
http://www.cninfo.com.cn
Value Online Online
Announcement date: April
April 30 (https://www.ir- Communication Investors participating in the Company's 2024 See CNINFO
Others 30 2025 Investor
2025 online.cn/) Network on Online annual performance briefing online (http://www.cninfo.com.cn)
Relations Activity Record
Interaction Platforms
Form of 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
CNINFO
Securities Asset Management Company Limited
ZKTeco Cloud http://www.cninfo.com.cn
Shanghai Hesheng Investment Management Co.Brain-Computer Announcement date: May
May 6 Ltd. CSC Research Institute China Capital See CNINFO
(Hangzhou) Field research Institution 6 2025 Investor
2025 Management Co. Ltd. China Post Securities Co. (http://www.cninfo.com.cn)
Technology Co. Ltd. Relations Activity Record
Ltd. Beijing Yuanfeng Private Equity Fund
Meeting Room Form of ZKTECO CO.Management Partnership (Limited Partnership)
LTD. (No. 2025-03)
Huaxia Bank Research Institute China
Development Bank Securities Co. Ltd. Tianhong
Asset Management Co. Ltd. Taiping Pension
Co. Ltd. Invesco Great Wall Fund Management
103ZKTeco 2025 Annual Report
Co. Ltd. Western Leadbank 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 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
Announcement date: May
May 16 Telephone AVIC Fund Management Co. Ltd. Shanghai See CNINFO
Online Meeting Institution 16 2025 Investor
2025 Communication Yongle Private Equity Fund Management Co. (http://www.cninfo.com.cn)
Relations Activity Record
Ltd.Form of ZKTECO CO.LTD. (No. 2025-04)
CNINFO
http://www.cninfo.com.cn
Announcement date: June
June 17 ZKTeco Meeting Guotai Haitong Securities Zeta Capital DM See CNINFO
Field research Institution 17 2025 Investor
2025 Room Capital (http://www.cninfo.com.cn)
Relations Activity Record
Form of ZKTECO CO.LTD. (No. 2025-05)
CNINFO
http://www.cninfo.com.cn
Guotai Haitong Securities Tebon Fund Fullgoal
ZKTeco Meeting Announcement date: June
June 23- Telephone Fund Penghua Fund GALAXY ASSET BOCOM See CNINFO
Room and Online Institution 25 2025 Investor
25 2025 Communication Schroders BOSC ASSET Changjiang Pension (http://www.cninfo.com.cn)
Meetings Relations Activity Record
CINDA FUND
Form of ZKTECO CO.LTD. (No. 2025-06)
CNINFO
http://www.cninfo.com.cn
Value Online Online
Announcement date:
August 27 (https://www.ir- Communication Investors participating in the Company's 2025 See CNINFO
Others August 27 2025 Investor
2025 online.cn/) Network on Online semi-annual performance briefing online (http://www.cninfo.com.cn)
Relations Activity Record
Interaction Platforms
Form of ZKTECO CO.LTD. (No. 2025-07)
104ZKTeco 2025 Annual Report
TF Securities Co. Ltd. New China Fund
Management Co. Ltd. Shanghai Zhaowan Asset
Management Co. Ltd. Harvest Fund
Management Co. Ltd. Jinku Qikai (Hangzhou)
Investment Management Co. Ltd. Shanghai
Branch All Win Investment Co. Hexie Health CNINFO
Insurance Co. Ltd. Bearing No (Shanghai) http://www.cninfo.com.cn
Investment Management Center (L.P.) Shenzhen Announcement date:
August 28 Comein Finance Telephone Institutions See CNINFO
Junzi Qianqian Private Equity Investment Fund August 28 2025 Investor
2025 platform Communication Individuals (http://www.cninfo.com.cn)
Management Co. Ltd. Xunyuan Asset Relations Activity Record
Management (Shanghai) Co. Ltd. CITIC Form of ZKTECO CO.Securities Co. Ltd. Western Leadbank Fund LTD. (No. 2025-08)
Management Co. Ltd. Shanghai Tourmaline
Asset Management Co. Ltd. Capital ITC BOC
International (China) Co. Ltd. and other
individual investors Liu Wenshu and Ye
Guangliang
CNINFO
http://www.cninfo.com.cn
Guotai Haitong Securities Co. Ltd. Golden Eagle
Announcement date:
ZKTeco Meeting Asset Management Co. Ltd. Shanghai Guotai
September Telephone See CNINFO September 9 2025
Room and Online Institution Junan Securities Asset Management Co. Ltd.
9 2025 Communication (http://www.cninfo.com.cn) Investor Relations
Meetings Life Insurance Asset Management Co. Ltd. and
Activity Record Form of
Taiping Pension Co. Ltd.ZKTECO CO. LTD. (No.
2025-09)
CNINFO
http://www.cninfo.com.cn
Online Announcement date:
September Investor Relations Communication See CNINFO September 19 2025
Others Investors participating in online Q&A
19 2025 Interactive Platform on Online (http://www.cninfo.com.cn) Investor Relations
Platforms Activity Record Form of
ZKTECO CO. LTD. (No.
2025-10)
CNINFO
ZKTeco Meeting China Post Securities CCB Principal Asset http://www.cninfo.com.cn
November Telephone See CNINFO
Room and Online Institution Management Cigna & CMB Life and Xitai Announcement date:
17 2025 Communication (http://www.cninfo.com.cn)
Meetings Investment November 17 2025
Investor Relations
105ZKTeco 2025 Annual Report
Activity Record Form of
ZKTECO CO. LTD. (No.
2025-11)
CNINFO
http://www.cninfo.com.cn
Announcement date:
TF Securities CINDA FUND Baoying Fund
December ZKTeco Meeting Institutions See CNINFO December 31 2025
Field research Rongtong Fund and individual investor Zhan
31 2025 Room Individuals (http://www.cninfo.com.cn) Investor Relations
Guoqiang
Activity Record Form of
ZKTECO CO. LTD. (No.
2025-12)
106ZKTeco 2025 Annual Report
XIII. Formulation and Implementation of the Market Value Management System and the
Plan for Enhancing Valuation
Has the Company established a market value management system
□ Yes □No
Has the Company disclosed its plan for enhancing valuation
□ Yes □No
XIV. Implementation of the Action Plan for "Double Improvement of Quality and Return"
Has the Company disclosed an action plan announcement for "dual improvement of quality and return".□ Yes □No
107ZKTeco 2025 Annual Report
Section IV Corporate Governance Environment and Society
I. Basic Situation of Corporate Governance
During the reporting period the Company continuously improved its corporate governance structure based on the specific situation
of the Company established and improved the internal management and control system of the Company continuously carried out in-
depth corporate governance activities and promoted standardized operation of the Company in strict accordance with the requirements
of laws regulations and normative documents such as the "Company Law" "Securities Law" "Code of Corporate Governance for
Listed Companies" "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange" "Shenzhen Stock
Exchange Guideline No. 2 on Self Regulation of Listed Companies - Normative Operation of Listed Companies on the Growth
Enterprise Board". The Company has established a corporate governance structure composed of the Board of Shareholders Board of
Directors and management established and improved the rules of procedure for Board of Shareholders Board of Directors and
independent director work system and established an Audit Committee Strategy and Development Committee Salary and Assessment
Committee and Nomination Committee under the Board of Directors.During the reporting period the Company in accordance with the requirements of the latest laws and regulations and in
consideration of its actual situation improved its governance structure and institutional system abolished supervisors and the Board
of Supervisors and formulated the "Management System for the Departure of Directors and Senior Managers of ZKTECO CO. LTD."
Simultaneously it revised relevant regulatory governance systems including the "Rules of Procedure for Shareholders' Meeting of
ZKTECO CO. LTD." the "Rules of Procedure of the Board of Directors of ZKTECO CO. LTD." the "Independent Director System
of ZKTECO CO. LTD." the "Related Party Transaction Management System of ZKTECO CO. LTD." the "Fundraising Management
System of ZKTECO CO. LTD." the "External Guarantee Management System of ZKTECO CO. LTD." the "Implementation Rules
of the Audit Committee of the Board of Directors of ZKTECO CO. LTD." the "Implementation Rules of the Nomination Committee
of the Board of Directors of ZKTECO CO. LTD." the "Implementation Rules of the Salary and Assessment Committee of the Board
of Directors of ZKTECO CO. LTD." the "Information Disclosure Management System of ZKTECO CO. LTD." and the
"Standardized Management System for Related Party Fund Transactions of ZKTECO CO. LTD."
1. About shareholders and shareholders' meeting
The Company standardizes the convening of the shareholders' meeting in strict accordance with the requirements of the "Rules
for the Shareholders' Meetings of Listed Companies" "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen
Stock Exchange" "Articles of Association" "Rules of Procedure of the Shareholders' Meeting" and other regulations treats all
shareholders equally and creates convenient conditions for shareholders to participate in the shareholders' meeting as much as possible
enabling them to fully exercise their shareholder rights and protect the interests of all shareholders. Meanwhile the Company hires
professional lawyers to witness the shareholders' meeting ensuring that the convening and voting procedures of the meeting comply
with relevant laws and regulations and safeguarding the legitimate rights and interests of shareholders.During the reporting period the Company held one shareholders' meeting and two extraordinary shareholders' meetings all of
which were held through a combination of on-site and online voting. The Company hired lawyers to attend and witness the shareholders'
meetings and provides legal opinions on the convening and voting procedures of the shareholders' meetings fully respecting and
safeguarding the legitimate rights and interests of all shareholders.
2. The Company and the controlling shareholders
The Company has independent and complete business and independent management capabilities which are separated from the
controlling shareholders in terms of personnel assets finance institutions business and other aspects. Each of them independently
calculates and assumes responsibilities and risks. During the reporting period major decisions of the Company were made by the board
of shareholders and the Board of Directors in accordance with the law. The controlling shareholders exercised their shareholder rights
through the board of shareholders and there were no direct or indirect interventions beyond the shareholders' meeting in the Company's
108ZKTeco 2025 Annual Report
decision-making and operating activities. There were no violations of commitments and there were no situations such as occupying
company funds or requiring guarantees for them or others.
3. Directors and the Board of Directors
The Company's Board of Directors has 7 directors including 3 independent directors. The number of directors and personnel
composition meet the requirements of laws regulations and the Company's Articles of Association. All directors fulfill their duties
with integrity diligence and conscientiousness attend meetings on time actively participate in training and continuously improve
their performance level. The Board of Directors of the Company has four specialized committees: the Audit Committee the Strategy
and Development Committee the Salary and Assessment Committee and the Nomination Committee. Each specialized committee
strictly performs its duties in accordance with relevant laws and regulations the Company's "Articles of Association" and the rules of
procedure of each specialized committee of the Board of Directors and operates well.During the reporting period the Company held 10 board meetings. The procedures for convening holding and voting at the
meetings strictly complied with relevant laws regulations and provisions. The Board of Directors makes decisions on relevant matters
which played a positive role in improving the Company's governance structure and standardizing operations and safeguarding the
interests of public shareholders.
4. Performance appraisal and incentive and restraint mechanisms
The Company has gradually established and improved an enterprise performance evaluation and incentive system and the
appointment of senior managers is open and transparent in accordance with laws and regulations. During the reporting period the
senior managers of the Company have conscientiously fulfilled their work responsibilities as indicated by assessment.
5. Improve the quality of information disclosure and effectively protect the rights and interests of investors
The Company truthfully accurately timely fairly and completely discloses relevant information in strict accordance with
relevant laws and regulations as well as the requirements of the "Articles of Association" and the "Information Disclosure Management
System". The Board Secretary of the Company is designated to be responsible for information disclosure and investor relationship
management strengthen communication with investors through channels such as investor hotlines faxes dedicated email exchange
Easy to Interact platforms and receiving shareholder visits strictly implement the requirements for insider information management
ensure that all shareholders and investors of the Company can obtain information fairly and continuously improve the transparency of
the Company.
6. Regarding stakeholders
The Company fully respects and safeguards the legitimate rights and interests of stakeholders achieves coordination and balance
of interests among shareholders employees society and other parties and jointly promotes the sustained and sound development of
the Company.Are there significant differences between the actual situation of corporate governance and laws administrative regulations and the
regulations on listed company governance issued by the CSRC
□ Yes □No
There are no significant differences between the actual situation of corporate governance and laws administrative regulations and
the regulations on listed company governance issued by the CSRC.II. Company's Independence in Assets Personnel Finance Organizations and Businesses
from Controlling Shareholders and Actual Controller
The Company operates in strict accordance with relevant laws regulations and the requirements of the "Company Law"
"Securities Law" and the "Articles of Association". It is independent of the controlling shareholders and actual controllers of the
Company in terms of assets personnel finance institutions and business and has a complete asset and business system and the ability
to operate independently in the market.
1. Asset Completeness
109ZKTeco 2025 Annual Report
The ownership of the necessary assets for the Company's current business and production operations is fully enjoyed by the
Company independently with complete control and domination over all assets and there is no situation of sharing with shareholder
units. The Company has an independent R&D procurement production and sales system as well as a business system and main assets
related to operations.
2. Personnel independence
The Company shall appoint directors in accordance with the relevant provisions of the "Company Law" and the "Articles of
Association". The Board of Directors shall appoint senior managers and the labor personnel and salary management of the Company
shall be completely independent of the shareholder entities. The General Manager Deputy General Manager CFO and Board Secretary
and other senior managers of the Company have not held any positions other than directors or supervisors in other enterprises controlled
by the controlling shareholder or actual controller and have not received salaries in other enterprises controlled by the controlling
shareholder or actual controller. The financial personnel of the Company do not work part-time in other enterprises controlled by the
controlling shareholder or actual controller.
3. Financial independence
The Company has established an independent financial accounting system capable of making financial decisions independently
with standardized financial accounting systems and financial management systems for branches and subsidiaries. The Company has
not shared bank accounts with controlling shareholders actual controllers and other enterprises under its control.
4. Independence in organizations
The Company has established and improved its internal business management structure independently exercising its business
management powers and there is no institutional confusion with other enterprises controlled by controlling shareholders or actual
controllers.
5. Business independence
The Company uses multimodal "Computer Vision and Biometrics" (BioCV) as its core technology and does not rely on
shareholder entities or their affiliated enterprises. There is no situation where shareholders intervene in the Company's business
operations by retaining procurement and sales institutions monopolizing business channels etc. There is no horizontal competition or
significantly unfair related party transactions between the Company and other enterprises controlled by the controlling shareholder or
actual controller and the controlling shareholder or actual controller has promised not to engage in any business or activity that
constitutes or may constitute horizontal competition with ZKTeco and enterprises controlled by ZKTeco.III. Horizontal Competition
□ Applicable □Not applicable
IV. Arrangement for Differences in Voting Rights of the Company
□ Applicable □Not applicable
V. Governance of Red Chip Structured Companies
□ Applicable □Not applicable
110ZKTeco 2025 Annual Report
VI. Directors and Senior Managers
1. Basic information
Shares Shares
Reasons for
Shares held at increased decreased Other changes
Commencement Termination Shares held at changes in
Tenure the beginning of during during in increase or
Name Sex Age Position of term of of term of the end of the share
status the period the the decrease
office office period (shares) increase or
(shares) period period (shares)
decrease
(shares) (shares)
The
Company
implements
Che December 14 March 25
Male 57 Chairman Incumbent 34022300 6804460 40826760 its 2024
Quanhong 2007 2029
annual
profit
distribution.March 25 The
Director Incumbent April 11 2020
2029 Company
Jin implements
Male 15600 3120 18720
Hairong 44 its 2024
Managing January 31 March 25
Incumbent annual
Director 2019 2029
profit
distribution.March 26
Director Resigned June 28 2016
Ma 2026
Male 43
Wentao Deputy
March 26
General Resigned June 28 2016
2026
Manager
The
Company
implements
Fu March 25
Male 42 Director Incumbent June 28 2016 14300 2860 17160 its 2024
Zhiqian 2029
annual
profit
distribution.
111ZKTeco 2025 Annual Report
Gao March 25
Male 47 Director Incumbent March 26 2026
Benhe 2029
Dong Independent March 26
Female 54 Resigned June 3 2020
Xiuqin director 2026
Zhuo Independent March 26
Female 45 Resigned April 11 2020
Shuyan director 2026
Pang Independent January 12 March 26
Male 55 Resigned
Chunlin director 2021 2026
Liang Independent March 25
Male 50 Incumbent March 26 2026
Long director 2029
Wang Independent March 25
Female 54 Incumbent March 26 2026
Yihua director 2029
Jin Independent March 25
Male 46 Incumbent March 26 2026
Zhenchao director 2029
Deputy
Li March 25
Male 53 General Incumbent June 28 2016
Zhinong 2029
Manager
Board March 25
Incumbent April 15 2020
Guo Secretary 2029
Female 45
Yanbo Deputy
September 16 March 25
General Incumbent
20222029
Manager
Wang March 25
Male 60 CFO Incumbent April 15 2020
Youwu 2029
The
Company
Deputy implements
Mu September 16 March 25
Female 39 General Incumbent 23400 4680 28080 its 2024
Wenting 2022 2029
Manager annual
profit
distribution.Total -- -- -- -- -- -- 34075600 0 0 6815120 40890720 --
112ZKTeco 2025 Annual Report
Any resignation of directors and senior managers during their term of office during the reporting period
□ Yes □No
Changes of directors and senior managers of the Company
□Applicable □ Not applicable
Name Positions Type Date Reasons
Resignation upon
Ma Wentao Director March 26 2026 General election
expiration of term
Deputy General Resignation upon
Ma Wentao March 26 2026 General election
Manager expiration of term
Resignation upon
Dong Xiuqin Independent director March 26 2026 General election
expiration of term
Resignation upon
Zhuo Shuyan Independent director March 26 2026 General election
expiration of term
Resignation upon
Pang Chunlin Independent director March 26 2026 General election
expiration of term
Gao Benhe Director Elected March 26 2026 General election
Liang Long Independent director Elected March 26 2026 General election
Wang Yihua Independent director Elected March 26 2026 General election
Jin Zhenchao Independent director Elected March 26 2026 General election
2. Positions and Incumbency
The professional background main work experience and current responsibilities of the Company's current directors and senior
managers
(1) Directors
Mr. Che Quanhong born in August 1968 Chinese nationality without permanent residency abroad holds a bachelor's degree. He
graduated from Lanzhou University with a major in Semiconductor Physics in July 1991 and currently serves as the Chairman of the
Company. Mr. Che Quanhong served as the Chairman and General Manager of the Company from December 2007 to January 2019
and has been serving as the Chairman of the Company since January 2019.Mr. Jin Hairong born in July 1981 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as the Legal Representative Director and General Manager of the Company. Mr. Jin Hairong served as the Sales
Manager and General Manager Assistant of the Company from February 2008 to February 2014. From February 2014 to January 2019
he served as the General Manager of the Card Business Unit of the Global Marketing Center of the Company. From February 2019 to
March 2020 he served as the General Manager and Legal Representative of the Company. From April 2020 to present he has served
as a Director General Manager and Legal Representative of the Company.Mr. Gao Benhe born in September 1978 Chinese nationality without permanent residency abroad holds an associate's degree.From April 2006 to March 2014 Mr. Gao Benhe served as the head of the Company's Latin America Business Unit. From April 2014
to present he has served as the head of the Middle East Business Unit and the head of the Company's Dubai subsidiary. From March
2026 to present Mr. Gao Benhe has served as a director of the Company.
Mr. Fu Zhiqian born in February 1984 Chinese nationality without permanent residency abroad holds a bachelor's degree and
currently serves as a Director of the Company. Mr. Fu Zhiqian served as the Marketing Manager of the Global Marketing Center
President Assistant General Manager of the Security Division of the Global Marketing Center in China and Head of the Global
Marketing Center in China from January 2008 to December 2024. Since January 2025 he has served as the General Manager of the
Global Market and Product Sharing Center of the Company. Since June 2016 he has been a Director of the Company.Mr. Liang Long born in March 1976 Chinese nationality without permanent residency abroad majored in Electrical Engineering
at Xi'an Jiaotong University. Mr. Liang Long has nearly twenty years of experience in the semiconductor-related industry. He
113ZKTeco 2025 Annual Report
previously held positions such as engineer marketing manager and Senior Sales Director at Motorola Freescale Xilinx Tilera Lantiq
Intel and Marvell. He currently serves as a director of Wuxi Will Semiconductor Co. Ltd. and Shandong Qiantu Intelligent Driving
Technology Co. Ltd. Chairman of Gettop (Zhejiang) Acoustic Co. Ltd. and Gettop Acoustic Co. Ltd. and manager of Gettop
(Shenzhen) Acoustic Co. Ltd. Mr. Liang Long has served as an independent director of the Company from March 2026 to present.Ms. Wang Yihua born in January 1972 Chinese nationality without permanent residency abroad has a Doctor of Management
degree. From July 1998 to present she has served as an associate professor at Shenzhen University. She previously served as an
independent director for Tubatu Group Co. Ltd. Silkroad Visual Technology Co. Ltd. Anfu CE Link Limited and Shenzhen Xinhao
Photoelectricity Technology Co. Ltd. From December 2020 to present she has served as an independent director of Shenzhen Kiwi
Instruments Co. Ltd. From May 2025 to present she has served as an independent director for Guangdong Huayan Robotics Co. Ltd.Ms. Wang Yihua has served as an independent director of the Company from March 2026 to present.Mr. Jin Zhenchao born in May 1979 Chinese nationality without permanent residency abroad has a postgraduate degree. From
June 2002 to June 2004 he worked at Hubei Shuailun Paper Industry Co. Ltd. serving as legal counsel. From September 2004 to June
2007 he studied at Peking University Law School pursuing a Master of Laws (LL.M.) degree; from June 2007 to June 2009 he worked
at Shenzhen SME Credit Financing Guarantee Group Co. Ltd. as Legal Manager; from July 2009 to present he has been working at
Guangdong Zhuojian Law Firm serving as Senior Partner and Deputy Director of the Executive Committee. From June 2020 to present
he has served as an independent director of Huilai Rural Commercial Bank. From May 2021 to present he has served as an independent
director of Streamax Technology Co. Ltd. Mr. Jin Zhenchao has served as the Company's independent director from March 2026 to
present.
(2) Senior managers
Mr. Jin Hairong is the Director and General Manager of the Company and his resume can be found in "(1) Appointment of
directors" in this section.Mr. Li Zhinong born in July 1972 Chinese nationality without permanent residency abroad holds a master's degree. From May
2006 to December 2007 Mr. Li Zhinong served as the Technical Director of Shenzhen ZKTeco Biometric Identification Technology
Co. Ltd. (formerly known as ZK Software Inc.) the Technical Director of the Company from December 2007 to May 2016 and the
Deputy General Manager and Technical Director of the Company from June 2016 to present.Mr. Wang Youwu born in December 1965 Chinese nationality without permanent residency abroad holds a bachelor's degree.Mr. Wang Youwu served as the Investment Banking Headquarters Manager of Dongxing Securities Co. Ltd. from October 2007 to
December 2009. From January 2010 to December 2015 he served as the Executive General Manager of the Enterprise Financing
Department of Changjiang Securities Consignment Inward & Sponsoring Broker Co. Ltd. He joined the Company in January 2016
and served as a Director and Deputy General Manager from June 2016 to April 2020. Since April 2020 he has been serving as the
Company's CFO and has also served as the Chairman Assistant of the Company since January 2022.Ms. Guo Yanbo born in January 1981 Chinese nationality without permanent residency abroad holds a bachelor's degree is
Certified Management Accountant (CMA) and currently serves as the Board Secretary Head of the Investment and Financing
Department and Deputy General Manager of the Company. Ms. Guo Yanbo served as the Head of the Company's Overseas Department
CFO and the Head of Human Resources Department from December 2007 to December 2015. From January 2016 to October 2017
she served as the Head of Audit Department. From October 2017 to March 2020 she served as the Head of the Audit and Investment
and Financing Department. From April 2020 to September 2022 she served as the Board Secretary and the Head of the Investment
and Financing Department. From September 2022 to present she has served as the Deputy General Manager Board Secretary and the
Head of the Investment and Financing Department. From February 2018 to October 2022 she served as a Supervisor of Xinhuaxin
(Xi'an) Information Technology Co. Ltd. (formerly known as "Xi'an Huaxin Smart Digital Technology Co. Ltd.").Ms. Mu Wenting born in December 1986 Chinese nationality without permanent residency abroad holds a bachelor's degree.From August 2010 to January 2017 Ms. Mu Wenting served as the Sales Representative for the Latin American Business Group of
the International Sales Department Project Management Specialist for the AFIS Project Group of the R&D Business Group Marketing
Specialist and Department Manager for the International Market and Brand Strategy Department and Manager for the Company's
114ZKTeco 2025 Annual Report
Brand Strategy Department. From February 2017 to February 2018 she served as the Director of the Chairman's Office and Chairman
Assistant. From February 2018 to February 2022 she served as the General Manager of the Management Department of the
Manufacturing Center. From February 2022 to September 2022 she served as the Director of the General Manager's Office and
Chairman Assistant. From September 2022 to July 2024 she has served as the Deputy General Manager Director of the General
Manager's Office and Chairman Assistant of the Company. From July 2024 to January 2026 she has served as the Deputy General
Manager of the Company as well as the Head of the Human Resources Center and the IT Information Center. From January 2026 to
present she has served as the Company's Deputy General Manager and Head of the IT Information Center. From November 2025 to
present she has served as Chairman of Shenzhen Longzhiyuan Technology Co. Ltd. a subsidiary of the Company.Situations where the controlling shareholder and actual controller concurrently serve as Chairman and General Manager of a listed
company
□ Applicable □Not applicable
Positions held in shareholder entities
□ Applicable □Not applicable
Positions held in other entities
□Applicable □ Not applicable
Compensation and
Name of other Positions held in Commencement of Termination of
Name allowance from the
entities other entities term of office term of office
other entities
NeuroSky ZKTeco
Brainscape
Che Quanhong Technology Director March 18 2026 No
(Shenzhen) Co.Ltd.Shenzhen Ruiming
September 30
Liang Long Pixel Technology Director July 10 2025 No
2022
Co. Ltd.Zhejiang Huatu
Microchip
Liang Long Director July 14 2023 August 14 2025 No
Technology Co.Ltd.Wuxi Will
December 28
Liang Long Semiconductor Director No
2021
Co. Ltd.Gettop Acoustic Chairman Legal November 18
Liang Long No
Co. Ltd. Representative 2021
Shandong Qiantu
Intelligent Driving Director Legal
Liang Long April 11 2025 No
Technology Co. Representative
Ltd.Gettop (Zhejiang) Chairman Legal
Liang Long June 30 2025 Yes
Acoustic Co. Ltd. Representative
Gettop (Shenzhen) Manager Legal November 21
Liang Long No
Acoustic Co. Ltd. Representative 2025
School of
Economics
Wang Yihua Teacher July 1 1998 Yes
Shenzhen
University
Guangdong
Independent
Wang Yihua Huayan Robotics May 14 2025 Yes
director
Co. Ltd.Shenzhen Kiwi Independent December 10
Wang Yihua Yes
Instruments Co. director 2020
115ZKTeco 2025 Annual Report
Ltd.Anfu CE Link Independent November 18 November 13
Wang Yihua Yes
Limited director 2019 2025
Senior Partner
Guangdong
Deputy Director of
Jin Zhenchao Zhuojian Law July 1 2009 Yes
the Executive
Firm
Committee
Guangdong Huilai
Independent
Jin Zhenchao Rural Commercial July 29 2020 Yes
director
Bank
Streamax
Independent
Jin Zhenchao Technology Co. May 12 2021 Yes
director
Ltd.Penalties imposed by securities regulatory agencies on current and resignation directors and senior managers of the Company in the
past three years during the reporting period
□ Applicable □Not applicable
3. Remuneration of directors and senior managers
Decision making process determination basis and actual payment situation of remuneration for directors and senior managers
The decision-making procedure for the remuneration of directors and senior managers: In accordance with relevant provisions
such as the "Articles of Association" the remuneration of directors of the Company shall be determined by the board of shareholders
of the Company after being deliberated and approved by the Board of Directors and the remuneration of senior managers shall be
determined by the Board of Directors of the Company.The basis for determining the remuneration of directors and senior managers: Independent directors of the Company only receive
allowances with each person receiving RMB 150000 per year. Mr. Che Quanhong as the Full-time Chairman of the Company
receives the Chairman's salary which is based on the salary standards of senior managers. Non-independent directors who hold other
positions within the Company shall not receive additional director allowances in addition to their own position salary. Directors and
senior managers serving in the Company shall receive compensation in accordance with the Company's relevant salary and performance
evaluation management system based on their specific management positions in the Company. Salary is divided into basic salary and
a combination of year-end bonus and performance related pay. The basic salary is paid monthly based on fixed salary. The year-end
bonus and performance related pay are comprehensively determined based on annual business goals and job performance as appraisal
criteria and are finally assessed and paid based on the overall calculation of the annual benefits achieved and individual work
performance completion according to the appraisal results of the current year.The actual payment of compensation for directors and senior managers: During the reporting period the total compensation for
directors and senior managers of the Company was RMB 5.9567 million.Remuneration of directors and senior managers during the reporting period of the Company
Unit: RMB '0000
Whether to
Total pre-tax obtain
compensation remuneration
Name Sex Age Position Tenure status
received from from related
the Company parties of the
Company
Che Quanhong Male 57 Chairman Incumbent 102.94 No
Director and General
Jin Hairong Male 44 Incumbent 45 No
Manager
Director and Deputy
Ma Wentao Male 43 Resigned 43.45 No
General Manager
116ZKTeco 2025 Annual Report
Fu Zhiqian Male 42 Director Incumbent 30 No
Dong Xiuqin Female 54 Independent director Resigned 15 No
Zhuo Shuyan Female 45 Independent director Resigned 15 No
Pang Chunlin Male 55 Independent director Resigned 15 No
Technical Director and
Li Zhinong Male 53 Incumbent 143.08 No
Deputy General Manager
Board Secretary and
Guo Yanbo Female 45 Incumbent 57.46 No
Deputy General Manager
Wang Youwu Male 60 CFO Incumbent 84.43 No
Mu Wenting Female 39 Deputy General Manager Incumbent 44.31 No
Total -- -- -- -- 595.67 --
Appraised in accordance with the Company's "Salary and
Appraisal basis for remuneration actually received by all
Assessment Management System for Directors and Senior
directors and senior managers at the end of the reporting period
Managers"
Assessment completion for remuneration actually received by
all directors and senior managers at the end of the reporting Completed
period
The Company will establish specific implementation plans for
Deferred payment arrangements for remuneration actually
relevant systems regarding deferred payment of remuneration
received by all directors and senior managers at the end of the
for directors and senior managers in 2026; this is not applicable
reporting period
to the current reporting period.The Company will establish specific implementation plans for
Clawback of remuneration actually received by all directors relevant systems regarding clawback of remuneration for
and senior managers at the end of the reporting period directors and senior managers in 2026; this is not applicable to
the current reporting period.Other explanations
□ Applicable □Not applicable
VII. Performance of Duties by Directors during the Reporting Period
1. Directors' attendance at board meetings and shareholders' meetings
Attendance of directors in board meetings and shareholders' meetings
Board Board
Board
meeting Board meeting not
Board meeting Board Presence at
presence meeting attending in
Name of meeting presence by meeting shareholders'
required in presence person for
director presence on telecom- absence meetings
the reporting through a two
site (times) communicati (times) (times)
period proxy (times) consecutive
on (times)
(times) times
Che
10 2 8 0 0 No 2
Quanhong
Jin Hairong 10 5 5 0 0 No 3
Ma Wentao 10 9 1 0 0 No 3
Fu Zhiqian 10 6 4 0 0 No 3
Dong Xiuqin 10 0 9 1 0 No 3
Zhuo Shuyan 10 0 10 0 0 No 2
Pang Chunlin 10 0 10 0 0 No 2
Description of not attending the board meeting in person for two consecutive times
Not applicable
117ZKTeco 2025 Annual Report
2. Objections from Directors on Related Issues of the Company
Do directors raise objections to relevant matters of the Company
□ Yes □No
During the reporting period the directors did not raise any objections to the relevant matters of the Company.
3. Other descriptions for directors performing their duties
Whether the directors' suggestions regarding the Company have been adopted
□Yes □ No
Directors' explanation on whether the Company's relevant suggestions have been adopted or not
During the reporting period the directors of the Company were diligent and responsible in accordance with relevant laws and
regulations attended relevant meetings on time carefully reviewed various proposals objectively expressed their opinions and ideas
and the Company adopted all reasonable suggestions put forward by the directors.
118ZKTeco 2025 Annual Report
VIII. The Special Committees under the Board of Directors during the Reporting Period
Number
Other Specifics of
of Important Opinions and
Committee Name Members Convening Date Meeting Content Performance Objection (if
Meetings Suggestions Proposed
of Duties any)
Held
The Audit Committee carries out
work in strict accordance with the
"Company Law" the regulatory
rules of the CSRC the "Articles of
Association" the "Rules of
The "Proposal on the 2024 Internal Procedure of the Board of
Audit Committee of Zhuo Shuyan
Audit Work Summary and the Directors" and the
the Board of Dong Xiuqin and 6 March 24 2025 None None
2025 Internal Audit Work Plan" "Implementation Rules of the Audit
Directors Fu Zhiqian
was deliberated and approved. Committee of the Board of
Directors". It is diligent and
responsible and after sufficient
communication and discussion
unanimously adopts relevant
proposals
The following proposals were
deliberated and approved:
The Audit Committee carries out
1. Proposal on the "2024 Annual
work in strict accordance with the
Report" and Its Summary;
"Company Law" the regulatory
2. Proposal on the "2024 Annual
rules of the CSRC the "Articles of
Financial Settlement Report";
Association" the "Rules of
3. Proposal on the "2024 Annual
Procedure of the Board of
Audit Committee of Zhuo Shuyan Internal Control Evaluation
Directors" and the
the Board of Dong Xiuqin and 6 April 10 2025 Report"; None None
"Implementation Rules of the Audit
Directors Fu Zhiqian 4. Proposal on Renewing the
Committee of the Board of
Appointment of the Audit
Directors". It is diligent and
Institution for 2025;
responsible and after sufficient
5. Proposal on Applying for
communication and discussion
Comprehensive Credit Line from
unanimously adopts relevant
Banks and Handling Bank Loans;
proposals
6. Proposal on Using Idle Self-
owned Funds to Purchase
119ZKTeco 2025 Annual Report
Financial Products;
7. Proposal on Conducting Foreign
Exchange Derivative Trading
Business;
8. Report by the Audit Committee
on the Assessment of the
Accounting Firm's Performance of
Duties in 2024 and its
Performance of Supervisory
Responsibilities.The Audit Committee carries out
work in strict accordance with the
"Company Law" the regulatory
rules of the CSRC the "Articles of
Association" the "Rules of
Procedure of the Board of
Audit Committee of Zhuo Shuyan The "Proposal on the 2025 Q1
Directors" and the
the Board of Dong Xiuqin and 6 April 24 2025 Report of ZKTECO CO. LTD." None None
"Implementation Rules of the Audit
Directors Fu Zhiqian was deliberated and approved.Committee of the Board of
Directors". It is diligent and
responsible and after sufficient
communication and discussion
unanimously adopts relevant
proposals
The Audit Committee carries out
work in strict accordance with the
"Company Law" the regulatory
rules of the CSRC the "Articles of
Association" the "Rules of
The "Proposal on 2025 Half Year Procedure of the Board of
Audit Committee of Zhuo Shuyan
Report of ZKTECO CO. LTD. Directors" and the
the Board of Dong Xiuqin and 6 August 14 2025 None None
and Its Abstract" was deliberated "Implementation Rules of the Audit
Directors Fu Zhiqian
and approved. Committee of the Board of
Directors". It is diligent and
responsible and after sufficient
communication and discussion
unanimously adopts relevant
proposals
120ZKTeco 2025 Annual Report
The Audit Committee carries out
work in strict accordance with the
"Company Law" the regulatory
The following proposals were rules of the CSRC the "Articles of
deliberated and approved: Association" the "Rules of
1. "Proposal on Revising the Procedure of the Board of
Audit Committee of Zhuo Shuyan
Selection System for Accounting Directors" and the
the Board of Dong Xiuqin and 6 September 29 2025 None None
Firms of ZKTECO CO. LTD."; "Implementation Rules of the Audit
Directors Fu Zhiqian
2. "Proposal on Revising the Committee of the Board of
Internal Audit System of ZKTECO Directors". It is diligent and
CO. LTD." responsible and after sufficient
communication and discussion
unanimously adopts relevant
proposals
The Audit Committee carries out
work in strict accordance with the
"Company Law" the regulatory
rules of the CSRC the "Articles of
Association" the "Rules of
Procedure of the Board of
Audit Committee of Zhuo Shuyan The "Proposal on the 2025 Q3
Directors" and the
the Board of Dong Xiuqin and 6 October 24 2025 Report of ZKTECO CO. LTD. None None
"Implementation Rules of the Audit
Directors Fu Zhiqian was deliberated and approved.Committee of the Board of
Directors". It is diligent and
responsible and after sufficient
communication and discussion
unanimously adopts relevant
proposals
The following proposals were The Salary and Assessment
deliberated and approved: Committee carries out work in
1. "Proposal on the Company's strict accordance with the
2025 Restricted Share Incentive "Company Law" the regulatory
Salary and Jin Hairong Pang
Plan (Draft) and Its Abstract"; rules of the CSRC the "Articles of
Assessment Chunlin and 4 January 19 2025 None None
2. "Proposal on the Company's Association" the "Rules of
Committee Zhuo Shuyan
Restricted Share Incentive Plan Procedure of the Board of
Implementation Assessment Directors" and the
Management Measures 2025"; "Implementation Rules of the
3. "Proposal on the Company's Salary and Assessment Committee
121ZKTeco 2025 Annual Report
2025 Employee Stock Ownership of the Board of Directors". It is
Plan (Draft) and Its Abstract"; diligent and responsible and after
4. "Proposal on the Company's sufficient communication and
2025 Employee Stock Ownership discussion unanimously adopts
Plan Management Measures". related proposals according to the
actual situation of the Company.The Salary and Assessment
Committee carries out work in
strict accordance with the
The following proposals were "Company Law" the regulatory
deliberated and approved: rules of the CSRC the "Articles of
1. "Proposal on Adjusting the List Association" the "Rules of
of Incentive Objects of Restricted Procedure of the Board of
Salary and Jin Hairong Pang
Share Incentive Plan in 2025 and Directors" and the
Assessment Chunlin and 4 March 24 2025 None None
the Number of Granted Objects"; "Implementation Rules of the
Committee Zhuo Shuyan
2. "Proposal on Granting Salary and Assessment Committee
Restricted Shares to the Incentive of the Board of Directors". It is
Objects of 2025 Restricted Share diligent and responsible and after
Incentive Plan". sufficient communication and
discussion unanimously adopts
related proposals according to the
actual situation of the Company.The Salary and Assessment
The following proposals were Committee carries out work in
deliberated and approved: strict accordance with the
1. "Proposal on 2025 "Company Law" the regulatory
Compensation Plan for Directors"; rules of the CSRC the "Articles of
2. "Proposal on the Remuneration Association" the "Rules of
Plan for Senior Managers for Procedure of the Board of
Salary and Jin Hairong Pang
2025"; Directors" and the
Assessment Chunlin and 4 April 10 2025 None None
3. "Proposal on the Failure to Meet "Implementation Rules of the
Committee Zhuo Shuyan
the Attribution Conditions for the Salary and Assessment Committee
Second Attribution Period of the of the Board of Directors". It is
Reserved Grant in the 2022 diligent and responsible. Based on
Restricted Share Incentive Plan the actual situation of the Company
and Cancellation of Granted but after thorough communication and
Not Affiliated Restricted Shares". discussion the related committee
members abstained from voting on
122ZKTeco 2025 Annual Report
the relevant proposals while the
non-related committee members all
voted in favor of the relevant
proposals.The Salary and Assessment
Committee carries out work in
strict accordance with the
"Company Law" the regulatory
rules of the CSRC the "Articles of
The "Proposal on Amending the Association" the "Rules of
Salary and Assessment Procedure of the Board of
Salary and Jin Hairong Pang
Management System for Directors Directors" and the
Assessment Chunlin and 4 September 29 2025 None None
Supervisors and Senior Managers "Implementation Rules of the
Committee Zhuo Shuyan
of ZKTECO CO. LTD." was Salary and Assessment Committee
deliberated and approved. of the Board of Directors". It is
diligent and responsible and after
sufficient communication and
discussion unanimously adopts
related proposals according to the
actual situation of the Company.The Nomination Committee strictly
carried out its work in accordance
with relevant laws and regulations
as well as the provisions of the
The "Proposal on Reviewing the Company's "Articles of
Qualifications of Employee Association" and the
Che Quanhong
Nomination Representative Director "Implementation Rules of the
Pang Chunlin and 1 October 23 2025 None None
Committee Candidates for the Third Board of Nomination Committee of the
Zhuo Shuyan
Directors" was deliberated and Board of Directors". The
approved. qualifications of the Company's
employee representative director
candidates were reviewed and the
relevant proposals were
unanimously passed.The "Proposal on the Acquisition The Strategy and Development
Strategy and Che Quanhong
of 55% Equity in Shenzhen Committee strictly conducted its
Development Pang Chunlin and 1 October 13 2025 None None
Longzhiyuan Technology Co. work in accordance with relevant
Committee Ma Wentao
Ltd." was deliberated and laws and regulations the "Articles
123ZKTeco 2025 Annual Report
approved. of Association" the
"Implementation Rules for the
Board of Directors' Strategy and
Development Committee" and
other relevant institutional
provisions reviewing the
Company's acquisition matters and
unanimously approving the relevant
proposal.
124ZKTeco 2025 Annual Report
IX. Performance of the Audit Committee
Were there any risks to the Company identified by the Audit Committee when performing its duties during the reporting period
□ Yes □No
The Audit Committee has no objection to the supervision matters during the reporting period.X. Employees of the Company
1. Number Professional Structure and Educational Background of Employees
Number of in-service employees of the parent company at the
676
end of the reporting period
Number of in-service employees of the major subsidiaries at
2773
the end of the reporting period
Total number of in-service employees at the end of the
3449
reporting period
Total number of employees receiving salaries in the current
3449
period
Number of retired employees requiring the parent Company
11
and its subsidiaries to bear costs
Professional structure
Type of professions Number of employees
Production personnel 899
Sales personnel 1275
Technical personnel 951
Financial personnel 103
Administrative personnel 221
Total 3449
Educational background
Educational background Number of employees
PhD candidate 0
Master's degree 122
Bachelor degree 1663
Other 1664
Total 3449
2. Remuneration policy
In 2025 the Company continued to optimize its compensation and performance management system completing policy
integration and process standardization and enhancing management transparency and operational efficiency. By integrating and
analyzing data it provides systematic data support for management operations and strategic decision-making. It pilots differentiated
incentive schemes for key functions such as R&D and marketing continuously improves the incentive mechanism and strengthens
talent competitiveness.
125ZKTeco 2025 Annual Report
3. Training plan
This year the Company organized a total of 1248 specialized training sessions focusing on practical business application and
strategic synergy. We continuously optimized the content and format specifically conducting various targeted training programs such
as AI technology application quality management system enhancement project engineering delivery practical empowerment for
business elites and new employee integration. These sessions covered employees in key positions across all levels. Through precise
and intensive empowerment we effectively enhance employees' professional capabilities the level of cross-departmental collaboration
and business performance further strengthening internal learning and development mechanisms to provide continuous talent support
for the Company's strategic advancement and competitiveness enhancement.
4. Labor outsourcing
□Applicable □ Not applicable
Sum of working hours of labor outsourcing (hour) 28169
Remuneration sum paid for labor outsourcing (RMB) 2813670.08
XI. Profit Distribution and Conversion of Capital Reserve to Share Capital of the Company
Formulation implementation or adjustment of profit distribution policies of ordinary shares especially the cash dividend plan during
the reporting period
□Applicable □ Not applicable
During the reporting period the Company reviewed and implemented the profit distribution plan in strict accordance with the
profit distribution policy stipulated in the Company's "Articles of Association". The relevant decision-making procedures and
mechanisms were complete and the profit distribution plan was implemented within the specified time after being reviewed and
approved ensuring the interests of all shareholders. The Company convened the 17th Session of the Third Board Meeting on April 21
2025 and the 2024 annual general meeting on May 15 2025 which approved the new "Articles of Association" and the "Shareholder
Dividend Return Plan for the Next Three Years (2025-2027)" detailing the Company's profit distribution policy especially regarding
cash dividends. At the same time the meetings also approved the "Proposal on the 2024 Profit Distribution Plan". The implementation
of the Company's 2024 annual profit distribution plan is as follows: The Company's total share capital is 196312325 shares. After
deducting the 1116200 shares held in the Company's dedicated securities account for share repurchases the share capital stands at
195196125 shares. Based on this the Company will distribute a cash dividend of RMB 5 (including tax) for every 10 shares to all
shareholders totaling RMB 97598062.50; 2 shares are transferred for every 10 shares totaling 39039225 shares of increased share
capital. On June 4 2025 the Company implemented the above profit distribution implementation plan. This profit distribution plan
complies with the provisions of the Company's "Articles of Association" and the requirements of the resolution on the General Meetings.Special explanation cash dividend policy
Whether it complies with the provisions of the Company's
Articles of Association or the requirements of the shareholders' Yes
meeting resolution:
Whether dividend standards and ratio are definite and clear: Yes
Whether the relevant decision-making procedures and
Yes
mechanisms are complete:
Whether independent directors performed their duties and
Yes
played their due role:
If the Company does not distribute cash dividends specific Not applicable
126ZKTeco 2025 Annual Report
reasons as well as the measures to be taken next to enhance
investor returns should be disclosed:
Whether minority shareholders have the opportunity to fully
express their opinions and demands and whether their Yes
legitimate rights and interests have been fully protected:
If the cash dividend policy is adjusted or changed whether the
Not applicable
conditions and procedures are compliant and transparent:
The profit distribution plan and the plan for converting capital reserve into share capital during the reporting period of the Company
are consistent with the relevant provisions of the Company's Articles of Association and dividend management measures
□Yes □ No □ Not applicable
The profit distribution plan and the plan for converting capital reserve into share capital during the reporting period of the Company
comply with relevant regulations such as the Company's Articles of Association.Profit distribution and conversion of capital reserve into share capital for the current year
Bonus issue per 10 shares (share) 0
Cash dividend per 10 shares (RMB) (tax inclusive) 4.8
Additional shares converted from capital reserves per 10 shares
0
(share)
Total capital shares as the basis for the distribution plan (share) 234235350
Cash dividend amount (RMB) (tax inclusive) 112432968.00
Cash dividend amount in other ways (such as repurchase of
0.00
shares) (RMB)
Total cash dividends (including other ways) (RMB) 112432968
Distributable profit (RMB) 363165101.68
Proportion of total cash dividends (including other ways) to
100.00%
total profit distribution
Cash dividend of the reporting period
If the Company is in a growth stage of development and there are significant capital expenditure arrangements the minimum
proportion of cash dividends in this profit distribution shall reach 20%
Details of profit distribution or plan for converting capital reserve into share capital
On April 21 2026 the Company convened the Second Session of the Fourth Board Meeting which approved the "Proposal on the
2025 Profit Distribution Plan". The Board of Directors proposed the Company's 2025 annual profit distribution plan as follows:
The Company plans to distribute cash dividends of RMB 4.8 (including tax) per 10 shares to all shareholders based on the future
total share capital deducted from the repurchased shares in the Company's repurchase special account on the registration date of
equity distribution. There will be no bonus shares or conversion of capital reserve into share capital. As of April 23 2026 the total
share capital of the Company is 235351550 shares. After deducting 1116200 shares that have been repurchased in the Company's
repurchase account the total amount of cash dividends planned to be distributed for 2025 is RMB 112432968 (including tax).If there is any change in the total share capital of the Company or the number of shares in the repurchase account from the date of
announcement of this profit distribution plan to the date of equity registration for the implementation of the rights distribution the
Company will adjust the total amount of distribution based on the total share capital on the equity registration date for the
implementation of the distribution plan excluding the shares already repurchased in the repurchase account while maintaining the
principle that the cash dividend per share remains unchanged.This proposal still needs to be submitted to the Company's 2025 annual shareholders' meeting for deliberation.The Company's profit distribution plan for 2025 was proposed by the Board of Directors after comprehensively considering factors
such as the current share capital situation operating conditions profitability financial position and the Company's long-term
development. It is beneficial to all shareholders sharing the Company's operating results. This profit distribution plan complies with
the Company's Articles of Association and relevant deliberation procedures. This profit distribution plan was approved by the first
special meeting of the independent directors of the Company's fourth board of directors effectively protecting the legitimate rights
and interests of small and medium-sized investors.During the reporting period the Company made profits and the parent company had a positive profit available for shareholder
distribution but no cash dividend distribution plan was proposed
127ZKTeco 2025 Annual Report
□ Applicable □Not applicable
XII. 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
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
128ZKTeco 2025 Annual Report
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.Equity incentives obtained by the directors and senior managers
□Applicable □ Not applicable
Unit: share
Exercise
Number Market Number Number of
Number Number price of
of new Number price at of Number newly Grant Number
of stock Exercisabl of exercised
stock of stock the end of restricted of granted price of of limited
options e shares exercised shares
options options the shares unlocked restricted restricted shares
Name Position held at the during the shares during the
granted held at the reporting held at the shares in shares in share held at the
beginning reporting during the reporting
during the end of the period beginning this the (RMB/sh end of the
of the period reporting period
reporting period (RMB/sha of the period reporting are) period
year period (RMB/sha
period re) period period
re)
Fu Zhiqian Director 0 0 0 0 0 0 0 0 6500 13.25 0
Deputy
Mu Wenting General 0 0 0 0 0 0 0 0 7150 13.25 0
Manager
Total -- 0 0 0 0 -- 0 -- 0 0 13650 -- 0
The restricted shares held by the above-mentioned personnel are Class II restricted shares. As the relevant shares have not yet
Remarks (if any)
vested the number of limited shares held at the end of the period is 0.Assessment and incentive mechanism of the senior managers
The performance of directors and senior managers serving in the Company's operational and management positions is subject to
comprehensive assessment based on the Company's economic benefits and according to the Company's annual operating plan and the
work objectives of the directors and senior managers in charge of their respective duties. On March 10 2026 the 25th Session of the
Company's Third Board Meeting reviewed and approved the "Salary and Assessment Management System for Directors and Senior
Managers of ZKTECO CO. LTD." Starting from 2026 the remuneration of non-independent directors and senior managers (including
the General Manager Deputy General Managers Board Secretary and Financial Administrator etc.) serving in the Company will be
implemented in accordance with the relevant provisions of this assessment management system. Their remuneration structure consists
of basic salary performance-based remuneration and medium- and long-term incentive income. For specific details please refer to
the "Salary and Assessment Management System for Directors and Senior Managers of ZKTECO CO. LTD." disclosed by the
Company.
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 Funds obtained
directors from employees'
supervisors senior 358 1336560 None 0.57% legitimate
managers middle remuneration self-
managers and raised funds and
129ZKTeco 2025 Annual Report
core technical funds obtained
(business) through other
personnel who methods permitted
play an important by laws and
role and have a administrative
significant impact regulations
on the Company's
overall
performance and
medium- and long-
term development.Shareholdings of directors and senior managers 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
Changes in asset management institutions during the reporting period
□ Applicable □Not applicable
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.On June 4 2025 the number of shares held in the securities account of the employee stock ownership plan changed from 1113800
shares to 1336560 shares as a result of the Company's implementation of the 2024 annual equity distribution.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 4110500
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.Circumstances of the termination of the employee stock ownership plan during the reporting period
□ Applicable □Not applicable
130ZKTeco 2025 Annual Report
Other explanations:
3. Other employee incentive plans
□ Applicable □Not applicable
XIII. Construction and Implementation of Internal Control System During the reporting
period
1. Construction and Implementation of Internal Control
The Company has formed a relatively complete internal control system in accordance with the "Basic Norms for the Internal
Control of Enterprises" and its supporting guidelines as well as other regulatory requirements and combined with the actual situation
of the Company and continuously optimized to adapt to the constantly changing external environment and internal management
requirements. With the joint efforts of the Board of Directors management and all employees the Company has established a relatively
complete and effective internal control management system. From the company level to the business process level a systematic internal
control system and necessary internal supervision mechanisms have been established to provide reasonable guarantees for the legality
and compliance of the Company's business management asset safety truthfulness and completeness of financial reports and related
information improvement of operational efficiency and effectiveness and the implementation of development strategies. During the
reporting period in accordance with the revisions to relevant laws regulations and policy documents and taking into account its
operational development needs the Company revised 31 systems including the Articles of Association and its appendices and the
rules of procedure for special committees. Through the continuous establishment and improvement of its internal control systems the
Company steadily enhanced its corporate governance level.During the reporting period the Company organized an internal control evaluation for 2025 and there were no significant or
important deficiencies in internal control related to financial and non-financial reporting.
2. Particulars of material internal control defects detected during the reporting period
□ Yes □No
XIV. Management and Control of Subsidiaries During the Reporting Period of the Company
Subsequent
Integration Problems in Solutions Resolution
Company Name Integration Plan Resolution
Progress Integration Taken Progress
Plan
1. Asset integration: Integrate Longzhiyuan
into the Company's asset management
system conduct asset inventory ownership
clarification and unified management of
Shenzhen asset ledgers to ensure asset security and
Longzhiyuan utilization efficiency.Completed None None None None
Technology Co. 2. Personnel integration: Maintain the
Ltd. relative stability of the management team
and core employees while assigning
personnel to key positions such as finance
and risk control and establish a unified
human resources and performance appraisal
131ZKTeco 2025 Annual Report
mechanism.
3. Financial integration: The Company
appoints a Chief Financial Officer and
financial management personnel to control
the corporate seal and dedicated financial
seal and to implement a unified accounting
system fund management and internal audit
system.
4. Organizational integration: As per the
agreement restructure Longzhiyuan's
governance structure (Board of Directors
Supervisors and Senior Managers) and
integrate it into the Company's overall
organizational structure and control system.
5. Business integration: Under the operating
objectives established by the Board of
Directors Longzhiyuan management
formulates a three-year plan and annual
budget. The Company does not additionally
interfere with daily operations but achieves
business synergy and risk control through
budgeting auditing performance appraisal
and other means.Abnormalities exist in the management control of subsidiaries.□ Yes □No
XV. Internal Control Evaluation Report and Internal Control Audit Report
1. Evaluation report on internal control
Disclosure date of the full text of the
April 23 2026
internal control evaluation report
Disclosure index of the full text of the
CNINFO (http://www.cninfo.com.cn)
internal control evaluation report
The proportion of the total assets of the
unit included in the evaluation scope to
90.20%
the total assets of the Company in the
consolidated financial statements
The proportion of operating revenue of
the unit included in the evaluation scope
97.91%
to the operating revenue of the Company
in the consolidated financial statements
Deficiency Identification Criteria
Category Financial Reports Non-financial Reports
Significant deficiencies: Control Significant deficiencies: Violation of
environment is ineffective; the national laws regulations or normative
supervision of internal control by the documents; lack of decision-making
Company's Audit Committee and internal procedures or unscientific decision-
Qualitative Criteria audit institutions is ineffective; making procedures leading to significant
discovering fraud by directors errors; lack of institutional control or
supervisors and senior managers; the systematic failure of important
Company has made significant businesses; the results of internal control
corrections to the published financial evaluation especially significant or
132ZKTeco 2025 Annual Report
statements; significant deficiencies that important deficiencies have not been
have been identified and reported to rectified; other situations that have a
management have not been corrected significant impact on the Company.within a reasonable time frame; other Important deficiencies: Deficiencies in
deficiencies that may affect the correct important business institutions or
judgment of report users. systems; important deficiencies in the
Important deficiencies: Failure to select results of internal control evaluation are
and apply accounting policies in not promptly rectified; other situations
accordance with generally accepted that have a significant negative impact
accounting standards; invalid anti-fraud on the Company with a severity lower
procedures and control measures; one or than significant deficiencies but may
more deficiencies in the control of the still lead to the Company deviating from
final financial reporting process. its control objectives.Although the significant deficiency General deficiencies: refer to internal
criteria have not been met there is no control deficiencies that do not constitute
reasonable guarantee that the financial significant or important deficiencies.statements prepared will achieve true and
accurate objectives.General deficiencies: refer to other
control deficiencies besides the
significant and important deficiencies
mentioned above.Significant deficiencies: Misstated
amount ≥ 1% of total assets; misstated
amount ≥ 2% of main business income;
misstated amount ≥ 5% of total profits
Important deficiencies: 0.5% of total
Significant deficiencies: Loss amount >
assets ≤ misstated amount < 1% of total
RMB 10 million; important deficiencies:
assets; 1% of main business income ≤
Quantitative Criteria RMB 1 million＜ loss amount ≤ RMB
misstated amount < 2% of total main
10 million; general deficiencies: loss
business income; 2% of total profits ≤
amount ≤ RMB 1 million
misstated amount < 5% of total profits
General deficiencies: Misstated amount
< 0.5% of total assets; misstated amount
< 1% of total main business income;
misstated amount < 2% of total profits
Number of significant deficiencies in
0
financial reports
Number of significant deficiencies in
0
non-financial reports
Number of important deficiencies in
0
financial reports
Number of important deficiencies in non-
0
financial reports
2. Internal control audit report
□Applicable □ Not applicable
Opinions on the internal control audit report
We believe that on December 31 2025 ZKTeco maintained effective internal control over financial reports in all material respects
in accordance with the "Basic Norms for the Internal Control of Enterprises" and relevant regulations.Disclosure of the internal control audit report Disclosed
Disclosure date of the full text of the internal control audit
April 2 2026
report
133ZKTeco 2025 Annual Report
Disclosure index of the full text of the internal control audit
CNINFO (http://www.cninfo.com.cn)
report
Type of the opinions on the internal control audit report Standard unqualified opinions
Are there any material deficiencies in the non-financial reports No
Has the accounting firm issued an internal control audit report with non-standard opinions
□ Yes □No
Is the internal control audit report issued by the accounting firm is consistent with the self-evaluation report of the Board of
Directors
□Yes □ No
Whether a non-standard audit opinion on internal control was issued during the reporting period or the previous year.□ Yes □No
XVI. Rectification of Problems in Self-inspection of Special Actions for Governance of Listed
Companies
Not applicable
XVII. 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
XVIII. Social Responsibilities
For specific information please refer to the "ZKTECO CO. LTD. 2025 SUSTAINABILITY REPORT" disclosed by the Company on
April 23 2026 on CNINFO (http://www.cninfo.com.cn).XIX. Efforts Regarding Poverty Alleviation and Rural Revitalization
For progress in consolidating and expanding poverty alleviation achievements and rural revitalization related work during the reporting
period please refer to the "ZKTECO CO. LTD. 2025 SUSTAINABILITY REPORT" disclosed by the Company on April 23 2026
on CNINFO (http://www.cninfo.com.cn).
134ZKTeco 2025 Annual Report
Section V Significant Events
I. Performance of Commitments
1. Commitments completed by actual controllers shareholders related parties purchasers orthe Company within the reporting period and commitments
not fulfilled by the end of the reporting period
□Applicable □ Not applicable
Causes of Undertaking Commitment Date of Term of
Commitment Content Performance
Commitment Party Type commitments commitments
1. Within 36 months from the date of ZKTeco's initial public offering and
listing I will not transfer or entrust others to manage the previously issued
shares of ZKTeco that the Company holds before the public offering nor will
ZKTeco repurchase such shares.
2. Within six months after ZKTeco's initial public offering and listing if the
closing price of ZKTeco's shares is lower than the issuance price of ZKTeco's
initial public offering for twenty consecutive trading days (if ex-right or ex-
dividend is carried out due to reasons such as cash dividend distribution stock
dividend conversion to share capital or issuance of new shares
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) or the closing
IPO-related August 17 February 16 Strict
ZKTeco Times Stock lockup price is lower than the issuance price of ZKTeco's initial public offering of
commitments 2022 2026 performance
stocks at the end of the six-month period after listing (if that day is not a
trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock
dividends conversion to share capital or issuance of new shares
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) the lockup
period for ZKTeco stocks the Company holds is automatically extended by six
months.
3. The Company will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
responsibilities conferred by this commitment the company will bear any
135ZKTeco 2025 Annual Report
losses suffered by ZKTeco other shareholders or stakeholders of ZKTeco.The profits from illegal reduction of stocks will belong to ZKTeco.
4. If there are different provisions in laws regulations normative documents
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that the
company should bear due to violating the above commitments the company
will voluntarily and unconditionally comply with these provisions.
1. Within 36 months from the date of ZKTeco's initial public offering and
listing I will not transfer or entrust others to manage the previously issued
shares of ZKTeco that I directly or indirectly hold before the public offering
nor will ZKTeco repurchase such shares.
2. Within six months after ZKTeco's initial public offering and listing if the
closing price of ZKTeco's shares is lower than the issuance price of ZKTeco's
initial public offering for twenty consecutive trading days (if ex-right or ex-
dividend is carried out due to reasons such as cash dividend distribution stock
dividend conversion to share capital or issuance of new shares
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) or the closing
price is lower than the issuance price of ZKTeco's initial public offering of
stocks at the end of the six-month period after listing (if that day is not a
trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock
IPO-related August 17 February 16 Strict
Che Quanhong Stock lockup dividends conversion to share capital or issuance of new shares
commitments 2022 2026 performance
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) the lockup
period for ZKTeco stocks I hold directly or indirectly is automatically
extended by six months.
3. After the expiration of the aforementioned stock lockup period during my
tenure as a director and senior managers of ZKTeco I will not directly or
indirectly transfer more than 25% of the total number of ZKTeco shares held
by me each year. Within six months of resignation I will not transfer or
entrust others to manage ZKTeco shares I directly and indirectly hold.
4. I will faithfully fulfill the above commitments and bear corresponding legal
responsibilities. If I fail to fulfill the obligations and responsibilities conferred
by this commitment I will bear any losses suffered by ZKTeco other
shareholders or stakeholders of ZKTeco. The profits from illegal reduction of
company stocks will belong to ZKTeco.
5. If there are different provisions in laws regulations normative documents
136ZKTeco 2025 Annual Report
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that I should
bear due to violating the above commitments I voluntarily and
unconditionally comply with these provisions.
1. Within 36 months from the date of ZKTeco's initial public offering and
listing I will not transfer or entrust others to manage the previously issued
shares of ZKTeco that the enterprise holds before the public offering nor will
ZKTeco repurchase such shares.
2. The enterprise will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
IPO-related responsibilities conferred by this commitment the enterprise will bear any August 17 August 16
LX Investment Stock lockup Fulfilled
commitments losses suffered by ZKTeco other shareholders or stakeholders of ZKTeco. 2022 2025
The profits from illegal reduction of stocks will belong to ZKTeco.
3. If there are different provisions in laws regulations normative documents
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that the
enterprise should bear due to violating the above commitments the enterprise
will voluntarily and unconditionally comply with these provisions.
1. The enterprise promises to lock in the shares of ZKTeco held in accordance
with the following principles:
(1) The shares held by the enterprise in ZKTeco are unlocked in four batches
with each batch unlocking one fourth of the shares held by the enterprise. The
unlocking period is one year two years three years and four years from the
date of ZKTeco's initial public offering and listing. For the shares involved in
the aforementioned lockup period arrangement that have not been unlocked
the enterprise will not transfer or entrust others to manage the shares already
issued by ZKTeco before its public offering nor will ZKTeco repurchase such
IPO-related shares. August 17 February 17 Strict
JYSJ and JYHY Stock lockup
commitments (2) For the newly added shares subscribed by the enterprise by participating in 2022 2027 performance
the capital increase of ZKTeco within 6 months prior to the completion of the
initial public offering of shares by ZKTeco the enterprise will not transfer or
entrust others to manage the newly added shares held by the enterprise nor
will ZKTeco repurchase such shares within three years from the date of
completing the industrial and commercial registration procedures for the
aforementioned capital increase. If a portion of the shares held by a Japanese
enterprise whose lockup period expires earlier than the expiration date of the
lockup period promised in the first item of this article the corresponding
lockup period for that portion of the shares shall be subject to the first item of
137ZKTeco 2025 Annual Report
this article.
2. The enterprise will faithfully fulfill the above commitments and bear
corresponding legal responsibilities. If I fail to fulfill the obligations and
responsibilities conferred by this commitment the enterprise will bear any
losses suffered by ZKTeco other shareholders or stakeholders of ZKTeco.The profits from illegal reduction of stocks will belong to ZKTeco.
3. If there are different provisions in laws regulations normative documents
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that the
enterprise should bear due to violating the above commitments the enterprise
will voluntarily and unconditionally comply with these provisions.
1. The enterprise promises to lock in the shares of ZKTeco held in accordance
with the following principles:
(1) The shares held by the enterprise in ZKTeco are unlocked in four batches
with each batch unlocking one fourth of the shares held by the enterprise. The
unlocking period is one year two years three years and four years from the
date of ZKTeco's initial public offering and listing. For the shares involved in
the aforementioned lockup period arrangement that have not been unlocked
the enterprise will not transfer or entrust others to manage the shares already
issued by ZKTeco before its public offering nor will ZKTeco repurchase such
shares.
(2) For the newly added shares subscribed by the enterprise by participating in
the capital increase of ZKTeco within 6 months prior to the completion of the
initial public offering of shares by ZKTeco the enterprise will not transfer or
IPO-related August 17 February 17 Strict
JYLX and JYQL Stock lockup entrust others to manage the newly added shares held by the enterprise nor
commitments 2022 2027 performance
will ZKTeco repurchase such shares within three years from the date of
completing the industrial and commercial registration procedures for the
aforementioned capital increase. If a portion of the shares held by a Japanese
enterprise whose lockup period expires earlier than the expiration date of the
lockup period promised in the first item of this article the corresponding
lockup period for that portion of the shares shall be subject to the first item of
this article.
2. The enterprise is willing to bear legal responsibilities arising from violating
the above commitments.
3. If there are different provisions in laws regulations normative documents
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that the
enterprise should bear due to violating the above commitments the enterprise
138ZKTeco 2025 Annual Report
will voluntarily and unconditionally comply with these provisions.
1. Strictly abide by the stock lockup commitments made by myself and my
shareholding platform and during the stock lockup period I will not transfer
or entrust others to manage the previously issued shares of ZKTeco that I
directly or indirectly hold before the public offering nor will ZKTeco
repurchase such shares;
2. During my tenure as a director/supervisor and/or senior managers of
ZKTeco I will not transfer more than 25% of the total number of shares of
ZKTeco I directly or indirectly hold each year. Within six months after my
resignation I will not transfer any of these shares. If I resign within six
months from the date of the initial public offering and listing of shares of
ZKTeco I will not transfer these shares within 18 months from the date of
resignation. If I resign on a date between the seventh and twelfth months after
the initial public offering and listing of its shares I will not transfer these
shares within 12 months from the date of declaration of resignation.
3. If I reduce my holdings of ZKTeco stocks within two years after the
Jin Hairong Ma
expiration of the lockup period the reduction price shall not be lower than the
Wentao Fu
issuance price of ZKTeco's initial public offering (if an ex-right or ex-
Zhiqian Jiang
dividend is made due to the distribution of cash dividends stock dividends
IPO-related Wenna Wu August 17 Strict
Stock lockup conversion into capital stock or issuance of new shares after this issuance Long term
commitments Xinke Liu Jiajia 2022 performance
corresponding adjustments shall be made in accordance with the relevant
Wang Youwu Li
regulations of the CSRC and the Shenzhen Stock Exchange).Zhinong and
4. Within six months after ZKTeco's initial public offering and listing if the
Guo Yanbo
closing price of ZKTeco's shares is lower than the issuance price of ZKTeco's
initial public offering for twenty consecutive trading days (if ex-right or ex-
dividend is carried out due to reasons such as cash dividend distribution stock
dividend conversion to share capital or issuance of new shares
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) or the closing
price is lower than the issuance price of ZKTeco's initial public offering of
stocks at the end of the six-month period after listing (if that day is not a
trading day it is the first trading day after that day) (if ex-right or ex-dividend
is carried out due to reasons such as cash dividends distribution stock
dividends conversion to share capital or issuance of new shares
corresponding adjustments must be made in accordance with the relevant
regulations of the CSRC and the Shenzhen Stock Exchange) the lockup
period for ZKTeco stocks I hold is automatically extended by six months. The
commitment shall not be terminated due to job change or resignation.
139ZKTeco 2025 Annual Report
5. I will faithfully fulfill the above commitments and bear corresponding legal
responsibilities. If I fail to fulfill the obligations and responsibilities conferred
by this commitment I will bear any losses suffered by ZKTeco other
shareholders or stakeholders of ZKTeco. The profits from illegal reduction of
stocks will belong to ZKTeco.
6. If I resign or change my position it will not affect the validity of this
commitment letter and I will continue to fulfill the above commitments.
7. If there are different provisions in laws regulations normative documents
as well as the CSRC or Shenzhen Stock Exchange regarding the lockup period
of the aforementioned shares and the relevant responsibilities that I should
bear due to violating the above commitments I voluntarily and
unconditionally comply with these provisions.
1. The Company and/or any enterprise controlled by the Company jointly
controlled with others or with significant influence currently does not engage
in any business or activity that constitutes or may constitute horizontal
competition with ZKTeco and enterprises controlled by ZKTeco. The
Company and/or enterprises controlled by the Company jointly controlled
with others and with significant influence will not engage in any business or
activities that constitute or may constitute horizontal competition with
ZKTeco and enterprises controlled by ZKTeco in the future.
2. If due to changes in national laws policies or other unavoidable reasons
the Company and/or enterprises controlled by the Company jointly controlled
with others or with significant influence constitute or may constitute
Commitment horizontal competition with ZKTeco the Company will cease the business
IPO-related to avoid and activities that exist in horizontal competition or the entrusted August 17 Strict
ZKTeco Times Long term
commitments horizontal management contracted operation or acquisition of such business that 2022 performance
competition constitutes horizontal competition and ZKTeco will enjoy priority under
equal conditions.
3. If ZKTeco expands into new business areas in the future ZKTeco enjoys
priority. The Company and other enterprises or economic organizations
controlled by the Company jointly controlled with others and with significant
influence (excluding ZKTeco and its subsidiaries) will no longer develop
similar businesses.The aforementioned commitment shall come into effect from the date of
signing and shall continue to be valid and irrevocable during the period when
the Company serves as the controlling shareholder of ZKTeco. If the
Company and other companies controlled by the Company violate the
aforementioned commitments the Company will bear the relevant losses
140ZKTeco 2025 Annual Report
suffered by ZKTeco ZKTeco's other shareholders or stakeholders as a result.
1. I and/or the enterprise controlled by me jointly controlled with others or
with significant influence currently does not engage in any business or
activity that constitutes or may constitute horizontal competition with ZKTeco
and enterprises controlled by ZKTeco. I and/or enterprises controlled by me
jointly controlled with others and with significant influence will not engage
in any business or activities that constitute or may constitute horizontal
competition with ZKTeco and enterprises controlled by ZKTeco in the future.
2. If due to changes in national laws policies or other unavoidable reasons I
and/or enterprises controlled by me jointly controlled with others or with
significant influence constitute or may constitute horizontal competition with
Commitment
ZKTeco I will cease the business and activities that exist in horizontal
IPO-related to avoid August 17 Strict
Che Quanhong competition or the entrusted management contracted operation or Long term
commitments horizontal 2022 performance
acquisition of such business that constitutes horizontal competition and
competition
ZKTeco will enjoy priority under equal conditions.
3. If ZKTeco expands into new business areas in the future ZKTeco enjoys
priority. I and other enterprises or economic organizations controlled by me
jointly controlled with others and with significant influence (excluding
ZKTeco and its subsidiaries) will no longer develop similar businesses.The aforementioned commitment shall come into effect from the date of
signing and shall continue to be valid and irrevocable during the period when
I serve as the actual controller of ZKTeco. If I and other companies controlled
by me violate the aforementioned commitments I will bear the relevant losses
suffered by ZKTeco ZKTecos other shareholders or stakeholders as a result.
1. The Company and/or enterprises controlled by the Company jointly
controlled with others and with significant influence will make every effort to
reduce related party transactions with ZKTeco and other enterprises under its
control.Commitment 2. For necessary and unavoidable related party transactions the Company
to guarantees that the related party transactions will be conducted under normal
IPO-related standardize commercial conditions and does not require ZKTeco and enterprises under its August 17 Strict
ZKTeco Times Long term
commitments and reduce control to provide any conditions superior to those given to third parties in fair 2022 performance
related party market transactions. The related party transactions involved will comply with
transactions relevant laws and regulations the "Articles of Association" and the "Related
Party Transaction Management System" and other relevant provisions of the
relevant documents. The Company will timely disclose information to ensure
that the legitimate rights and interests of ZKTeco and other shareholders are
not harmed through related party transactions;
141ZKTeco 2025 Annual Report
3. During the period when the Company serves as the controlling shareholder
of ZKTeco the Company will faithfully fulfill the above commitments and
assume corresponding legal responsibilities. If the violation of the above
commitments by the Company and other enterprises controlled by the
Company results in damage to the interests of ZKTeco or the legitimate
interests of other shareholders the Company will bear corresponding
compensation responsibilities in accordance with the law.
1. U and/or enterprises controlled by me jointly controlled with others and
with significant influence will make every effort to reduce related party
transactions with ZKTeco and other enterprises under its control.
2. For necessary and unavoidable related party transactions I guarantee that
the related party transactions will be conducted under normal commercial
conditions and do not require ZKTeco and enterprises under its control to
provide any conditions superior to those given to third parties in fair market
Commitment transactions. The related party transactions involved will comply with relevant
to laws and regulations the "Articles of Association" and the "Related Party
IPO-related standardize Transaction Management System" and other relevant provisions of the August 17 Strict
Che Quanhong Long term
commitments and reduce relevant documents. The Company will timely disclose information to ensure 2022 performance
related party that the legitimate rights and interests of ZKTeco and other shareholders are
transactions not harmed through related party transactions;
3. During the period when I serve as the actual controller of ZKTeco the
Company will faithfully fulfill the above commitments and assume
corresponding legal responsibilities. If the violation of the above
commitments by me and other enterprises controlled by me results in damage
to the interests of ZKTeco or the legitimate interests of other shareholders I
will bear corresponding compensation responsibilities in accordance with the
law.Che Quanhong 1. I and my immediate family members/other enterprises controlled by me and
Jin Hairong Ma my immediate family members will make every effort to reduce related party
Wentao Fu transactions with ZKTeco and other enterprises under its control.Commitment
Zhiqian Dong 2. For necessary and unavoidable related party transactions I guarantee that
to
Xiuqin Pang the related party transactions will be conducted under normal commercial
IPO-related standardize August 17 Strict
Chunlin Zhuo conditions and do not require ZKTeco and enterprises under its control to Long term
commitments and reduce 2022 performance
Shuyan Jiang provide any conditions superior to those given to third parties in fair market
related party
Wenna Wu transactions. The related party transactions involved will comply with relevant
transactions
Xinke Liu Jiajia laws and regulations the "Articles of Association" and the "Related Party
Wang Youwu Li Transaction Management System" and other relevant provisions of the
Zhinong and relevant documents. The Company will timely disclose information to ensure
142ZKTeco 2025 Annual Report
Guo Yanbo that the legitimate rights and interests of ZKTeco and other shareholders are
not harmed through related party transactions;
3. I will faithfully fulfill the above commitments and bear corresponding legal
responsibilities. If the violation of the above commitments by me and other
enterprises controlled by me results in damage to the interests of ZKTeco or
the legitimate interests of other shareholders I will bear corresponding
compensation responsibilities in accordance with the law.
1. The Company/I will strictly abide by the restrictions on the circulation of
ZKTeco shares and the commitment to voluntary lockup issued by the
Company/me and strictly comply with the relevant provisions of laws
regulations and normative documents. The Company/I will not reduce our
holdings of ZKTeco shares during the lockup period.
2. Within two years after the expiration of the lockup period promised by the
Company/me if the Company/I plan(s) to reduce our holdings of ZKTeco
shares the reduction price will not be lower than the issuance price at the time
of the initial public offering of the shares (If ZKTeco pays dividends issues
Shareholding bonus shares or converts capital reserve into share capital during this period
ZKTeco Times
IPO-related and intention the issuance price shall be adjusted accordingly.). August 17 Strict
and Che Long term
commitments to reduce 3. After the expiration of the lockup period promised by the Company/me the 2022 performance
Quanhong
holdings Company/I will reduce our holdings of ZKTeco stocks in strict accordance
with the relevant provisions of the "Company Law" "Securities Law" CSRC
and stock exchange.
4. If the Company/I obtain(s) (excess) income due to failure to fulfill the
above commitments the (excess) income shall belong to ZKTeco and shall be
paid to the designated account of ZKTeco within five days of receiving the
income. If the Company/I fail(s) to fulfill the above commitments and
cause(s) losses to ZKTeco or other investors the Company/I will bear
compensation liability to ZKTeco or other investors in accordance with the
law.
1. The enterprise will not reduce its holdings of ZKTeco stocks during the
lockup period in strict accordance with the commitments issued by the
enterprise regarding the circulation restrictions and voluntary lockup of its
Shareholding
holdings of ZKTeco shares and with the relevant provisions of laws
IPO-related JYSJ JYHY and and intention August 17 Strict
regulations and normative documents. Long term
commitments LX Investment to reduce 2022 performance
2. After the expiration of the lockup period promised by the enterprise if the
holdings
enterprise plans to reduce its holdings it will notify ZKTeco of the reduction
in accordance with the regulations of the CSRC and the Shenzhen Stock
Exchange and after the reduction is announced it will reduce its holdings in
143ZKTeco 2025 Annual Report
accordance with the relevant regulations of the CSRC and the Shenzhen Stock
Exchange.If the enterprise fails to fulfill the above commitments it will agree to bear the
legal liability arising from the violation of the above commitments.Within three years from the date of the official listing of the Company's
stocks if there is a situation where the closing price of the stocks for 20
consecutive trading days is lower than the latest audited net assets per share of
the Company it will meet the starting conditions of the stable stock price
plan.When the closing price of the Company's stock for 20 consecutive trading
days is lower than the latest audited net assets per share of the Company it
reaches the starting condition of the stable stock price plan. The Company
shall convene a board meeting within 10 trading days to review specific plans
for stabilizing the Company's stock price clarify the implementation period of
Commitment
IPO-related such specific plans and initiate the implementation of specific plans for August 17 August 16
ZKTeco to stabilizing Fulfilled
commitments stabilizing the stock price within 5 trading days after the approval of such 2022 2025
stock prices
plans by the shareholders' meeting.When the Company meets the starting conditions for the stable stock price
plan the Company controlling shareholders directors (excluding independent
directors) and senior managers will carry out the implementation in the
following order:
* Company repurchase;
* Increase in holdings by controlling shareholders;
* Directors (excluding independent directors) and senior managers increase
their holdings. Until the stopping conditions of the stable stock price plan are
met.ZKTeco Times
Che Quanhong
Jin Hairong Ma When the Company initiates a stock price stablizing plan in accordance with
Commitment
IPO-related Wentao Fu the "Plan for Stabilizing the Stock Price within Three Years after Listing" it August 17 August 16
to stabilizing Fulfilled
commitments Zhiqian Wang will fulfill corresponding obligations in accordance with the law in strict 2022 2025
stock prices
Youwu Li accordance with the requirements of the stock price stablizing plan.Zhinong and
Guo Yanbo
When the Company initiates a stock price stablizing plan in accordance with
Commitment
IPO-related the "Plan for Stabilizing the Stock Price within Three Years after Listing" it August 17 August 16
Mu Wenting to stabilizing Fulfilled
commitments will fulfill corresponding obligations in accordance with the law in strict 2022 2025
stock prices
accordance with the requirements of the stock price stablizing plan.
144ZKTeco 2025 Annual Report
There are no false records misleading statements or significant omissions in
the prospectus and other information disclosure materials of the Company's
initial public offering of stocks and listing on the ChiNext.If it is determined by the CSRC Shenzhen Stock Exchange or other
competent departments that there are false records misleading statements or
Commitment
significant omissions in the prospectus and other information disclosure
letter
materials of the Company's initial public offering of stocks and listing on the
regarding the
ChiNext which constitutes a significant and substantial impact on
absence of
determining whether the Company meets the issuance conditions stipulated by
false records
law: Within 10 trading days from the date when the Shenzhen Stock Exchange
misleading
or other competent departments determine that the Company has the
statements
IPO-related aforementioned situation the Company will convene a board meeting and August 17 Strict
ZKTeco or significant Long term
commitments propose to convene a shareholders' meeting to review the proposal to 2022 performance
omissions in
repurchase all shares issued for the initial public offering. The repurchase
the
price will be determined based on the issuance price and with reference to
prospectus
relevant market factors.and other
If it is determined by the CSRC Shenzhen Stock Exchange or other
information
competent departments that there are false records misleading statements or
disclosure
significant omissions in the prospectus and other information disclosure
materials
materials of the Company's initial public offering of stocks and listing on the
ChiNext resulting in losses to investors in securities trading the Company
will compensate investors for losses in accordance with the law according to
the relevant decisions of the CSRC Shenzhen Stock Exchange or other
competent departments.Commitment The prospectus and other information disclosure materials of ZKTeco's initial
letter public offering of stocks and listing on the ChiNext are true accurate and
regarding the complete without any false records misleading statements or significant
absence of omissions.false records If it is determined by the CSRC Shenzhen Stock Exchange or other
misleading competent departments that ZKTeco has false records misleading statements
ZKTeco Times
IPO-related statements or significant omissions in the prospectus and other information disclosure August 17 Strict
and Che Long term
commitments or significant materials of its initial public offering of stocks and listing on the ChiNext 2022 performance
Quanhong
omissions in resulting in losses to investors in securities issuance and trading the
the Company/I will compensate investors for losses in accordance with the law
prospectus according to the provisions of the relevant decisions of the CSRC Shenzhen
and other Stock Exchange or other authorized departments.information If it is determined by the CSRC Shenzhen Stock Exchange or other
disclosure competent departments that there are false records misleading statements or
145ZKTeco 2025 Annual Report
materials significant omissions in the prospectus and other information disclosure
materials of ZKTeco's initial public offering of stocks and its listing on the
ChiNext which constitutes a significant and substantial impact on
determining whether ZKTeco meets the issuance conditions stipulated by law
the Company/I will urge ZKTeco to repurchase all new shares issued in the
initial public offering in accordance with the law and at the same time the
Company/I will repurchase the original restricted shares that have been
transferred at the price in the secondary market in accordance with the law.When the Company/I repurchase(s) stocks we will comply with the relevant
provisions of the "Company Law" "Securities Law" CSRC and Shenzhen
Stock Exchange as well as the "Articles of Association".There are no false records misleading statements or significant omissions in
Commitment
the prospectus and other information disclosure materials of the Company's
letter
Che Quanhong initial public offering of stocks and listing on the ChiNext.regarding the
Jin Hairong Ma If there are false records misleading statements or significant omissions in
absence of
Wentao Fu the Company's prospectus and other information disclosure materials
false records
Zhiqian Dong resulting in losses to investors in securities issuance and trading I will
misleading
Xiuqin Pang compensate the investors for the losses in accordance with the law.statements
IPO-related Chunlin Zhuo If I fail to fulfill the above commitments I will publicly explain the specific August 17 Strict
or significant Long term
commitments Shuyan Jiang reasons for my failure in the Company's shareholders' meeting and 2022 performance
omissions in
Wenna Wu newspapers and magazines designated by the CSRC apologize to the
the
Xinke Liu Jiajia Company's shareholders and public investors and cease receiving salary
prospectus
Wang Youwu Li allowances and shareholder dividends from the Company from the date of
and other
Zhinong and violating the above commitments. Meanwhile my shares directly or indirectly
information
Guo Yanbo held in the Company will not be transferred until I take corresponding
disclosure
compensation measures according to the above commitments and implement
materials
them completely.
(1) Do not interfere with the Company's management activities beyond my
authority and do not encroach on the Company's interests.
(2) From the date of issuance of this commitment letter to the completion of
Commitment the Company's public offering of stocks if the CSRC makes other new
ZKTeco Times to fill in regulatory provisions on filling in return measures and commitments and the
IPO-related August 17 Strict
and Che diluted above commitments cannot meet the requirements of the CSRC the Long term
commitments 2022 performance
Quanhong immediate commitment will be issued in accordance with the latest regulations of the
returns CSRC.I promise to effectively fulfill relevant measures for filling in returns in the
Company's system and any commitments made regarding these measures. If I
violate these commitments and cause losses to the Company or investors I
146ZKTeco 2025 Annual Report
will be liable for compensation for the Company or investors in accordance
with the law."In order to ensure the effective implementation of the Company's
compensation measures the Company directors and senior managers make
the following commitments:
(1) They will not transfer benefits to other units or individuals free of charge
or under unfair conditions nor will they damage the interests of the Company
in other ways;
(2) They will constrain duty consumption behavior;
(3) They will not use company assets to engage in investment or consumption
activities unrelated to their performance of duties;
ZKTeco Che (4) They will actively promote the further improvement of the Company's
Quanhong Jin compensation system and fully support the linkage between the compensation
Hairong Ma Commitment system formulated by the Company's Board of Directors or compensation
Wentao Fu on guarantee committee and the implementation of the Company's compensation measures;
Zhiqian Dong measures for (5) If the Company launches an equity incentive plan in the future I promise
IPO-related August 17 Strict
Xiuqin Pang filling in the to make every effort within my own responsibilities and authority to link the Long term
commitments 2022 performance
Chunlin Zhuo diluted exercise conditions of the equity incentive that the Company intends to
Shuyan Wang immediate announce with the implementation of the Company's compensation and return
Youwu Li return measures;
Zhinong and (6) From the date of issuance of this commitment letter to the completion of
Guo Yanbo the Company's public offering of stocks if the CSRC makes other new
regulatory provisions on filling in return measures and commitments and the
above commitments cannot meet the requirements of the CSRC the
commitment will be issued in accordance with the latest regulations of the
CSRC.I promise to effectively fulfill relevant measures for filling in returns in the
Company's system and any commitments made regarding these measures. If I
violate these commitments and cause losses to the Company or investors I
will be liable for compensation for the Company or investors in accordance
with the law."
Commitment If the Company fails to fulfill the commitments disclosed in the prospectus
on relevant the specific reasons for the failure will be disclosed through the Company's
binding shareholders' meeting securities regulatory authority or designated channels
IPO-related August 17 Strict
ZKTeco measures in of the Shenzhen Stock Exchange as appropriate and supplementary or Long term
commitments 2022 performance
case of alternative commitments will be proposed to the Company's investors to
failure to protect their rights and interests as much as possible.fulfill If investors suffer losses in securities trading due to the Company's failure to
147ZKTeco 2025 Annual Report
commitments fulfill relevant commitments the Company will compensate the investors for
the relevant losses in accordance with the law. Within 10 days after the
securities regulatory authority or other competent departments determine that
the Company has the aforementioned situation the Company will initiate
relevant work to compensate investors for losses. Investor losses are
determined based on the amount determined through consultation with
investors or based on methods or amounts recognized by securities regulatory
authorities or judicial authorities.
1. If the Company fails to fulfill the commitments disclosed in the prospectus
the specific reasons for the failure will be disclosed through ZKTeco's
shareholders' meeting securities regulatory authority or designated channels
of the Stock Exchange as appropriate and supplementary or alternative
commitments will be proposed to ZKTeco's investors to protect their rights
Commitment and interests as much as possible.on relevant 2. If investors suffer losses in securities trading due to the Company's failure
binding to fulfill relevant commitments the Company will compensate the investors
IPO-related measures in for the relevant losses in accordance with the law. August 17 Strict
ZKTeco Times Long term
commitments case of 3. If the Company fails to bear the aforementioned compensation liability the 2022 performance
failure to shares of ZKTeco held by the Company shall not be transferred until the
fulfill Company has fulfilled the aforementioned compensation liability and
commitments ZKTeco has the right to deduct the cash dividends distributed to the Company
for bearing the aforementioned compensation liability.
4. During the period when the Company serves as the controlling shareholder
of ZKTeco if ZKTeco fails to fulfill the commitments disclosed in the
prospectus and causes losses to investors the Company promises to bear
compensation liability in accordance with the law.
1. If I fail to fulfill the commitments disclosed in the prospectus the specific
reasons for the failure will be disclosed through ZKTeco's shareholders'
Commitment meeting securities regulatory authority or designated channels of the Stock
on relevant Exchange as appropriate and supplementary or alternative commitments will
binding be proposed to ZKTeco's investors to protect their rights and interests as much
IPO-related measures in as possible. August 17 Strict
Che Quanhong Long term
commitments case of 2. If investors suffer losses in securities trading due to my failure to fulfill 2022 performance
failure to relevant commitments I will compensate the investors for the relevant losses
fulfill in accordance with the law.commitments 3. If I fail to bear the aforementioned compensation liability the shares of
ZKTeco held by me shall not be transferred until I have fulfilled the
aforementioned compensation liability and ZKTeco has the right to deduct the
148ZKTeco 2025 Annual Report
cash dividends distributed to me for bearing the aforementioned compensation
liability.
4. During the period when I serve as the actual controller of ZKTeco if
ZKTeco fails to fulfill the commitments disclosed in the prospectus and
causes losses to investors I promise to bear compensation liability in
accordance with the law.Che Quanhong 1. If I fail to fulfill the public commitments made by myself in the prospectus
Jin Hairong Ma of ZKTeco's initial public offering and listing on the ChiNext:
Wentao Fu Commitment (1) I will publicly explain the specific reasons for not fulfilling my
Zhiqian Dong on relevant commitments in the Company's shareholders' meeting and newspapers and
Xiuqin Pang binding magazines designated by the CSRC and apologize to the Company's
IPO-related Chunlin Zhuo measures in shareholders and public investors. August 17 Strict
Long term
commitments Shuyan Jiang case of (2) I will stop receiving my salary within 10 trading days from the date of the 2022 performance
Wenna Wu failure to aforementioned event and my shares directly or indirectly held in the
Xinke Liu Jiajia fulfill Company (if any) shall not be transferred until I fulfill the relevant
Wang Youwu Li commitments commitments.Zhinong and 2. If I fail to fulfill the relevant commitments I will be liable for
Guo Yanbo compensation to the Company or investors in accordance with the law.
(1) The Company guarantees that there will be no fraudulent issuance of
shares in this public offering and listing on the ChiNext.
(2) If the securities regulatory authorities stock exchanges or judicial
Commitment
authorities determine that the Company has engaged in fraudulent issuance
to repurchase
behavior which has a significant substantive impact on determining whether
IPO-related shares for August 17 Strict
ZKTeco the Company meets the issuance conditions stipulated by law the Company Long term
commitments fraudulent 2022 performance
will initiate the share repurchase procedure in accordance with relevant laws
issuance and
and regulations and the Company's Articles of Association within 5 working
listing
days after final determination by the securities regulatory authorities stock
exchanges or judicial authorities to repurchase all new shares issued by the
Company in this public offering.
(1) Guarantee that there will be no fraudulent issuance of shares in ZKTeco's
Commitment public offering and listing on the ChiNext.to repurchase (2) If the securities regulatory authorities stock exchanges or judicial
ZKTeco Times
IPO-related shares for authorities determine that ZKTeco has engaged in fraudulent issuance the August 17 Strict
and Che Long term
commitments fraudulent Company/I will initiate a share repurchase procedure within 5 working days 2022 performance
Quanhong
issuance and after confirmation by the securities regulatory authorities stock exchanges or
listing judicial authorities to repurchase all original restricted shares transferred by
the Company/me.IPO-related Che Quanhong Commitment (1) I guarantee that there is no fraudulent issuance of ZKTeco's initial public August 17 Long term Strict
149ZKTeco 2025 Annual Report
commitments Jin Hairong Ma to repurchase offering and listing on the ChiNext. 2022 performance
Wentao Fu shares for (2) If the securities regulatory authorities stock exchanges or judicial
Zhiqian Dong listing authorities determine that ZKTeco has engaged in fraudulent issuance
Xiuqin Pang behavior causing investors to suffer losses in securities issuance and trading I
Chunlin Zhuo will compensate investors for their losses in accordance with the law after the
Shuyan Jiang securities regulatory authorities stock exchanges or judicial authorities
Wenna Wu determine the compensation liability.Xinke Liu Jiajia (3) If I violate the above commitments I will publicly explain the specific
Wang Youwu Li reasons for my failure to fulfill them in the shareholders' meeting of ZKTeco
Zhinong and and newspapers and magazines designated by the CSRC and apologize to
Guo Yanbo shareholders and public investors. Within 5 working days from the date of the
violation of the above commitments I will stop receiving salary or allowances
and shareholder dividends from ZKTeco and my shares in ZKTeco will not
be transferred until I take corresponding compensation measures according to
the above commitments and implement them completely.The Company's shareholders include ZKTeco Times Che Quanhong LX
Investment JYSJ JYHY JYLX JYQL Shenzhen Fuhai Junyong No.1
Venture Capital Enterprise (Limited Partnership) Yiwu Huaxin Vision
Venture Capital Center (Limited Partnership) and Qingdao Walden
Zhongxiang Investment Center (Limited Partnership). Among them Che
Quanhong is the actual controller of the Company ZKTeco Times is a limited
liability company jointly held by Che Quanhong and his brother Che
Quanzhong LX Investment is a limited partnership jointly held by Che
Quanhong and his father Che Jun and natural person De Wang and JYSJ
Special
JYHY JYLX and JYQL are the employee stock holding platform of the
commitment
Company and Shenzhen Fuhai Junyong No.1 Venture Capital Enterprise
IPO-related on August 17 Strict
ZKTeco (Limited Partnership) Yiwu Huaxin Vision Venture Capital Center (Limited Long term
commitments shareholder 2022 performance
Partnership) and Qingdao Walden Zhongxiang Investment Center (Limited
information
Partnership) are investors introduced by the Company. Shenzhen Fuhai
disclosure
Junyong No.1 Venture Capital Enterprise (Limited Partnership) Yiwu Huaxin
Vision Venture Capital Center (Limited Partnership) and Qingdao Walden
Zhongxiang Investment Center (Limited Partnership) are private investment
funds registered with the Asset Management Association of China (AMAC).The aforementioned entities all have the qualification to hold shares in the
Company and there is no situation where entities prohibited by laws and
regulations from holding shares directly or indirectly hold shares in the
Company. The intermediary or its responsible persons senior managers or
handlers involved in this issuance do not directly or indirectly hold any shares
150ZKTeco 2025 Annual Report
or other interests of the Company. There is no situation where shareholders of
the Company engage in improper transfer of benefits through the Company's
equity.The Company and its shareholders have promptly provided truthful accurate
and complete information to the intermediary involved in this issuance
actively and comprehensively cooperated with the intermediary involved in
this issuance to conduct due diligence and truthfully accurately and
completely disclosed shareholder information in the application documents
for this issuance in accordance with the law fulfilling the obligation of
information disclosure.If a lawsuit arbitration dispute or administrative penalty occurs due to the
ZKTeco Times Company's involvement in the installation and use of unauthorized software
IPO-related Other August 17 Strict
and Che we voluntarily and jointly bear all economic consequences and losses for the Long term
commitments commitments 2022 performance
Quanhong Company and will not seek compensation from the Company under any
conditions or methods.
1. If ZKTeco (including its predecessor) and its controlling subsidiaries fail to
pay social insurance premiums and/or housing provident fund for employees
in accordance with the law or in full causing ZKTeco and/or its controlling
subsidiaries to have a supplementary payment obligation or suffer any fines or
losses the Company/I will unconditionally and voluntarily bear such
supplementary payment obligation fines or losses to ensure that ZKTeco and
its holding subsidiaries do not suffer any economic losses due to such matters.ZKTeco Times
IPO-related Other 2. If ZKTeco (including its predecessor) and its controlling subsidiaries use August 17 Strict
and Che Long term
commitments commitments labor employment methods in certain positions causing ZKTeco and/or its 2022 performance
Quanhong
controlling subsidiaries to suffer any fines or losses the Company/I will
unconditionally and voluntarily bear such fines or losses to ensure that
ZKTeco and its controlling subsidiaries do not suffer any economic losses due
to such matters.The aforementioned commitments are unconditional and irrevocable.The Company/I will bear any losses suffered by stakeholders as a result of
violating the aforementioned commitments.If the Company is unable to continue using the defective property due to
ZKTeco Times defects or if the relevant government authorities require the demolition of the
IPO-related Other August 17 Strict
and Che relevant property or impose penalties on the Company in the future they will Long term
commitments commitments 2022 performance
Quanhong unconditionally bear all losses costs and expenses incurred by the Company
arising therefrom.Whether the
Yes
commitment is
151ZKTeco 2025 Annual Report
fulfilled on time
If the commitment is
not fulfilled within the
promised period a
detailed explanation of
the specific reasons Not applicable
for the incomplete
fulfillment and the
next work plan should
be provided.
152ZKTeco 2025 Annual Report
2. If there are assets or projects of the Company which have profit forecast while the reporting period is still
in the profit forecast period the Company shall state whether the assets or projects meet the original profit
forecast and the reasons
□ Applicable □Not applicable
3. Performance commitments of the Company
□Applicable □ Not applicable
Actual
Committed
Term of Commitment achieved Completion
Commitment context Undertaking Party amount (RMB
commitments indicators amount (RMB rate (%)
'0000)
'0000)
The Company signed the "Equity
Acquisition Agreement for
Shenzhen Longzhiyuan Technology
Co. Ltd." with Shenzhen
Longzhiyuan Technology Co. Ltd.and its shareholders Yu Mengchu Li
Weihua Shenzhen Chengtian
Enterprise Management Co. Ltd.Shenzhen Longdingxing Enterprise
Management Partnership (Limited
Partnership) Shenzhen Longjuxin
Investment Partnership (Limited
Partnership) Shenzhen Longhexin
Investment Partnership (Limited
Yu Mengchu Li
Partnership) Shenzhen Longyixin
Weihua Shenzhen
Investment Partnership (Limited
Chengtian Enterprise 2025-2027 Net profit 30000 7266.26 24.22
Partnership) Shenzhen Wolonghui
Management Co.Investment Partnership (Limited
Ltd.Partnership) and Li Weixiong. After
the completion of the industrial and
commercial change registration for
the equity change Shenzhen
Longzhiyuan Technology Company
Limited by Shares was renamed
Shenzhen Longzhiyuan Technology
Co. Ltd. becoming a controlling
subsidiary of the Company and
included in the Company's
consolidated financial statements.Some transaction counterparties
made performance commitments for
this transaction.Changes in performance commitments
□ Applicable □Not applicable
Commitments made by the Company's shareholders and transaction counterparties regarding the annual operating performance of the
Company or relevant assets
□Applicable □ Not applicable
On October 17 2025 the Company entered into an "Equity Acquisition Agreement for Shenzhen Longzhiyuan Technology Co.Ltd." with Shenzhen Longzhiyuan Technology Co. Ltd. and its shareholders. Transaction counterparties Yu Mengchu Li Weihua and
153ZKTeco 2025 Annual Report
Shenzhen Chengtian Enterprise Management Co. Ltd. made a performance commitment for Shenzhen Longzhiyuan Technology Co.Ltd. from 2025 to 2027. The parties jointly committed that the net profit of the target company in 2025 2026 and 2027 shall not be
less than RMB 90 million RMB 100 million and RMB 110 million respectively with a cumulative total of not less than RMB 300
million. "Net profit" refers to the net profit attributable to the parent company's shareholders after deducting non-recurring profits and
losses and excluding the impact of share-based payment in the accounting firm's financial statements of the target company as audited
by the accounting firm engaged by ZKTeco.Completion of performance commitments and its impact on goodwill impairment test
Longzhiyuan's audited net profit for 2025 was RMB 72.6626 million which was RMB 17.3374 million lower than the committed
amount failing to fulfill the performance commitment for the current year. Longzhiyuan failed to meet its annual performance
commitment due to declining market demand which led to a decrease in business volume. According to Longzhiyuan's management
forecast Longzhiyuan is expected to complete its three-year cumulative performance commitment thus having no impact on the
goodwill impairment test for the current 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. Explanation Given by the Board of Directors regarding the Latest "Non-standard Audit
Report"
□ Applicable □Not applicable
V. Explanation Given by the Board of Directors Audit Committee and Independent Directors
(if any) 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 Changes in Accounting Policies
Accounting Estimates or Correction of Major Accounting Errors during the Reporting Period
□ Applicable □Not applicable
154ZKTeco 2025 Annual Report
VII. Explanation for Changes in the Scope of Consolidated Financial Statements Compared to
the Financial Report for the Previous Year
□Applicable □ Not applicable
1. Business merger not under common control in the current period
Time point for equity Cost for equity Percentage of acquired Means for equity
Name of the acquiree
acquisition acquisition equity (%) acquisition
Shenzhen Longzhiyuan
Technology Co. Ltd. November 18 2025 RMB 416.35 million 55.00 Purchase
and its subsidiaries
Continued:
Revenue of the Net profit of the Cash flow of the
Determination
Name of the acquiree from the acquiree from the acquiree from the
Acquisition date basis for
acquiree acquisition date to acquisition date to date of acquisition
acquisition date
the end of term the end of term to the end of term
Shenzhen
Longzhiyuan Date of obtaining
November 18
Technology Co. control over the 44651064.61 7802920.54 15500616.41
2025 [Note]
Ltd. and its target company
subsidiaries
Note: According to the 22nd Session of the Third Board Meeting of the Company the Company signed the "Equity Acquisition
Agreement" with Yu Mengchu Li Weihua Chengtian Limited Longdingxing Longjuxin Longhexin Longyixin Wolonghui and Li
Weixiong on October 17 2025. The Company acquired 55% equity of Shenzhen Longzhiyuan Technology Co. Ltd. collectively held
by Yu Mengchu Li Weihua Chengtian Limited Longdingxing Longjuxin Longhexin Longyixin Wolonghui and Li Weixiong for
RMB 416350000. The Company had paid 50% of the equity transfer payment RMB 208175000 by December 31 2025. Shenzhen
Longzhiyuan Technology Co. Ltd. completed the industrial and commercial change registration procedures on November 18 2025.Concurrently the new Board of Directors of Shenzhen Longzhiyuan Technology Co. Ltd. was established on November 18 2025. In
the new Board of Directors the directors dispatched by the Company constituted a majority and the Company obtained de facto control
over the Company on November 18 2025. For easier accounting it was included in the scope of the consolidated financial statements
from December 1 2025.
2. Changes in the scope of consolidation due to other reasons
Percentage
Establishment Reason for
S/N Company Name Registered Capital of shares
Date Change
（%）
September 8 Cancellation
1 ZKTECO ROMANIAS.R.L. RON 250.00 100.00
2022 [Note 1]
NUR ALTTKNWLWJIA August 14
2 SAR 5625000.00 60.00 Establishment
COMPANY 2025
Note 1: On April 23 2025 ZKTECO ROMANIA S.R.L. completed its company deregistration.VIII. Appointment and Dismissal of Accounting Firms
Accounting firm currently employed
Zhonghui Certified Public Accountants (Special General
Name of domestic accounting firms
Partnership)
Remuneration of domestic accounting firms (RMB '0000) 175
Continuous years of audit services of domestic accounting 2 years
155ZKTeco 2025 Annual Report
firms
Name of certified public accountant (CPA) of domestic
Yin Wenwen and Yuan Zongzhi
accounting firms
Continuous years of audit services provided by certified public
1 year 2 years
accountant (CPA) of domestic accounting firms
Name of overseas accounting firms (if any) Not applicable
Continuous years of audit services by overseas accounting
Not applicable
firms (if any)
Name of certified public accountant (CPA) of overseas
Not applicable
accounting firms (if any)
Whether the accounting firm was changed in the reporting period
□ Yes □No
Appointment of audit accounting firms financial advisors or sponsors for internal control
□ Applicable □Not applicable
IX. Delisting after the Disclosure of the Annual Report
□ Applicable □Not applicable
X. Matters Related to Bankruptcy Reorganization
□ Applicable □Not applicable
There were no bankruptcy or restructuring related matters during the reporting period of the Company.
156ZKTeco 2025 Annual Report
XI. Material Litigation and Arbitration
□Applicable □ Not applicable
Amount Is there an
Basic information Progress of
involved estimated Litigation (arbitration) Disclosure
of litigation litigation Execution of litigation (arbitration) judgments Disclosure Index
(RMB liability trial results and effects Date
(arbitration) (arbitration)
'0000) formed
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
Shenzhen Intermediate People's Court on January 6 2025
requesting the court to conduct a bankruptcy liquidation of
Zokon Industry. The Shenzhen Intermediate People's Court
filed the case on January 16 2025 with the case number (2025)
Y 03 PS No. 131. On April 22 2025 the Shenzhen Intermediate
People's Court issued Civil Ruling (2025) Y 03 PS No. 131
ruling to accept the bankruptcy liquidation application filed by
the Company against Zokon Industry with case number (2025)
Y 03 P No. 407. On June 26 2025 the court appointed an
The second instance
administrator for Zokon Industry's bankruptcy liquidation case CNINFO
court ruled that Zokon
Unfair competition and issued a notice for creditors to declare their claims. The (http://www.cninfo.com.cn)
Industry compensate
dispute filed by the Implementation Company filed relevant claims on July 30 2025 and received August 27 "2025 Half Year Report of
200 No the Company and
Company against stage the bankruptcy administrator's preliminary claim review letter 2025 ZKTECO CO. LTD."
Shenzhen ZKTeco for
Zokon Industry on August 11 2025. On September 2 2025 the Company (Announcement No. 2025-
a loss of RMB 2
received the "Voting Report of the First Creditors' Meeting for 073)
million
the Bankruptcy Liquidation Case of Shenzhen Zokon Industry
Development Co. Ltd." issued by the bankruptcy administrator.The voting results were: the bankruptcy administrator had no
objection to the "Debt Statement" and approved the "Asset
Management Plan" "Asset Realization Plan" and "Bankruptcy
Property Distribution Plan" and selected Taobao.com as the
online auction platform. On March 26 2026 the Company
received the "Report on Adjusting the Amount of Ordinary
Claims" issued by the bankruptcy administrator which
explicitly stipulated that RMB 600000 debt owed by the
Company to Zokon Industry in the case of "Zokon Industry vs.the Company and Shenzhen Xinjiacheng Intelligent Technology
157ZKTeco 2025 Annual Report
Co. Ltd. for Trademark Infringement and Unfair Competition
Dispute" should be offset against the claims declared in the
bankruptcy case.On April 1 2026 the Company received Ruling No. (2025) Yue
03 Po 407-5 from the Shenzhen Intermediate People's Court. As
Zokon Industry had no assets available for distribution the
court issued a ruling to terminate Zokon Industry's bankruptcy
proceedings.The Company notified Zokon Industry and its attorneys in
March 2024 and the Shenzhen Intermediate People's Court in
The Company has April 2024 to offset the debt related to the unfair competition
suspended the dispute between the Company and Zokon Industry in this case.Disputes filed by description of "Zokon" That is the amount payable by the Company to Zokon Industry
Zokon Industry As RMB on relevant platforms in this case was fully offset against the amount payable by
over infringement 600000 owed by and compensated Zokon Industry to the Company based on the Company's
of trademark rights the Company has Zokon Industry with a lawsuit against Zokon Industry in the unfair competition CNINFO
and unfair been confirmed total of RMB 600000 dispute case. No judgment payment is required in this case. In (http://www.cninfo.com.cn)
competition against Yes it has in the bankruptcy for economic losses the case of "Unfair competition dispute filed by the Company August 30 "2024 Half Year Report of
60
the Company and been offset. liquidation and reasonable against Zokon Industry" the Company declared RMB 600000 2024 ZKTECO CO. LTD."
Shenzhen proceedings of expenses for rights debt owed to Zokon Industry. On March 26 2026 the (Announcement No. 2024-
Xinjiacheng Zokon Industry protection; the Company received the "Report on Adjusting the Amount of 037)
Intelligent this case is judgment result has no Ordinary Claims" issued by the bankruptcy administrator
Technology Co. closed. significant impact on which explicitly stipulated that RMB 600000 debt owed by the
Ltd. the Company's Company to Zokon Industry in the case of "Zokon Industry vs.production and the Company and Shenzhen Xinjiacheng Intelligent Technology
operation Co. Ltd. for Trademark Infringement and Unfair Competition
Dispute" should be offset against the claims declared in the
bankruptcy case.Other
lawsuits/arbitrations
where the Company CNINFO
(including The Company (http://www.cninfo.com.cn)
subsidiary strictly follows August 27 "2025 Half Year Report of
2511.24 No No significant impact The Company strictly follows the progress of each case
companies in the the progress of 2025 ZKTECO CO. LTD."
consolidated each case (Announcement No. 2025-
financial 073)
statements) as the
plaintiff fails to
158ZKTeco 2025 Annual Report
meet the disclosure
standards for major
lawsuits
Other
lawsuits/arbitrations
where the Company
(including
CNINFO
subsidiary
The Company (http://www.cninfo.com.cn)
companies in the
strictly follows August 27 "2025 Half Year Report of
consolidated 222.67 No No significant impact The Company strictly follows the progress of each case
the progress of 2025 ZKTECO CO. LTD."
financial
each case (Announcement No. 2025-
statements) as the
073)
defendant fails to
meet the disclosure
standards for major
lawsuits
159ZKTeco 2025 Annual Report
XII. Punishment and Rectification
□ Applicable □Not applicable
There were no penalties or rectifications during the reporting period of the Company.XIII. The Integrity of the Company Its Controlling Shareholders and Actual Controllers
□Applicable □ Not applicable
During the reporting period the Company its controlling shareholders and actual controllers were in good faith and there were no
instances of failure to fulfill effective court judgments or outstanding debts of significant amounts.XIV. Significant Related-Party Transactions
1. Related-party transactions related to daily operations
□ Applicable □Not applicable
There were no related party transactions related to daily operations during the reporting period of the Company.
2. Related-party transactions arising from the acquisition and sale of assets or equity
□ Applicable □Not applicable
There were no related party transactions related to asset or equity acquisitions or sales during the reporting period of the Company.
3. Related-party Transactions Arising from Joint Investments on External Parties
□ Applicable □Not applicable
During the reporting period the Company did not engage in any related party transactions related to joint foreign investment.
4. Related Credit and Debt Transactions
□ Applicable □Not applicable
There were no current associated rights of credit and liabilities during the reporting period of the Company.
5. Transactions with Related Financial Companies
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the Company and its affiliated financial companies and related
parties.
6. Transactions between financial companies controlled by the Company and related parties
□ Applicable □Not applicable
There is no deposit loan credit or other financial businesses between the financial company controlled by the Company and its
affiliated parties.
160ZKTeco 2025 Annual Report
7. Other significant related party transactions
□Applicable □ Not applicable
Please refer to the "Announcement on Signing a Lease Contract and Related Party Transaction" (Announcement No.: 2025-103)
disclosed by the Company on CNINFO on December 26 2025.Related Queries on the Disclosure Website of Temporary Reports on Major Related Party Transactions
Temporary Announcement Disclosure Temporary Announcement Disclosure
Temporary Announcement Name
Date Website Name
Announcement on Signing a Lease
December 26 2025 CNINFO http://www.cninfo.com.cn
Contract and Related Party Transaction
XV. Significant Contracts and Their Performance
1. Custody contracting and leasing matters
(1) Custody
□ Applicable □Not applicable
There was no custody during the reporting period of the Company.
(2) Contracting
□ Applicable □Not applicable
There was no contracting during the reporting period of the Company.
(3) Leasing
□Applicable □ Not applicable
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.
161ZKTeco 2025 Annual Report
3. Entrustment of others to manage cash assets
(1) Entrustment of financial management
□Applicable □ Not applicable
Overview of entrusted financial management during the reporting period
Unit: RMB '0000
Balance of entrusted financial
Product Category Risk Characteristics management during the Overdue uncollected amount
reporting period
Bank financial products Low risk 84156.40 0
Other categories Low risk 71.88 0
Specific situation of the Company as a sole principal entrusting financial institutions to conduct asset management activities or
investing in high-risk entrusted financial products with lower security and poorer liquidity
□ Applicable □Not applicable
(2) Entrusted loan
□ Applicable □Not applicable
There were no entrusted loans during the reporting period of the Company.
4. Other significant contracts
□ Applicable □Not applicable
There were no other significant contracts during the reporting period of the Company.
162ZKTeco 2025 Annual Report
XVI. Use of Raised Funds
□Applicable □ Not applicable
1. Overall use of raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Proportion Total amount Proportion The purpose
of raised of raised Accumulated of and
Accumulated Amount of
Total amount funds funds with total amount accumulated destination
Total amount Net amount total amount Total amount raised funds
Year of Fundraising Listing date of raised utilized at changed of raised total amount of the raised
of raised of raised of raised of unused idle for more
fundraising method of securities funds used in the end of purposes funds with of raised funds that
funds funds (1) funds used raised funds than two
this period the reporting during the changed funds with have not
(2) years
period (3) = reporting purposes change been used
(2)/(1) period purposes yet
Stored in the
bank's
special
Initial public August 17
2022 160816.89 145729.84 11200.63 74201.94 50.92% 0 32085.41 22.02% 75576.77 account for 0
offering 2022
fundraising
and wealth
management
Total -- -- 160816.89 145729.84 11200.63 74201.94 50.92% 0 32085.41 22.02% 75576.77 -- 0
Description of the overall use of raised funds:
1. According to the approval of the "Reply of CSRC to Approval for the Registration of Initial Public Offering of Stocks of ZKTECO CO. LTD." (ZJXK [2022] No. 926) the Company has
publicly issued 37123013 RMB denominated ordinary shares (A shares) with a face value of RMB 1.00 per share an issuance price of RMB 43.32 per share and a total amount of raised funds
of RMB 1608168923.16. After deducting the issuance expenses (excluding value-added tax) of RMB 150870545.46 the actual net amount of raised funds is RMB 1457298377.70. The
receipt date of the raised funds is August 12 2022. The availability of the raised funds has been verified by Baker Tilly China Certified Public Accountants (Special General Partnership) and a
"Capital Verification Report" (TZYZ [2022] No. 38658) has been issued.
163ZKTeco 2025 Annual Report
2. All the raised funds mentioned above have been deposited in a special account for raised funds for management and a regulatory agreement for raised funds has been signed with the sponsor
and the commercial bank that deposited the raised funds.
3. As of December 31 2025 the cumulative amount used for the investment projects was RMB 742019389.93 and the balance of the remaining raised funds (including interest income and
financial product income net of bank handling charges) was RMB 755767657.13.
2. Committed projects with raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Has there
Committed Has the
Accumulated Investment Date when Accumulated been a
investment project Committed Investment Benefits Have the
Adjusted investment progress as the project benefits major
Listing projects and been total Amount achieved expected
Financing Project total amount as of of the end reaches its achieved as change in
date of the investment changed investment During the during this benefits
project name nature investment the end of of the expected of the end of the
securities direction of (including amount of Reporting reporting been
(1) the period period conditions the reporting feasibility
over-raised partial raised funds Period period achieved
(2) (3)=(2)/(1) for use period of the
funds changes)
project
Committed investment projects
1. Tangxia
Initial public
Production Production
offering of August 17 Not Not Not
Base and Yes 24841.18 Yes
stocks in 2022 applicable applicable applicable
Construction construction
2022
Project
2. Hybrid
Initial public
Biometrics Production March 31
offering of August 17 Not
IoT Intelligent and Yes 43689.94 43689.94 378.34 28120.71 64.36% 2026 (Note 2955.67 6762.38 No
stocks in 2022 applicable
Industrial construction 2)
2022
Base Project
3. American
Initial public
Manufacturing Production
offering of August 17 August 31 Not Not Not
Factory and Yes 17392.21 14392.65 3109.3 3429.48 23.83% No
stocks in 2022 2027 applicable applicable applicable
Construction construction
2022
Project
Initial public August 17 4. R&D R&D Yes 18240.58 14692.19 74.21 10997.94 74.86% September Not Not Not No
164ZKTeco 2025 Annual Report
offering of 2022 Center project 30 2025 applicable applicable applicable
stocks in Construction
2022 Project
5. Global
Initial public Marketing
offering of August 17 Service Operational August 31 Not Not Not
Yes 26802.01 26802.01 3249.17 11954.48 44.60% No
stocks in 2022 Network management 2028 applicable applicable applicable
2022 Construction
Project
6. Remaining
funds after the
previous
Initial public
change in the Production
offering of August 17 Not Not Not
American and Yes 0 2999.56 No
stocks in 2022 applicable applicable applicable
Manufacturing construction
2022
Factory
Construction
Project
7. Multimodal
Biometrics
Initial public Digitalization
Production
offering of August 17 Industrial June 30 Not Not Not Yes
and No 0 39605.1 4389.61 19699.33 49.74%
stocks in 2022 Base 2026 applicable applicable applicable (Note 3)
construction
2022 Construction
Project (Note
3)
8. Remaining
Initial public funds after the
offering of August 17 change in the R&D Not Not Not
Yes 0 3548.39 No
stocks in 2022 R&D Center project applicable applicable applicable
2022 Construction
Project
Subtotal of committed investment projects -- 130965.92 145729.84 11200.63 74201.94 -- -- 2955.67 6762.38 -- --
Direction of over-raised fund investment direction
1. Production
August 17 Not Not Not
Undetermined 14763.92 and Yes 14763.92 No
2022 applicable applicable applicable
funds construction
165ZKTeco 2025 Annual Report
Subtotal of over-raised fund investment direction -- 14763.92 -- -- -- --
Total -- 145729.84 145729.84 11200.63 74201.94 -- -- 2955.67 6762.38 -- --
Hybrid Biometrics IoT Intelligent Industrial Base Project: In view of significant changes in domestic and international situations and market demand in recent
years and to adapt to these changes combined with the actual construction progress of the investment project the Company convened the 25th Session of the Third
Board Meeting on March 10 2026 and the first extraordinary general meeting of shareholders in 2026 on March 26 2026. These meetings reviewed and approved
the "Proposal on Adjusting the Investment Plan Reducing the Total Investment Amount and Extending the Completion Date for Certain Raised Funds Investment
Projects" agreeing to adjust the investment plan reduce the total investment amount and extend the date for the Company's raised funds investment project "Hybrid
Biometrics IoT Intelligent Industrial Base Project" to reach its expected conditions for use. For details please refer to the "Announcement on Adjusting the
Investment Plan Reducing the Total Investment Amount and Extending the Completion Date for Certain Raised Funds Investment Projects" (Announcement No.:
2026-011). The aforementioned adjustments to the investment plan reduction in total investment and extension will have an impact on the estimated benefits. The
specific impact will be subject to the calculations disclosed upon the project's completion.Global Marketing Service Network Construction Project: In view of adjustments made to the internal investment structure and implementation methods of the
Global Marketing Service Network Construction Project and considering the current construction cycle of the raised funds investment project to utilize the raised
funds more scientifically reasonably and effectively the Company has extended the date for the Global Marketing Service Network Construction Project to reach its
Describe the situation and expected conditions for use until August 31 2028.reasons why the planned American Manufacturing Factory Construction Project: Given that the American Manufacturing Factory Construction Project is implemented in the US due to
progress and expected differences in regulatory environments the Company's customized requirements and the coordination of supply chain and construction resources the project has been
benefits have not been delayed. After comprehensive consideration the Company decided to extend the date for this project to reach its expected conditions for use until August 31 2027.achieved by projects Regarding the aforementioned Global Marketing Service Network Construction Project and American Manufacturing Factory Construction Project the
(including the reason for 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
selecting "not applicable" Meetings on May 15 2025 and deliberated and approved the "Proposal on Adjusting the Internal Investment Structure Implementation Method and Extension of
for "whether the expected Some Raised Fund Investment Projects". For details please refer to the "Announcement on Adjusting the Internal Investment Structure Implementation Method and
benefits have been Extension of Some Raised Fund Investment Projects" (Announcement No.: 2025-045).achieved") Multimodal Biometrics Digitalization Industrial Base Construction Project: Considering the current market environment the Company's overall business layout
and existing capacity utilization after careful evaluation the Company's existing capacity and completed and operational project content are sufficient to meet current
business development needs. In view of this the Company convened the Second Session of the Fourth Board Meeting on April 21 2026 and reviewed and approved
the "Proposal on Terminating Certain Raised Funds Investment Projects and Continuing to Deposit the Remaining Raised Funds in a Special Account for Raised
Funds Management". The Board of Directors believes that based on the current actual situation of the project and after careful consideration it agrees to terminate
the implementation of the "Multimodal Biometrics Digitalization Industrial Base Construction Project" and continue to deposit the remaining raised funds in the
special account for raised funds. This proposal still needs to be submitted to the shareholders' meeting for deliberation.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. In March 2026 the investment plan for the Hybrid Biometrics IoT Intelligent Industrial Base Project was adjusted
and the total investment amount was reduced which will have an impact on the estimated benefits. The specific impact will be subject to the calculations disclosed
upon the project's completion.Description of significant Multimodal Biometrics Digitalization Industrial Base Construction Project: Considering the current market environment the Company's overall business layout
166ZKTeco 2025 Annual Report
changes in project and existing capacity utilization after careful evaluation the Company's existing capacity and completed and operational project content are sufficient to meet current
feasibility business development needs. In view of this the Company convened the Second Session of the Fourth Board Meeting on April 21 2026 and reviewed and approved
the "Proposal on Terminating Certain Raised Funds Investment Projects and Continuing to Deposit the Remaining Raised Funds in a Special Account for Raised
Funds Management". The Board of Directors believes that based on the current actual situation of the project and after careful consideration it agrees to terminate
the implementation of the "Multimodal Biometrics Digitalization Industrial Base Construction Project" and continue to deposit the remaining raised funds in the
special account for raised funds. This proposal still needs to be submitted to the shareholders' meeting for deliberation.The amount purpose and
progress of the over- Not applicable
raised funds
Instances of unauthorized
alteration of the use of
raised funds and illegal Not applicable
occupation of raised
funds
Changes in the
implementation location
Not applicable
of projects invested with
raised funds
Applicable
Occurred during the reporting period
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 and deliberated and approved the "Proposal on Adjusting the Internal Investment Structure Implementation Method and
Extension of Some Raised Fund Investment Projects". Changes were made to the relevant contents of the Global Marketing Service Network Construction Project
and the American Manufacturing Factory Construction Project.
1. Reasons for Adjusting the Internal Investment Structure of the Investment Project
The original Global Marketing Service Network Construction Project was planned in 2020. The overall planning of the overseas marketing network was
Adjustment of
formulated by the Company based on the global marketing network layout market environment economic environment industry development trends and the
implementation methods
Company's actual situation at that time. However with the changes in global geopolitics economic conditions industry competition and other factors the original
for projects invested with
investment project planning cannot well match the actual market demand and respond to global development. The current actual situation has deviated from the
raised funds
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
167ZKTeco 2025 Annual Report
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
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 Funds Increasing Capital and Providing Loans to Subsidiaries to
Implement Investment Projects". The salaries social insurance premiums housing provident fund utilities etc. of domestic personnel of the Company in
implementing the investment projects "Hybrid Biometrics IoT Intelligent Industrial Base Project" "R&D Center Construction Project" "Global Marketing Service
Advance investment and Network Construction Project" and the "Multimodal Biometrics Digitalization Industrial Base Construction Project" are planned to be paid by the Company or its
replacement of raised subsidiary implementing the investment projects in advance with their own funds. The Company collected and calculated the aforementioned advance expenses
funds for investment 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
projects its subsidiary's own fund account for implementing the investment projects. The implementation location of the Company's investment project "American
Manufacturing Factory Construction Project" is in the United States and the investment project construction funds need to be paid in USD. The Company's
investment projects "Global Marketing Service Network Construction Project" and "R&D Center Construction Project" include overseas construction content and the
operability of paying funds required for overseas construction directly from the special account for raised funds is poor. Therefore the Company plans to use its own
foreign exchange to pay the required funds for the overseas parts of the "Global Marketing Service Network Construction Project" "American Manufacturing Factory
Construction Project" and "R&D Center Construction Project". Subsequently the amount of advance payments will be calculated monthly and equal amounts will be
transferred from the special account for raised funds to the Company's own fund account.As of December 31 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 120.0881 million.Temporary replenishment
of working capital with Not applicable
idle raised funds
The amount and reasons Applicable
for the surplus of raised As of September 30 2025 the investment project "R&D Center Construction Project" had reached its expected conditions for use. To rationally allocate funds
funds during project and improve the efficiency of raised fund utilization the Company convened the 21st Session of the Third Board Meeting and the 20th Session of the Third
implementation Supervisory Board Meeting on October 9 2025 and reviewed and approved the "Proposal on Closing Some Raised Fund Investment Projects from Initial Public
168ZKTeco 2025 Annual Report
Offering and Using the Remaining Raised Funds". The Company agreed to close the initial public offering investment project "R&D Center Construction Project"
based on the actual construction progress of the raised fund investment projects and agreed to use the remaining raised funds from this project totaling RMB
38658900 (the actual remaining amount shall be based on the balance in the special account for raised funds on the day of fund transfer) to permanently supplement
working capital for the Company's production and operating activities.During the construction of this investment project based on changes in market environment and the Company's actual situation and considering the
optimization of resource allocation and enhancement of intensive benefits some surplus funds were generated. The reasons include: Firstly due to changes in market
environment and equipment upgrades and iterations some equipment originally planned for purchase could no longer meet the latest R&D requirements. The
Company adjusted its demand for this part of the equipment and the corresponding capital investment for this part was covered by the Company's own funds;
secondly some software originally planned for purchase had a low compatibility with the Company's demand for agility and flexibility. The Company intends to
achieve higher agility and scalability at a lower cost by independently developing some software; thirdly during the implementation of the raised fund investment
projects the Company strictly complied with relevant regulations on raised fund management. Based on project planning and actual market conditions and without
affecting the smooth implementation and completion of the raised fund investment projects the Company used raised funds following the principles of
reasonableness economy effectiveness and prudence strengthening cost control supervision and management at all stages of project construction thereby
reasonably reducing costs and saving some raised funds.The purpose and As of December 31 2025 the balance of the Company's unused IPO raised funds is RMB 755.7677 million (including interest income and financial product
destination of the raised income net of handling charges) including RMB 110.7677 million of demand deposit in the special account for raised funds and RMB 645 million of time deposit
funds that have not been and other financial products. The above financial products have high safety meet the requirements of capital preservation and have good liquidity which does not
used yet affect the normal operation of the investment plan for raised funds.Problems or other
situations in the use and Not applicable.disclosure of raised funds
Note 1: If there is a discrepancy between the total count and the sum of the sub item values it is due to rounding reasons.Note 2: The Company convened the 25th Session of the Third Board Meeting on March 10 2026 and the first extraordinary general meeting of shareholders in 2026 on March 26 2026. These
meetings reviewed and approved the "Proposal on Adjusting the Investment Plan Reducing the Total Investment Amount and Extending the Completion Date for Certain Raised Funds
Investment Projects" agreeing to adjust the investment plan reduce the total investment amount and extend the date for the Company's raised funds investment project "Hybrid Biometrics IoT
Intelligent Industrial Base Project" to reach its expected conditions for use. For the Hybrid Biometrics IoT Intelligent Industrial Base Project the scheduled date for the project to reach its
expected conditions for use is March 31 2026 and the scheduled date for the project to reach its expected conditions for use after the adjustment is September 30 2026.Note 3: The Company convened the Second Session of the Fourth Board Meeting on April 21 2026 which reviewed and approved the "Proposal on Terminating Certain Raised Funds
Investment Projects and Continuing to Deposit the Remaining Raised Funds in a Special Account for Raised Funds Management". The Company intends to terminate the implementation of the
"Multimodal Biometrics Digitalization Industrial Base Construction Project" and will continue to manage the remaining raised funds in a special account for raised funds. This proposal still
needs to be submitted to the Company's shareholders' meeting for review.
169ZKTeco 2025 Annual Report
3. Change in the use of raised funds
□Applicable □ Not applicable
Unit: RMB '0000
Has there
The total
Actual been a
amount of Actual Date when
accumulated Investment Benefits Have the significant
Corresponding raised funds investment the project
Financing investment progress as achieved expected change in
Fundraising Changed original to be amount reaches its
project amount as of the end of during this benefits the
method project committed invested in during this expected
name of the end of the period reporting been feasibility of
projects the project reporting conditions
the period (3)=(2)/(1) period achieved the project
after the period for use
(2) after the
change (1)
change
Global Global
Initial
Marketing Marketing
public Initial
Service Service August 31 Not
offering of public 26802.01 3249.17 11954.48 44.60% 0 No
Network Network 2028 applicable
stocks in offering
Construction Construction
2022
Project Project
Initial American American
public Initial Manufacturing Manufacturing
August 31 Not
offering of public Factory Factory 14392.65 3109.3 3429.48 23.83% 0 No
2027 applicable
stocks in offering Construction Construction
2022 Project Project
Total -- -- -- 41194.66 6358.47 15383.96 -- -- 0 -- --
Description of reasons for changes decision-
For details please refer to the section on committed projects invested with raised funds above specifically "Adjustment of implementation
making procedures and information
methods for projects invested with raised funds".disclosure (by specific project)
Global Marketing Service Network Construction Project: In view of adjustments made to the internal investment structure and
implementation methods of the Global Marketing Service Network Construction Project and considering the current construction cycle of
The situation and reasons for not achieving the raised funds investment project to utilize the raised funds more scientifically reasonably and effectively the Company has extended the
the planned progress or expected benefits (by date for the Global Marketing Service Network Construction Project to reach its expected conditions for use until August 31 2028.specific project)
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
170ZKTeco 2025 Annual Report
supply chain and construction resources the project has been delayed. After comprehensive consideration the Company decided to extend
the date for this project to reach its expected conditions for use until August 31 2027.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
Not applicable.feasibility after the change
4. Intermediary's verification opinions on the storage and use of raised funds
□Applicable □ Not applicable
The sponsor UBS Securities Co. Ltd. issued the "Special Verification Report of UBS Securities Co. Ltd. on the Deposit Management and Use of Raised Funds by ZKTECO CO. LTD. in
2025" stating that ZKTeco's deposit and use of raised funds in 2025 complies with the "Regulatory Rules for Raised Funds of Listed Companies" the "Rules Governing the Listing of Shares on
the ChiNext Market of Shenzhen Stock Exchange" the "Shenzhen Stock Exchange Guideline No. 2 on Self Regulation of Listed Companies - Normative Operation of Listed Companies on the
Growth Enterprise Board" and other relevant laws regulations and documents. The Company has deposited and used the raised funds in special accounts for specific purposes and there are no
instances of non-compliant use of raised funds.Zhonghui Certified Public Accountants (Special General Partnership) issued the "Assurance Report on the Special Report Regarding the Deposit Management and Use of Raised Funds for the
Year 2025 by ZKTECO CO. LTD." believing that the "Special Report on the Deposit Management and Use of Raised Funds for the Year 2025" prepared by ZKTeco management complies in
all material respects with the "Shenzhen Stock Exchange Guideline No. 2 on Self Regulation of Listed Companies - Normative Operation of Listed Companies on the Growth Enterprise Board
(Revised 2025)" and the provisions of relevant format guidelines and fairly reflected the actual deposit management and use of ZKTeco's raised funds for the year 2025.
171ZKTeco 2025 Annual Report
XVII. Description of Other Significant Events
□ Applicable □Not applicable
There are no other significant matters that need to be explained during the reporting period of the Company.XVIII. Significant Events of the Company's Subsidiaries
□ Applicable □Not applicable
172ZKTeco 2025 Annual 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 from Others Subtotal Quantity Proportion
shares capital
reserve
I. Restricted -
11971218861.00%23942439172449112143667951.60%
shares 22217948
1. Shares
held by State
2. Shares
held by state-
owned legal
persons
3. Shares
held by other -
11971218861.00%23942439172449112143667951.60%
domestic 22217948
enterprises
Including:
shares held by -
8564991443.65%17129983-50879658056194934.23%
domestic 22217948
corporations
Shares
held by
3406227417.36%681245668124564087473017.37%
domestic
natural persons
4. Foreign
shareholding
Including:
shares held by
overseas legal
persons
Shares
held by
overseas
natural person
II. Shares not
subject to
7652517539.00%7496215096786222179483738969611391487148.40%
trading
restrictions
1. RMB
denominated
7652517539.00%7496215096786222179483738969611391487148.40%
ordinary
shares
2. Domestic
listed foreign
shares
173ZKTeco 2025 Annual Report
3. Overseas
listed foreign
shares
4. Others
III. Total
196237363100.00%7496239039225039114187235351550100.00%
shares
Reasons for changes in shares
□Applicable □ Not applicable
1. Reasons for changes in restricted shares
On August 18 2025 the lockup period of the shares issued by the Company before the initial public offering expired and the shares
went public. The number of shareholders with the restrictions lifted was 5 with 22217948 shares accounting for 9.44% of the
Company's total share capital at the time of lifting the restrictions.
2. Reasons for changes in total shares
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.On May 26 2025 the Company disclosed the "2024 Annual Equity Distribution Implementation Announcement". After deliberation
and approval by the Company's 2024 Annual General Meeting the Company converted 2 shares of capital reserve to all shareholders
for every 10 shares. After the completion of the capital reserve conversion the total share capital of the Company increased from
196312325 shares to 235351550 shares.
Approval of changes in shares
□Applicable □ Not applicable
The 2024 annual equity distribution plan of the Company has been deliberated and approved by the 2024 annual general meeting held
on May 15 2025 and the Company disclosed the "2024 Annual Equity Distribution Implementation Announcement" (Announcement
No.: 2025-061) on CNINFO (http://www.cninfo.com.cn) on May 26 2025;
The attribution condition for the first attribution period of the reserved grant under the 2022 Restricted Share Incentive Plan of the
Company 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. For details refer to the "Announcement on the Achievement of the Attribution
Conditions for the First Attribution Period of the Reserved Grant in the 2022 Restricted Share Incentive Plan" (Announcement No.
2025-005) disclosed by the Company on January 2 2025 on CNINFO (http://www.cninfo.com.cn).
Transfer of changes in shares
□Applicable □ Not applicable
The registration date for the Company's annual equity distribution in 2024 is June 3 2025 and the ex-dividend date is June 4 2025.The increased shares were registered in the shareholder's securities account on June 4 2025;
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.The impact of share changes on financial indicators such as basic EPS and diluted EPS for the most recent year and period and net
assets per share attributable to ordinary shareholders of the Company
174ZKTeco 2025 Annual Report
□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. The Company's equity distribution record date for 2024 was June 3 2025
and the ex-dividend date was June 4 2025. The bonus shares allotted from capital reserve in this distribution were registered to
shareholders' securities accounts on June 4 2025 and the total share capital increased from 196312325 shares to 235351550 shares
resulting in corresponding dilution of EPS and net assets per share. The relevant data can be found in "V. Main Accounting Data and
Financial Indicators" of "Section II Company Profile and Key Financial Indicators" of the report.Other contents deemed necessary by the Company or required to be disclosed by the securities regulatory authority
□ Applicable □Not applicable
2. Changes in restricted shares
□Applicable □ Not applicable
Unit: share
Number of Number of Number of
Increase in Date of
restricted shares released restricted
Name of restricted Reason for releasing from
shares at the from trading shares at the
shareholder shares during restrictions trading
beginning of restrictions in end of the
the period restrictions
the period this period period
Shenzhen
Restricted
ZKTeco Times February 24
58500000 11700000 70200000 shares before
Investment Co. 2026
IPO
Ltd.Restricted
February 24
Che Quanhong 34022300 6804460 40826760 shares before
2026
IPO
One quarter of
the shares will
Shenzhen JYSJ be unlocked
Investment Restricted from August
Enterprise 7053800 1410760 4232280 4232280 shares before 17 2023 until
(Limited IPO all shares are
Partnership) unlocked on
August 17
2026
One quarter of
the shares will
Shenzhen
be unlocked
JYHY
Restricted from August
Investment
6960524 1392105 4176314 4176315 shares before 17 2023 until
Enterprise
IPO all shares are
(Limited
unlocked on
Partnership)
August 17
2026
Dongguan LX
Investment
Restricted
Partnership August 18
9880000 1976000 11856000 0 shares before
Enterprise 2025
IPO
(Limited
Partnership)
175ZKTeco 2025 Annual Report
One quarter of
the shares will
Shenzhen
be unlocked
JYLX
Restricted from August
Consulting
2374190 474838 1424514 1424514 shares before 17 2023 until
Enterprise
IPO all shares are
(Limited
unlocked on
Partnership)
August 17
2026
One quarter of
Shenzhen the shares will
JYQL be unlocked
Investment Restricted from August
Consulting 881400 176280 528840 528840 shares before 17 2023 until
Enterprise IPO all shares are
(Limited unlocked on
Partnership) August 17
2026
During the
tenure of
directors and
senior
executives
25% of the total
Restricted
number of
Fu Zhiqian 10724 2146 12870 shares before
shares held will
IPO
be unlocked
annually while
the remaining
75% will be
automatically
locked
During the
tenure of
directors and
senior
executives
25% of the total
Restricted
number of
Jin Hairong 11700 2340 14040 shares before
shares held will
IPO
be unlocked
annually while
the remaining
75% will be
automatically
locked
During the
tenure of
directors and
senior
executives
Restricted
25% of the total
Mu Wenting 17550 3510 21060 shares before
number of
IPO
shares held will
be unlocked
annually while
the remaining
75% will be
176ZKTeco 2025 Annual Report
automatically
locked
Total 119712188 23942439 22217948 121436679 -- --
II. Issuance and Listing of Securities
1. Securities issuance (excluding preferred shares) during the reporting period
□Applicable □ Not applicable
Type of Listing
Issue Price Transaction
stocks and Number approved Disclosure
Issue Date (or Interest Listing Date Termination Disclosure Index
derivative of Issues amount Date
Rate) Date
securities (share)
Stock Category
"Announcement on the
Attribution Results of
the First Attribution
Period of the Reserved
Grant in the 2022
Restricted January 10 RMB January 10 Restricted Share January 8
7496274962
share 2025 13.67/share 2025 Incentive Plan and the 2025
Listing of Shares of
ZKTECO CO. LTD."
(Announcement No.
2025-009) on the
website of CNINFO
Convertible corporate bonds corporate bonds with detachable warrants and corporate bonds.Other derivative securities of corporate bonds
Description of securities issuance (excluding preferred shares) during the reporting period
Description 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.
2. Description of Changes in Total Share Capital the Structure of Shareholders and the Structure of Assets
and Liabilities of the Company
□Applicable □ Not applicable
During the reporting period the Company's total share capital increased from 196237363 shares to 196312325 shares due to the
fulfillment of the attribution conditions for the first attribution period of the reserved grant under the 2022 Restricted Share Incentive
Plan. Due to the implementation of the 2024 annual equity distribution plan the Company distributed 2 bonus shares for every 10
shares held by all shareholders from capital reserve. After this bonus share distribution from capital reserve the Company's total share
capital increased from 196312325 shares to 235351550 shares.
177ZKTeco 2025 Annual Report
As of the end of 2025 the Company's total assets amounted to RMB 4.9548106 billion representing a YoY increase of 23.42%
compared to RMB 4.0146235 billion at the end of 2024. The total liabilities were RMB 1.289229 billion a YoY increase of 102.51%
compared to RMB 636.6231 million at the end of 2024. The asset liability ratio was 26.02%.
3. Internal employee shares
□ Applicable □Not applicable
III. Shareholders and Actual Controllers
1. Number of shareholders of the Company and shareholding
Unit: share
Total
number of
preferred
Total number shareholders
Total number
of preferred whose Total
of ordinary
Total number shareholders voting rights number of
shareholders
of ordinary whose voting have been shareholde
at the end of
shareholders at rights have recovered at rs holding
21054 the previous 25251 0 0 0
the end of the been recovered the end of special
month before
reporting at the end of last month voting
the disclosure
period the reporting before the shares (if
date of the
period (if any) disclosure any)
annual report
(see Note 9) date of the
annual report
(if any) (see
Note 9)
Shareholding of shareholders holding more than 5% or the top 10 shareholders (excluding shares lent through refinancing)
Changes in Pledge marking or frozen
Number of Number of
increase and Number of
shares held at shares not
Name of Nature of Percentage of decrease shares with
the end of the subject to
shareholder shareholder shares during the trading
reporting trading Share status Amount
reporting restrictions
period restrictions
period
Shenzhen Domestic
ZKTeco Times non state-
29.83% 70200000 11700000 70200000 0 Not applicable 0
Investment owned
Co. Ltd. corporation
Domestic
Che Quanhong natural 17.35% 40826760 6804460 40826760 0 Not applicable 0
person
Shenzhen
JYHY Domestic
Investment non state-
5.94% 13978512 103562 4176315 9802197 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Shenzhen JYSJ Domestic
Investment non state-
5.92% 13938856 -99544 4232280 9706576 Not applicable 0
Enterprise owned
(Limited corporation
178ZKTeco 2025 Annual Report
Partnership)
Dongguan LX
Investment Domestic
Partnership non state-
5.04% 11856000 1976000 0 11856000 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Shenzhen
JYLX Domestic
Consulting non state-
1.69% 3975273 367379 1424514 2550759 Not applicable 0
Enterprise owned
(Limited corporation
Partnership)
Hong Kong
Securities
Overseas
Clearing 0.75% 1767698 1278635 0 1767698 Not applicable 0
corporation
Company
Limited
ZKTECO CO.LTD. - 2025
Employee
Others 0.57% 1336560 1336560 0 1336560 Not applicable 0
Stock
Ownership
Plan
Shenzhen
JYQL
Domestic
Investment
non state-
Consulting 0.48% 1135260 -16490 528840 606420 Not applicable 0
owned
Enterprise
corporation
(Limited
Partnership)
Domestic
Han Xiao natural 0.34% 807916 610178 0 807916 Not applicable 0
person
Strategic investors or
general legal persons
become the top 10
Not applicable
shareholders due to the
placement of new shares (if
any) (see Note 4)
Shareholder Che Quanhong is elder brother of shareholder Che Quanzhong from ZKTeco Times are
brothers and son of Che Jun partner of LX Investment.The shareholder Che Quanhong holds 76.02% of the equity of ZKTeco Times being the controlling
Description of the above
shareholder of ZKTeco Times. Meanwhile Che Quanhong holds 1.18% of the property share of shareholder
shareholder's association or
LX Investment and 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
As of December 31 2025 the Company's dedicated securities account for share repurchases holds 1116200
existence of special
A ordinary shares accounting for 0.47% of the current total share capital of the Company. As required it is
repurchase accounts among
not included in the list of the top 10 shareholders of the Company.the top 10 shareholders (if
179ZKTeco 2025 Annual Report
any) (see Note 10)
Particulars about the top 10 shareholders not subject to trading restrictions (excluding shares lent through refinancing and executive
lockup shares)
Number of shares not subject to trading restrictions held at the end of the Types of shares
Name of shareholder
reporting period Types of shares Amount
Dongguan LX Investment
RMB denominated
Partnership Enterprise 11856000 11856000
ordinary shares
(Limited Partnership)
Shenzhen JYHY
RMB denominated
Investment Enterprise 9802197 9802197
ordinary shares
(Limited Partnership)
Shenzhen JYSJ Investment
RMB denominated
Enterprise (Limited 9706576 9706576
ordinary shares
Partnership)
Shenzhen JYLX
RMB denominated
Consulting Enterprise 2550759 2550759
ordinary shares
(Limited Partnership)
Hong Kong Securities RMB denominated
17676981767698
Clearing Company Limited ordinary shares
ZKTECO CO. LTD. -
RMB denominated
2025 Employee Stock 1336560 1336560
ordinary shares
Ownership Plan
RMB denominated
Han Xiao 807916 807916
ordinary shares
RMB denominated
Liu Yunlai 700952 700952
ordinary shares
RMB denominated
Zhan Guoqiang 666620 666620
ordinary shares
RMB denominated
Liu Chunli 642500 642500
ordinary shares
Description of the
association or concerted
action between the top 10
shareholders of outstanding Shareholder Che Quanhong holds 1.18% of the property shares of shareholder LX Investment and 8.65% of
shares not subject to the property shares of shareholder JYLX. In addition the Company does not know whether there is a related
trading restrictions as well relationship between the top 10 other shareholders of shares not subject to trading restrictions as well as
as between the top 10 between the top 10 shareholders of outstanding shares not subject to trading restrictions and the top 10
shareholders of outstanding shareholders or whether they belong to Concerted Parties.shares without trading
restrictions and the top 10
shareholders
Among the top 10 shareholders not subject to trading restrictions at the period end shareholder Han Xiao
held a total of 807916 A shares of the Company including 43000 A shares held through margin accounts
and 764916 A shares held through client credit transaction guaranty securities accounts of China Galaxy
Securities Co. Ltd. At the end of the reporting period shareholder Liu Yunlai held 0 A shares of the
Description of shareholders
Company through margin accounts and 700952 A shares of the Company through client credit transaction
participating in margin
guaranty securities accounts of GF Securities Co. Ltd. At the end of the reporting period shareholder Zhan
trading (if any) (see Note
Guoqiang held 0 A shares of the Company through margin accounts and 666620 A shares of the Company
5)
through client credit transaction guaranty securities accounts of Guosen Securities Co. Ltd. At the end of the
reporting period shareholder Liu Chunli held 0 A shares of the Company through margin accounts and
642500 A shares of the Company through client credit transaction guaranty securities accounts of China
Securities Co. Ltd.Participation of shareholders holding more than 5% of the property 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
180ZKTeco 2025 Annual Report
Changes to the top 10 shareholders and the top 10 shareholders of outstanding shares not subject to trading restrictions compared to
the previous period due to reasons related to lending/repayment through refinancing
□ Applicable □Not applicable
Does the Company have voting right difference arrangements
□ Applicable □Not applicable
Did the top 10 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.
2. Controlling shareholders of the Company
Nature of controlling shareholder: controlled by natural person
Type of controlling shareholder: legal person
Name of controlling
Legal representative Date of establishment Organizational code Main business
shareholder
Shenzhen ZKTeco
Times Investment Co. Ma Bowen July 13 2015 91440300335415347N Investment
Ltd.Equity of other
domestic and foreign
listed companies
controlled and The controlling shareholders of the Company did not hold or participate in other domestic and foreign
participated in by listed companies.controlling
shareholders during the
reporting period
Changes in controlling shareholders during the reporting period
□ Applicable □Not applicable
There was no change in the controlling shareholder of the Company during the reporting period.
3. Particulars about the Company’s Actual Controller & Concerted Parties
Nature of actual controller: domestic natural persons
Type of actual controller: natural person
Relationship with actual Have you obtained residency
Name of actual controller Nationality
controller in other countries or regions
Che Quanhong Oneself China No
Mr. Che Quanhong is the Chairman of the Company. Please refer to "2. Appointment" in "VI.Main occupation and position Information on Directors and senior managers" in "Section IV Corporate Governance
Environment and Society" of this annual report for details.Domestic and foreign listed
companies that have None
controlled in the past 10 years
Changes in actual controller during the reporting period
□ Applicable □Not applicable
There has been no change in the actual controller of the Company during the reporting period.Block diagram of property rights and control relationship between the Company and actual controller
181ZKTeco 2025 Annual Report
Che Quanhong
Shenzhen
ZKTeco
Times
Investment
Co. Ltd.ZKTECO CO. LTD.The actual controller controls the Company through trust or other asset management methods
□ Applicable □Not applicable
4. The Company's Controlling Shareholder or the Largest Shareholder and its Concerted Action Person's
Cumulative Pledged Shares Account for 80% of the Company's Shares Held by Them
□ Applicable □Not applicable
5. Particulars about Other Corporate Shareholders with Shareholding Proportion over 10%
□ Applicable □Not applicable
6. Restricted reduction of shares held by controlling shareholders actual controllers restructuring parties
and other committed entities
□ Applicable □Not applicable
IV. Specific Implementation of Share Repurchase During the Reporting Period
Implementation progress of share repurchase
□Applicable □ Not applicable
Proportion of
Proposed repurchased
Number of
Plan Proportion to repurchase Proposed Number of quantity to
shares to be Repurchase
disclosure total share amount repurchase repurchased the
repurchased purpose
time capital (RMB period shares underlying
(shares)
'0000) shares
involved in
182ZKTeco 2025 Annual Report
the equity
incentive
plan (if any)
Based on the
upper limit The
of the proportion of
repurchase 193039666
Not less than
price of shares of the Implement
RMB 30
RMB 48.07 total share employee
million November
per share capital of the stock
November (inclusive) 10 2023-
(inclusive) Company as ownership 2230000 1
11 2023 and not more November 9
the expected of the plans or
than RMB 60 2024
number of disclosure equity
million
repurchased date of the incentives
(inclusive)
shares is repurchase
624090 to plan is 0.32%
1248180-0.65%
shares
Note 1: Accounts for 100.00% of the 2025 employee stock ownership plan.Progress in implementing centralized bidding trading to reduce holdings and repurchase shares
□Applicable □ Not applicable
The Company convened the 15th Session of the Third Board Meeting and the 14th Session of the Third Supervisory Board Meeting
on January 23 2025 and the first extraordinary general meeting of 2025 on February 11 2025. These meetings separately reviewed
and approved the "2025 Employee Stock Ownership Plan (Draft)" and the "2025 Restricted Share Incentive Plan (Draft)". The
Company agreed to implement equity incentives by issuing the Company's A-share common stock to incentive objects through private
placement and/or repurchasing the Company's A-share common stock from the secondary market and to implement the employee
stock ownership plan with 1113800 repurchased A-share common stock of ZKTeco. For details please refer to the relevant
announcements disclosed by the Company on the website of CNINFO on January 24 2025.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. For
details please refer to the "Announcement on the Completion of Non-Trading Transfer of the 2025 Employee Stock Ownership Plan"
(Announcement No.: 2025-060) disclosed by the Company on CNINFO on May 23 2025.
V. Preferred Shares
□ Applicable □Not applicable
There is no preferred share in the Company during the reporting period.
183ZKTeco 2025 Annual Report
Section VII Bonds
□ Applicable □Not applicable
184ZKTeco 2025 Annual Report
Section VIII Financial Report
I. Audit Report
Audit opinion Standard unqualified opinions
Audit report signing date April 21 2026
Zhonghui Certified Public Accountants (Special General
Audit institution name
Partnership)
Audit Report No. ZHKS [2026] No. 7118
Name of CPA Yin Wenwen Yuan Zongzhi
Audit Report Text
All shareholders of ZKTECO CO. LTD.:
I. Audit Opinion
We have audited the financial statements of ZKTECO CO. LTD. (hereinafter referred to as "ZKTeco") including the consolidated
and parent company's balance sheet as of December 31 2025 the consolidated and parent company's profit statement the consolidated
and parent company's cash flow statement the consolidated statements and Statement of Changes in Equity of the Parent Company and
notes to financial statements as of 2025.In our opinion the accompanying financial statements have been prepared in accordance with the provisions of the Accounting
Standards for Enterprises in all material aspects and fairly reflect the ZKTeco's consolidated and parent company's financial position as
of December 31 2025 as well as the consolidated and parent company's operating results and cash flows as of 2025.II. Basis for Opinion
We conducted our audit in accordance with China Standards on Auditing ("CSAs"). The "CPA's Responsibility for the Audit of
Financial Statements" section of the Audit Report further elaborates our responsibilities under these standards. We are independent of
ZKTeco in accordance with the China Code of Ethics for Certified Public Accountants and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.III. Key Audit Matters
Key audit matters are the most important matters we believe to audit the current financial statements according to our professional
judgment. The response to these matters is based on the audit of the financial statements as a whole and the formation of an audit
opinion and we do not express an opinion on these matters separately. We have identified the following key audit matters that need to
be communicated in the audit report.(I) Revenue recognition
1. Description of matters
As stated in Note V (42) to the financial statements ZKTeco's operating revenue for 2025 was RMB 2132.79 million. As
operating revenue is one of the key performance indicators of ZKTeco there is an inherent risk that the management may
inappropriately recognize revenue to achieve specific targets or expectations. Therefore we consider the recognition of operating
revenue of ZKTeco as a key audit matter.
2. Audit response
Our main audit procedures for revenue recognition include:
185ZKTeco 2025 Annual Report
(1) Understand the key internal controls related to revenue recognition evaluate whether their design is effective determine
whether they are implemented and test the effectiveness of the operation of relevant internal controls;
(2) Understand the revenue recognition policies through interviews with management examine the terms of major customer
contracts and analyze whether the conditions methods and timing of the Company's revenue recognition comply with the requirements
of Accounting Standards for Business Enterprises;
(3) Perform analytical procedures on operating revenue analyze the changes in sales of major products and major customers
compare with the changes in the same period of the previous year and review the rationality of sales changes;
(4) Confirm the sales revenue of major customers combined with the audit of accounts receivable and perform substitution tests
on customers who have not responded to the letter;
(5) Check the major customer contracts sales outbound orders acceptance certificates logistics documents customs declarations
and invoices to verify the authenticity of ZKTeco's revenue confirmation;
(6) Conduct cut-off tests on sales transactions before and after the balance sheet date to evaluate whether the revenue is recorded
in the appropriate accounting period.IV. Other information
The management of ZKTeco (hereinafter referred to as the management) is responsible for other information. The other
information comprises the information included in the annual report for 2025 but does not include the financial statements and our
audit report thereon.Our audit opinions published in the financial statements do not cover other information and we do not publish any form of assured
conclusion on other information.In combination with our audit of the financial statements our responsibility is to read other information. In the process we consider
whether there is significant inconsistency in other information with the financial statements or what we have learned during the audit
process or other material misstatement existed.Based on the work we have performed if we determine that there is a material misstatement of other information we should report
that fact. In this regard we have nothing to report.V. Responsibilities of management and governance for the financial statements
The management is responsible for the preparation of financial statements that give a fair view in accordance with the Accounting
Standards for Enterprises and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement whether due to fraud or error.In preparing the financial statements management is responsible for assessing ZKTeco's ability to continue as a going concern
disclosing as applicable matters related to going concern and using the going concern assumption unless the management either
intends to liquidate ZKTeco or to cease operations or has no realistic alternative but to do so.Those charged with governance of ZKTeco (hereinafter referred to as Those Charged with Governance) are responsible for
overseeing ZKTeco's financial reporting process.VI. CPA's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement whether due to fraud or error and to issue an audit report that includes our opinion. Reasonable assurance is a high level
of assurance but is not a guarantee that an audit conducted in accordance with CSAs will always detect a material misstatement when
it exists. Misstatements can arise from fraud or error and are considered material if individually or in aggregate they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.As part of an audit in accordance with CSAs we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
186ZKTeco 2025 Annual Report
(I) Identify and assess the risks of material misstatement in the Financial Statements whether due to fraud or error design and
perform the audit procedures to address these risks and obtain the audit evidence that is sufficient and appropriate to provide a basis
for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error
as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.(II) Understand the audit-related internal control to design appropriate audit procedures.(III) Evaluate the appropriateness of accounting policies selected by the Management and the reasonableness of accounting
estimates and related disclosures.(IV) Draw a conclusion on the appropriateness of the going concern assumption used by the Management. based on the audit
evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on ZKTeco's
ability to continue as a going concern. If we conclude that there is a material uncertainty according to the auditing standards we are
required in our Audit Report to draw attention of statement users to the related disclosures in the Financial Statements; or if such
disclosures are inadequate we shall publish non-unqualified opinions. Our conclusions are based on the audit evidence obtained up to
the date of our Audit Report. However future events or conditions may cause ZKTeco to cease to continue as a going concern.(V) Evaluate the overall presentation structure and content of the financial statements and whether the financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.(VI) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within
ZKTeco to express an opinion on the financial statements. We are responsible for the direction supervision and performance of the
audit on the Company and we remain solely responsible for our audit opinion.We communicate with the management on matters such as the planned scope timing and significant audit findings including
internal control deficiencies identified during our audits that are of concern.We also provide a statement to the management that we have complied with ethical requirements related to independence and
communicate with Those Charged with Governance all relationships and other matters that may reasonably be considered to affect our
independence as well as related precautions if applicable.From the matters communicated with those charged with governance we determine which matters are most important to the audit
of the current financial statements thus constituting key audit matters. We describe these matters in the audit report unless laws and
regulations prohibit public disclosure of these matters or in rare cases if the negative consequences of communicating a matter in the
audit report are reasonably expected to exceed the benefits in the public interest we determine that the matter should not be
communicated in the audit report.II. Financial Statements
The unit of the financial statements in the financial notes is: RMB
1. Consolidated Balance Sheet
Prepared by: ZKTECO CO. LTD.December 31 2025
Unit: RMB
Item December 31 2025 January 1 2025
Current assets:
Monetary funds 1243119411.23 1473334905.97
Deposit reservation for balance
Lendings to banks and other financial
institutions
Trading financial assets 800444410.21 491331815.79
187ZKTeco 2025 Annual Report
Derivative financial assets
Notes receivable 538349.21 165450.00
Accounts receivable 676383210.14 519014337.89
Receivable financing
Prepayments 18032290.05 26561472.98
Premiums receivable
Reinsurance accounts receivable
Reserves for reinsurance contract
receivable
Other receivables 52567928.29 41144121.16
Including: interest receivable
Dividends receivable
Buying back the sale of financial
assets
Inventories 468837064.12 335306397.14
Including: Data resources
Contract assets 26949.78 212795.14
Held-for-sale assets
Non-current assets due within one year 2320265.60 20383238.35
Other current assets 104567979.67 33070816.00
Total current assets 3366837858.30 2940525350.42
Non-current assets:
Loans and advances to customers
Debt investment 28977331.32 15775806.16
Other debt investment
Long-term receivables 17932540.32 5479301.55
Long-term equity investment 25112854.58 28982092.23
Other equity instrument investments
Other non-current financial assets
Investment real estate 19863144.69 21504316.77
Fixed assets 723300476.82 535337384.82
Construction in progress 113147627.97 226445932.02
Productive biological assets
Oil and gas assets
Right-of-use assets 55789456.58 48352214.14
Intangible assets 271465068.24 99844396.80
Including: Data resources
Development expenditures
Including: Data resources
Goodwill 239061688.95 512337.25
Long-term deferred expenses 10365428.72 5555537.61
Deferred income tax assets 82533157.92 81688798.50
Other non-current assets 423995.07 4620055.22
188ZKTeco 2025 Annual Report
Total non-current assets 1587972771.18 1074098173.07
Total assets 4954810629.48 4014623523.49
Current liabilities:
Short-term loan 81101188.00
Borrowings from the Central Bank
Borrowings from banks and other
financial institutions
Trading financial liabilities 208175000.00
Derivative financial liabilities
Notes payable 239870823.79 134784219.75
Accounts payable 404450021.92 225414642.83
Advances from customer
Contract liabilities 76516595.89 71168318.91
Financial assets sold for repurchase
Deposit from customers and interbank
Acting trading securities
Acting underwriting securities
Payroll payable 62261494.07 53990974.31
Taxes payable 38878015.23 20281098.96
Other payables 71479362.71 45821035.19
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
30859013.8622822648.87
year
Other current liabilities 18771142.30 12060579.96
Total current liabilities 1232362657.77 586343518.78
Non-current liabilities:
Reserves for insurance contracts
Long-term loan 139871.08 7021328.89
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 25370074.36 29108076.76
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 1364769.40 1420041.44
Deferred income tax liabilities 29991667.84 12730094.50
189ZKTeco 2025 Annual Report
Other non-current liabilities
Total non-current liabilities 56866382.68 50279541.59
Total liabilities 1289229040.45 636623060.37
Owner's equity:
Share capital 235351550.00 196312325.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2068821395.02 2107323633.23
Less: treasury stock 44078890.10 59683228.10
Other comprehensive income 39799829.67 41914807.74
Special reserve
Surplus reserves 67458631.43 64002687.03
General risk reserves
Undistributed profits 1114135904.69 1000479479.18
Total owners' equity attributable to the
3481488420.713350349704.08
parent company
Minority interests 184093168.32 27650759.04
Total owners' equity 3665581589.03 3378000463.12
Total liabilities and owner's equity 4954810629.48 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
Item December 31 2025 January 1 2025
Current assets:
Monetary funds 369007059.01 824570527.22
Trading financial assets 331610473.21 71072880.32
Derivative financial assets
Notes receivable 156790.41
Accounts receivable 428225183.76 516437060.81
Receivables financing
Prepayments 6462285.58 10439376.39
Other receivables 31318946.42 28468054.40
Including: interest receivable 46922.03 46922.03
Dividends receivable
Inventories 62381514.53 105623350.08
Including: Data resources
Contract assets 9172.80 192777.03
Held-for-sale assets
Non-current assets due within one year 1020439.67 339420.08
Other current assets 65277597.19 4922632.78
Total current assets 1295469462.58 1562066079.11
Non-current assets:
190ZKTeco 2025 Annual Report
Debt investment 21036292.96 10260784.31
Other debt investment
Long-term receivables 7693859.44 2323586.07
Long-term equity investment 1837314121.27 1360368042.33
Other equity instrument investments
Other non-current financial assets
Investment real estate
Fixed assets 39234838.25 46126552.33
Construction in progress
Productive biological assets
Oil and gas assets
Right-of-use assets 3397123.73 9186583.12
Intangible assets 28442988.56 31838535.17
Including: Data resources
Development expenditures
Including: Data resources
Goodwill
Long-term deferred expenses 3770321.93 3048841.86
Deferred income tax assets 49321418.19 49639639.95
Other non-current assets 589955.22
Total non-current assets 1990210964.33 1513382520.36
Total assets 3285680426.91 3075448599.47
Current liabilities:
Short-term loan
Trading financial liabilities 208175000.00
Derivative financial liabilities
Notes payable 77782177.57 102953171.16
Accounts payable 162076940.64 109367315.26
Advances from customer
Contract liabilities 18868667.39 27371907.92
Payroll payable 14248129.06 14888641.90
Taxes payable 1945673.22 2599023.91
Other payables 87941897.36 49256238.57
Including: interest payable
Dividends payable 556900.00
Liabilities held for sale
Non-current liabilities due within one
2792552.495620355.31
year
Other current liabilities 6057760.52 9674292.24
Total current liabilities 579888798.25 321730946.27
Non-current liabilities:
Long-term loan
191ZKTeco 2025 Annual Report
Bonds payable
Including: preferred stock
Perpetual bonds
Lease liabilities 692690.06 3377514.34
Long-term payables
Long-term payroll payable
Estimated liabilities
Deferred income 11365.24
Deferred tax liabilities 2341558.59 3443841.43
Other non-current liabilities
Total non-current liabilities 3034248.65 6832721.01
Total liabilities 582923046.90 328563667.28
Owner's equity:
Share capital 235351550.00 196312325.00
Other equity instruments
Including: preferred stock
Perpetual bonds
Capital reserve 2080952283.49 2116684780.13
Less: treasury stock 44078890.10 59683228.10
Other comprehensive income
Special reserve
Surplus reserves 67367334.94 63911390.54
Undistributed profits 363165101.68 429659664.62
Total owners' equity 2702757380.01 2746884932.19
Total liabilities and owner's equity 3285680426.91 3075448599.47
3. Consolidated Profit Statement
Unit: RMB
Item 2025 2024
I. Total operating revenue 2132789667.81 1991200391.75
Including: operating revenue 2132789667.81 1991200391.75
Interest income
Premium earned
Revenue from handling
charges and commissions
II. Total operating cost 1852739271.27 1782774757.20
Including: operating cost 1063952308.89 1008242645.99
Interest expenses
Expenses from handling
charges and commissions
Surrender value
Net payments for insurance
claims
Net provisions for reserves in
insurance liability contracts
192ZKTeco 2025 Annual Report
Policy dividend expenses
Reinsurance expenses
Taxes and surcharges 23856191.23 29265779.72
Selling expenses 469389517.11 446509619.84
Administrative expenses 131948221.69 117559541.39
R&D expenses 184608110.11 215470991.40
Financial expenses -21015077.76 -34273821.14
Including: interest expenses 3257528.29 3871915.67
Interest income 27447223.90 42321327.95
Plus: other income 11545929.17 18367589.83
Investment income ( loss
2637301.434195000.74
expressed with "-")
Including: income from
investment in associates and -1396664.52 3001156.73
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
15102322.0214859953.45
(loss expressed with "-")
Losses from credit impairment
-21053880.50-21206975.03
(loss expressed with "-")
Losses from impairment of assets
-15091760.31-7654897.66
(loss expressed with "-")
Gains from disposal of assets
312220.10-653718.36
(loss expressed with "-")
III. Operating profit (loss expressed with
273502528.45216332587.52
"-")
Plus: non-operating revenue 1934540.52 5545326.30
Less: Non-operating expenditure 5153791.42 6513782.84
IV. Total profit (loss expressed with "-") 270283277.55 215364130.98
Less: income tax expenses 24936133.78 14832125.82
V. Net profit (loss expressed with "-") 245347143.77 200532005.16
(I) Classification by business
continuity
1. Net profit from continuing
operations (net loss expressed with 245347143.77 200532005.16
"-")
2. Net profit from discontinued
operations (net loss expressed with "-")
(II) Classification by ownership
1. Net profits attributable to
214710432.41183045997.93
shareholders of parent company
2. Minority shareholders' profit and 30636711.36 17486007.23
193ZKTeco 2025 Annual Report
loss
VI. Other comprehensive income - after
-438704.7415860099.64
tax
Net of tax of other comprehensive
income attributable to the owner of the -2114978.07 13913848.55
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
-2114978.0713913848.55
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
-2114978.0713913848.55
foreign currency financial statements
7. Others
After-tax net amount of other
comprehensive income attributable to the 1676273.33 1946251.09
minority shareholders
VII. Total comprehensive income 244908439.03 216392104.80
Total comprehensive income
attributable to owners of the parent 212595454.34 196959846.48
company
Total comprehensive income
32312984.6919432258.32
attributable to minority shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS 0.9186 0.7913
(II) Diluted EPS 0.9149 0.7913
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 2025 2024
194ZKTeco 2025 Annual Report
I. Operating revenue 805130826.73 1343903884.64
Less: operating cost 560855700.21 1031003266.22
Taxes and surcharges 3936272.86 7076042.43
Selling expenses 114468659.36 151644243.44
Administrative expenses 50250690.65 56626647.98
R&D expenses 65338077.28 115374818.03
Financial expenses -5917089.93 -30884427.41
Including: interest expenses 234457.44 478491.92
Interest income 10494332.89 20496636.74
Plus: other income 2998273.93 7448445.44
Investment income ( loss
21508102.5711170810.73
expressed with "-")
Including: income from
investment in associates and -120687.66 -239422.08
joint ventures
Derecognition of
income for financial assets measured at
amortized cost (loss expressed with "-")
Gains from net exposure hedging
(loss expressed with "-")
Gains from changes in fair value
5139185.963218077.91
(loss expressed with "-")
Losses from credit impairment
-9726580.99-7650167.42
(loss expressed with "-")
Losses from impairment of assets
-1674369.85-3026826.74
(loss expressed with "-")
Gains from disposal of assets
51482.66-67696.60
(loss expressed with "-")
II. Operating profit (loss expressed with
34494610.5824155937.27
"-")
Plus: non-operating revenue 680260.57 2499437.54
Less: Non-operating expenditure 959222.89 2171217.28
III. Total profits (total losses expressed
34215648.2624484157.53
with "-")
Less: income tax expenses -343795.70 -10988487.79
IV. Net profit (net loss expressed with "-
34559443.9635472645.32
")
(I) Net profit from continuing
34559443.9635472645.32
operations (net loss expressed with "-")
(II) Net profit from discontinued
operations (net loss expressed with "-")
V. Net of tax of other comprehensive
income
(I) Other comprehensive income
that cannot be transferred to profit or loss
1. Changes in re-measurement of
the defined benefit plan
2. Other comprehensive income
that cannot be transferred to profit or loss
195ZKTeco 2025 Annual Report
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 34559443.96 35472645.32
VII. Earnings per share (EPS):
(I) Basic EPS
(II) Diluted EPS
5. Consolidated Cash Flow Statement
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Cash received from sale of goods and
2130846310.332058756161.46
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
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
charges and commissions
Net increase in borrowings from banks
and other financial institutions
Net capital increase in repurchase
196ZKTeco 2025 Annual Report
business
Net cash received from vicariously
traded securities
Refund of taxes and surcharges 94078964.81 65423445.28
Cash received from other operating
125693352.23269869995.07
activities
Subtotal of cash inflows from operating
2350618627.372394049601.81
activities
Cash paid for purchase of goods and
978792838.371111062232.72
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
charges and commissions
Cash paid for policy dividends
Cash paid to and for employees 543615813.06 567299000.71
Payments of all types of taxes 82135246.08 104157253.19
Other cash payments relating to
363601699.05383194532.14
operating activities
Subtotal of cash outflows from operating
1968145596.562165713018.76
activities
Net cash flows from operating activities 382473030.81 228336583.05
II. Cash flows from investing activities:
Cash received from disinvestment 3141564126.42 1651783573.66
Cash received from investment
16234230.1510815578.51
income
Net cash received from disposal of
fixed assets intangible assets and other 1005556.46 638811.45
long-term assets
Net cash received from disposal of
3.91
subsidiaries and other business units
Cash received from other investing
285803.23
activities
Subtotal of cash inflows from investing
3159089716.261663237967.53
activities
Cash paid to acquire and construct
fixed assets intangible assets and other 141054763.14 197709114.77
long-term assets
Cash paid for investments 3385127695.89 1631334606.67
Net increase in pledge loans
Net cash paid to acquire subsidiaries
82277257.55
and other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing
3608459716.581829043721.44
activities
Net cash flows from investing activities -449370000.32 -165805753.91
197ZKTeco 2025 Annual Report
III. Cash flows from financing activities:
Cash received from investors 1271432.49 23810988.13
Including: Cash received by
subsidiaries from the absorption of 1271432.49 1490379.74
minority shareholders' investments
Cash received from borrowings
Cash received from other financing
170411088.16
activities
Subtotal of cash inflows from financing
171682520.6523810988.13
activities
Cash paid for debt repayments 1050617.50 1293275.15
Cash paid for distribution of dividends
123607390.19107434308.74
and profits or payment of interest
Including: dividends and profits paid
26275472.5220665840.53
to minority shareholders by subsidiaries
103293564.83
Cash paid for other financing activities 91169472.06
Subtotal of cash outflows from financing 227951572.52
199897055.95
activities
-56269051.87
Net cash flows from financing activities -176086067.82
IV. Effect of exchange rate changes on -5459173.57
10879013.09
cash and cash equivalents
V. Net increase in cash and cash -128625194.95
-102676225.59
equivalents
Plus: beginning balance of cash and 1214344327.43
1317020553.02
cash equivalents
VI. Closing balance of cash and cash 1085719132.48
1214344327.43
equivalents
6. Cash Flow Statement of Parent Company
Unit: RMB
Item 2025 2024
I. Cash flows from operating activities:
Cash received from sale of goods and
776078219.241290725515.80
rendering of services
Refund of taxes and surcharges 40413708.60 31620174.65
Cash received from other operating
89665427.69242896415.31
activities
Subtotal of cash inflows from operating
906157355.531565242105.76
activities
Cash paid for purchase of goods and
348520471.48917089300.58
rendering of services
Cash paid to and for employees 136885957.57 213562250.93
Payments of all types of taxes 12833795.10 7939135.57
Other cash payments relating to
199234235.45326219255.91
operating activities
Subtotal of cash outflows from operating
697474459.601464809942.99
activities
Net cash flows from operating activities 208682895.93 100432162.77
II. Cash flows from investing activities:
Cash received from disinvestment 2184757850.00 687213327.52
Cash received from investment 25560187.38 20224512.32
198ZKTeco 2025 Annual Report
income
Net cash received from disposal of
fixed assets intangible assets and other 3459228.06 14749016.67
long-term assets
Net cash received from disposal of
subsidiaries and other business units
Cash received from other investing
285803.23
activities
Subtotal of cash inflows from investing
2214063068.67722186856.51
activities
Cash paid to acquire and construct
fixed assets intangible assets and other 2406051.09 21022612.56
long-term assets
Cash paid for investments 2684953423.05 864683970.26
Net cash paid to acquire subsidiaries
and other business units
Cash paid for other investing activities
Subtotal of cash outflows from investing
2687359474.14885706582.82
activities
Net cash flows from investing activities -473296405.47 -163519726.31
III. Cash flows from financing activities:
Cash received from investors 22320608.39
Cash received from borrowings
Cash received from other financing
31324168.46
activities
Subtotal of cash inflows from financing
31324168.4622320608.39
activities
Cash paid for debt repayments
Cash paid for distribution of dividends
97041162.5086602278.60
and profits or payment of interest
Cash paid for other financing activities 4949271.49 66555713.14
Subtotal of cash outflows from financing
101990433.99153157991.74
activities
Net cash flows from financing activities -70666265.53 -130837383.35
IV. Effect of exchange rate changes on
-1556376.237439355.96
cash and cash equivalents
V. Net increase in cash and cash
-336836151.30-186485590.93
equivalents
Plus: beginning balance of cash and
688934703.03875420293.96
cash equivalents
VI. Closing balance of cash and cash
352098551.73688934703.03
equivalents
7. Consolidated Statement of Changes in Equity
Amount in current period
Unit: RMB
199ZKTeco 2025 Annual Report
2025
Equity attributable to owners of the parent company
Item Other equity instruments Other General Minority Total owners'
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
196312325.002107323633.2359683228.1041914807.7464002687.031000479479.183350349704.0827650759.043378000463.12
previous year
Plus: changes in
accounting policies
Corrections
of prior period errors
Others
II. Beginning balance
196312325.002107323633.2359683228.1041914807.7464002687.031000479479.183350349704.0827650759.043378000463.12
of this year
III. Amount
increase/decrease of
-
the current period 39039225.00 -38502238.21 -2114978.07 3455944.40 113656425.51 131138716.63 287581125.91
15604338.00156442409.28
(decrease expressed
with "-")
(I) Total
comprehensive -2114978.07 214710432.41 212595454.34 32312984.69 244908439.03
income
(II) Capital invested
-
and reduced by the 4475789.41 20080127.41 1271432.49 21351559.90
15604338.00
owners
1. Common stock
contributed by 1271432.49 1271432.49
owners
2. Capital invested
by holders of other
equity instruments
3. Amount of share- 19523227.41
19523227.4119523227.41
based payments
200ZKTeco 2025 Annual Report
recognized in equity
-
4. Others -15047438.00 556900.00 556900.00
15604338.00
(III) Profit -
3455944.40-101054006.90-97598062.50-123873535.02
distribution 26275472.52
1. Surplus reserves
3455944.40-3455944.400.00
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
-
owners (or -97598062.50 -97598062.50 -123873535.02
26275472.52
shareholders)
4. Others 0.00 0.00
(IV) Internal
carryover of owner's 39039225.00 -39039225.00 0.00 0.00
equity
1. Capital reserve
transfer to capital (or 39039225.00 -39039225.00
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 earnings
carried forward from
other comprehensive
income
201ZKTeco 2025 Annual Report
6. Others 0.00 0.00
(V) Special reserve
1. Withdrawal in this
period
2. Use in the current
period
(VI) Others -3938802.62 -3938802.62 149133464.62 145194662.00
IV. Ending balance
235351550.0044078890.1039799829.673481488420.71184093168.32
of current period 2068821395.02 67458631.43 1114135904.69 3665581589.03
Amount of previous period
Unit: RMB
2024
Equity attributable to owners of the parent company
Item Other equity instruments Other General Minority Total owners'
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
194679508.002075479375.13784700.0028000959.1960455422.50907583024.383265413589.2025375754.083290789343.28
previous year
Plus: changes in
accounting policies
Corrections
of prior period errors
Others
II. Beginning balance
194679508.002075479375.13784700.0028000959.1960455422.50907583024.383265413589.2025375754.083290789343.28
of this year
III. Amount
increase/decrease of
the current period 1632817.00 31844258.10 58898528.10 13913848.55 3547264.53 92896454.80 84936114.88 2275004.96 87211119.84
(decrease expressed
with "-")
(I) Total 13913848.55 183045997.93 196959846.48 19432258.32 216392104.80
202ZKTeco 2025 Annual Report
comprehensive
income
(II) Capital invested
and reduced by the 1632817.00 31844258.10 58898528.10 -25421453.00 1545215.27 -23876237.73
owners
1. Common stock
contributed by 1632817.00 20687791.39 58898528.10 -36577919.71 1490379.74 -35087539.97
owners
2. Capital invested
by holders of other
equity instruments
3. Amount of share-
based payments 11156466.71 11156466.71 54835.53 11211302.24
recognized in equity
4. Others
(III) Profit -
3547264.53-90149543.13-86602278.60-107268119.13
distribution 20665840.53
1. Surplus reserves
3547264.53-3547264.530.00
withdrawal
2. Withdrawal of
general risk
preparation
3. Distribution to
-
owners (or -86602278.60 -86602278.60 -107268119.13
20665840.53
shareholders)
4. Others
(IV) Internal
carryover of owner's
equity
1. Capital reserve
transfer to capital (or
equity capital)
2. Surplus reserve
203ZKTeco 2025 Annual Report
transfer to capital (or
equity capital)
3. Surplus reserve
offsetting losses
4. Changes in
defined benefit plans
carried forward to
retained earnings
5. Retained earnings
carried forward from
other comprehensive
income
6. Others
(V) Special reserve
1. Withdrawal in this
period
2. Use in the current
period
(VI) Others 1963371.90 1963371.90
IV. Ending balance
196312325.002107323633.2359683228.1041914807.7464002687.031000479479.183350349704.0827650759.043378000463.12
of current period
8. Statement of Changes in Equity of the Parent Company
Amount in current period
Unit: RMB
2025
Other equity instruments Other
Item Less: treasury Special Surplus Undistributed Total owners'
Share capital Preferred Perpetual Capital reserve comprehensive Others
Others stock reserve reserves profits equity
stock bonds income
I. Ending balance of 196312325.00 2116684780.13 59683228.10 63911390.54 429659664.62 2746884932.19
204ZKTeco 2025 Annual Report
previous year
Plus: changes in
accounting policies
Corrections
of prior period errors
Others
II. Beginning balance
196312325.002116684780.1359683228.1063911390.54429659664.622746884932.19
of this year
III. Amount
increase/decrease of
-
the current period 39039225.00 -35732496.64 3455944.40 -66494562.94 -44127552.18
15604338.00
(decrease expressed
with "-")
(I) Total
comprehensive 34559443.96 34559443.96
income
(II) Capital invested
-
and reduced by the 3306728.36 18911066.36
15604338.00
owners
1. Common stock
contributed by
owners
2. Capital invested
by holders of other
equity instruments
3. Amount of share-
based payments 18354166.36 18354166.36
recognized in equity
-
4. Others -15047438.00 556900.00
15604338.00
(III) Profit -
3455944.40 101054006.90 -97598062.50 distribution
1. Surplus reserves 3455944.40 -3455944.40 0.00
205ZKTeco 2025 Annual Report
withdrawal
2. Distribution to
owners (or -97598062.50 -97598062.50
shareholders)
3. Others
(IV) Internal
carryover of owner's 39039225.00 -39039225.00 0.00
equity
1. Capital reserve
transfer to capital (or 39039225.00 -39039225.00 0.00
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 earnings
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
235351550.002080952283.4944078890.1067367334.94363165101.682702757380.01
of current period
206ZKTeco 2025 Annual Report
Amount of previous period
Unit: RMB
2024
Other equity instruments Other
Item Less: treasury Special Surplus Undistributed Total owners'
Share capital Preferred Perpetual Capital reserve comprehensive Others
Others stock reserve reserves profits equity
stock bonds income
I. Ending balance of
194679508.002085198988.61784700.0060364126.01484336562.432823794485.05
previous year
Plus: changes in
accounting policies
Corrections
of prior period errors
Others
II. Beginning balance
194679508.002085198988.61784700.0060364126.01484336562.432823794485.05
of this year
III. Amount
increase/decrease of
the current period 1632817.00 31485791.52 58898528.10 3547264.53 -54676897.81 -76909552.86
(decrease expressed
with "-")
(I) Total
comprehensive 35472645.32 35472645.32
income
(II) Capital invested
and reduced by the 1632817.00 31485791.52 58898528.10 -25779919.58
owners
1. Common stock
contributed by 1632817.00 20274489.28 58898528.10 -36991221.82
owners
2. Capital invested
by holders of other
equity instruments
207ZKTeco 2025 Annual Report
3. Amount of share-
based payments 11211302.24 11211302.24
recognized in equity
4. Others
(III) Profit
3547264.53-90149543.13-86602278.60
distribution
1. Surplus reserves
3547264.53-3547264.530.00
withdrawal
2. Distribution to
owners (or -86602278.60 -86602278.60
shareholders)
3. Others
(IV) Internal
carryover of owner's
equity
1. Capital reserve
transfer to capital (or
equity capital)
2. Surplus reserve
transfer to capital (or
equity capital)
3. Surplus reserve
offsetting losses
4. Changes in
defined benefit plans
carried forward to
retained earnings
5. Retained earnings
carried forward from
other comprehensive
income
6. Others
(V) Special reserve
208ZKTeco 2025 Annual Report
1. Withdrawal in this
period
2. Use in the current
period
(VI) Others
IV. Ending balance
196312325.002116684780.1359683228.1063911390.54429659664.622746884932.19
of current period
209ZKTeco 2025 Annual Report
III. Basic Information of the Company
ZKTECO CO. LTD. (hereinafter referred to as "the Company" or "Company") formerly known as Dongguan ZKTeco Electronic
Technology Co. Ltd. was established on December 14 2007 by Che Jun and Che Quanhong with registration number
441900000160222 and registered capital of RMB 5000000.00 at the time of establishment. Approved by the Dongguan
Administration for Market Regulation the Company obtained the "Business License" with a unified social credit code of
914419006698651618 on July 14 2016. The Company was listed on the Shenzhen Stock Exchange on August 17 2022 and currently
holds a business license with a unified social credit code of 914419006698651618.As of December 31 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 235351550.00. The registered address is: No. 32 Pingshan
Industrial Road Tangxia Town Dongguan Guangdong China. The parent company is Shenzhen ZKTeco Times Investment Co. Ltd.and the actual controller is Che Quanhong.The Company belongs to the computer communication and other electronic equipment manufacturing industries mainly engaged
in the R&D design production sales and services of computer vision and biometric technology and related products.These financial statements and the notes thereto were approved for issue by the Company's Board of Directors on April 21 2026.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 formulated several specific accounting policies and accounting
estimates for transactions and events such as revenue recognition depreciation of fixed assets and amortization of intangible assets.For specific accounting policies please refer to the relevant explanations in Section V(23) Section V(26) Section V(34) etc. of this
chapter.
210ZKTeco 2025 Annual Report
1. Declaration of compliance with Accounting Standards for Business Enterprises
The financial statements prepared by the Company meet the requirements of the Accounting Standards for Enterprises and
authentically and completely reflect financial position business performance cash flow and other relative information on the Company.
2. Accounting period
The accounting year shall begin on January 1 and end on December 31 on the Gregorian calendar.
3. Operating cycle
The normal operating cycle refers to the period from the time when the Company purchases the assets for processing to the time
when the cash or cash equivalents are realized. The Company takes 12 months as its operating cycle and adopts it as its liquidity
division criteria for assets and liabilities.
4. Recording currency
Renminbi is adopted as the recording currency of the Company and the domestic subsidiaries. Overseas subsidiaries of the
Company use the currency of the main economic environment in which they operate as the recording currency and convert it into RMB
when preparing financial statements.The Company's financial statements are prepared by using RMB as currency.
5. Method for recognizing significance criteria and selection basis
□Applicable □ Not applicable
Item Significance criteria
The amount of individual construction in progress exceeds 1%
Important construction in progress
of the total assets
The amount of individual receivables exceeds 1% of the total
Receivables with individual provision for significant items
assets
Other important payables with an aging of over one year Other individual payables exceeding 1% of total assets
The amount of individual accounts payable exceeds 1% of the
Important accounts payable with an aging of over one year
total assets
Important partly-owned subsidiaries The proportion of total revenue and total profit exceeds 10%
The amount of individual prepayments exceeds 1% of the total
Important prepayments with an aging of over one year
assets
The amount of individual contract liabilities exceeds 1% of the
Important contract liabilities with an aging of over one year
total assets
The carrying amount of long-term equity investment exceeds
Important joint ventures or associates
5% of the total assets
The amount of cash flows from individual investing activities
Significant cash flows from investing activities
exceeds 1% of the total assets
6. Accounting treatment methods of business merger under the common control and merger under
different control
Business combination refers to the transactions or events which merger two or more than two separate businesses into one
reporting entity. Business merger involves entities under common control and not under common control.
1. Accounting treatment methods for business merger under common control
211ZKTeco 2025 Annual Report
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 profits and losses 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 business merger not under common control
The enterprises involved in the combination are not subject to the same party or ultimate parties before and after the merger this
business combination is not under the same control.The difference between the merger cost and the fair value of the identifiable net assets obtained from the acquiree on the date of
acquisition is recognized as goodwill by the Company. The acquirer shall treat the balance between the combination costs and the fair
values of the identifiable net assets it obtains from the acquiree: it shall firstly reexamine the measurement of the fair values of the
identifiable assets liabilities and contingent liabilities it obtains from the acquiree as well as the combination costs; and if after the
reexamination the combination costs are still less than the fair values of the identifiable net assets it obtains from the acquiree it shall
record the difference into the current profits and losses.If on the date of acquisition or at the end of the consolidation period due to various factors it is impossible to reasonably
determine the fair value of each asset paid as the consolidation consideration or the fair value of each identifiable asset and liability
obtained from the acquiree in the consolidation the Company will account for the business combination based on temporarily
determined values at the end of the consolidation period. If further information is obtained within 12 months from the date of acquisition
indicating that the originally provisionally determined value needs to be adjusted it shall be treated as if it occurred on the date of
acquisition and retroactive adjustments shall be made. At the same time relevant adjustments shall be made to the comparative
statement information provided on the basis of the provisional value. Adjustments to the cost of the business combination or the value
of identifiable assets and liabilities acquired in the combination made after 12 months from the date of acquisition shall be handled in
accordance with the principles set forth in "Accounting Standards for Enterprises No. 28 - Explanation of Changes in Accounting
Policies Accounting Estimates and Corrections of Errors".The deductible temporary differences of the acquiree obtained by the Company in a business combination that do not meet the
recognition conditions for deferred income tax assets on the date of acquisition shall not be recognized. Within 12 months after the
date of acquisition if new or further information is obtained indicating that the relevant circumstances on the date of acquisition already
existed and it is expected that the economic benefits brought by the deductible temporary differences of the acquiree on the date of
acquisition can be realized the related deferred income tax assets shall be recognized and at the same time the goodwill shall be
reduced. If the goodwill is insufficient to offset the difference shall be recognized as current profits and losses. Except for above
212ZKTeco 2025 Annual Report
situations the deferred income tax assets recognized to be related to the business combination shall be included in current profits and
losses.For a merger under different control that is achieved through multiple transactions in steps it shall be determined in accordance
with the Accounting Standards for Enterprises whether such multiple transactions constitute a "package deal". The terms conditions
and economic impact of multiple transactions meet one or more of the following situations which typically indicate that the multiple
transaction matters should be accounted for as a package deal: (1) These transactions were entered into simultaneously or taking into
account mutual influence; (2) These transactions as a whole can achieve a complete business result; (3) The occurrence of a transaction
depends on the occurrence of at least one other transaction; (4) A transaction alone is not economical but it is economic when
considered with other transactions.If the transaction belongs to a "package deal" each transaction shall be treated as a transaction to obtain control for accounting
treatment. If the transaction is not a "package deal" the equity in the acquiree held before the date of acquisition in the consolidated
financial statements shall be remeasured at its fair value as of the date of acquisition and the difference between the fair value and the
book value shall be recognized in the current investment income or retained earnings. The portion of equity in the acquiree held before
the date of acquisition involving other comprehensive income and other changes in the owner' equity shall be converted into the current
income on the date of acquisition except for other comprehensive income from the remeasurement of the net liability or net asset of
the defined benefit plan of the investee.
3. Treatment of transaction costs in business combinations
The agency fees and other related administrative expenses of the auditing legal services assessment consulting incurred for the
business combination shall be included in current profits and losses when incurred. The transaction costs of the equity securities or
debt securities as consideration for the merger shall be included in the initial recognition amount of the equity securities or debt
securities.
7. Judgment criteria for control and preparation methods for consolidated financial statements
1. Judgment criteria for control and consolidation scope
The scope of consolidation of the consolidated financial statement is determined by whether the Company has the power to
control over other entities. Control refers to the control power of the Company over the investee. Through the control the Company
can obtain variable return by participating in relevant activities of the investee and can affect the return amount by using the control
power over the investee. The consolidation scope 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 consolidated 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 profit 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 profit statement and
consolidated cash flow statement. During the reporting period the opening balances of the consolidated balance sheet are adjusted
213ZKTeco 2025 Annual Report
simultaneously and the relevant items of the comparative statements are also adjusted. This is treated as if the consolidated statement
entity had existed since the time when the ultimate controller began to exercise control.In the current period if a subsidiary is added due to a merger under different control the opening balance of the consolidated
balance sheet shall not be adjusted; adjustments shall be made to the financial statements according to the fair values of the identifiable
assets on the date of acquisition. The income expenses and profits of subsidiaries from the date of acquisition to the end of the reporting
period are incorporated into the consolidated profit 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 profit 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 interests 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.
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 profit 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 "Main Accounting Policies and
Accounting Estimates - Long-term Equity Investments" or "Main Accounting Policies and Accounting 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
214ZKTeco 2025 Annual Report
to the investment disposal before the loss of control right shall be recognized as other comprehensive income in the consolidated
financial statements and shall be transferred into the current profits and losses when the control right is lost.For these transactions not belonging to package deal the accounting treatment for each transaction shall be conducted in
accordance with the applicable principles of "Disposal of Partial Long-Term Equity Investment to Subsidiary under the Condition of
Not Losing Control Right" and "Losing Control Right over the Original Subsidiary due to Disposal of Partial Equity Investment or
Other Reasons" (see previous paragraph for details). That is before losing control the difference between each disposal price and the
share of the book value of the net asset of the subsidiary continuously calculated from the date of acquisition corresponding to the
disposed investment shall be treated as an equity transaction and recorded in capital reserve (share premium). It shall not be transferred
to the profit or loss of the period when control is lost.
8. Classification of joint venture arrangement and accountant treatment method of joint operation
A joint venture arrangement is an arrangement jointly controlled by two or more participants. The Company classifies joint
venture arrangements as joint operations or joint ventures based on the rights and obligations it enjoys and assumes in the joint venture
arrangements.A joint venture refers to a joint venture arrangement in which the Company has rights only to the net assets of the arrangement.The Company accounts for its investment in the joint venture using the equity method in accordance with the accounting policies for
"Long-term equity investment calculated by using the equity method" as described in the section "Main Accounting Policies and
Accounting 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. The Company shall recognize the income generated from the sale of shares in joint operation;
4. The Company shall recognize the income generated from the sale of joint operation output according to the Company's share;
5. The Company shall recognize the expenses incurred alone and the expenses incurred from 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 known amount of cash and small risk of value change.
215ZKTeco 2025 Annual Report
10. Foreign currency transactions and foreign currency statement translation
1. Foreign currency transaction
For foreign currency transactions that occur the spot exchange rate on the transaction date (usually referring to the middle rate
of the foreign exchange rate announced by the People's Bank of China on that day the same below) is used to convert them into the
recording currency for accounting purposes. However for foreign currency exchange transactions or transactions involving foreign
currency exchange that occur within the Company they should be converted into the amount of the recording currency based on the
actual exchange rate adopted.
2. Translation methods of foreign currency monetary items and non-monetary items
The foreign currency monetary items on the balance sheet date are translated at the spot exchange rate on the balance sheet date;
the resulting exchange differences are included in current profits and losses except for: (1) The exchange differences arising from
special foreign currency borrowings related to the acquisition and construction of assets eligible for capitalization which are treated in
accordance with the principle of capitalization of borrowing costs; (2) The exchange differences of hedging instruments used for
effective hedging of net investments in foreign operations (such differences are included in other comprehensive income and are
recognized in current profits and losses 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 profit 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 interests 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
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(1) Recognition and initial measurement of financial assets and financial liabilities
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 "Main Accounting
Policies and Accounting 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.
1) Financial assets measured at amortized cost.
Financial assets measured at 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 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 measured at the amortized cost using the effective interest rate method after initial recognition. Any
gains or losses arising therefrom are included in current profits and losses upon derecognition amortization in accordance with the
effective interest rate method or impairment recognition.The amortized cost of a financial asset shall be determined by adjusting the initial recognition amount of the financial asset as
follows: * deducting the principal repaid; * plus or minus the accumulated amortization amount formed by amortizing the difference
between the initial recognition amount and the maturity amount using the effective interest rate method; * deducting the accumulated
loss provisions.The effective interest rate method refers to the method of calculating the amortized cost of financial assets or financial liabilities
and allocating interest income or interest expenses to each accounting period. Actual interest rate refers to the interest rate used to
discount the estimated future cash flows of a financial asset or financial liability over its expected lifespan into the book balance of the
financial asset or the amortized cost of the financial liability. When determining the actual interest rate the Company estimates the
expected cash flow based on all contract terms of financial assets or liabilities (such as early repayment extension call options or
other similar options) but does not consider expected credit losses.The interest income is calculated and determined by multiplying the book balance of the financial asset by the effective interest
rate by the Company except for the following circumstances: * For the purchased or originated financial asset with credit impairment
the interest income is calculated and determined according to the amortized cost of the financial asset and the effective interest rate
after credit adjustment from the initial recognition. * For the financial asset purchased or originated without credit impairment but
with credit impairment in the subsequent period the interest income shall be calculated and determined according to the amortized cost
and the effective interest rate of the financial asset. If the credit risk of the financial instrument improves in subsequent periods and no
longer has credit impairment and this improvement can be objectively linked to an event that occurs after the application of the above
provisions interest income shall be determined by multiplying the actual interest rate by the book balance of the financial asset.
2) 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
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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.
3) Financial assets measured at fair value and whose changes are included in the current profits and losses
Financial assets other than above 1) and 2) 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 assets 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.
1) Financial liabilities measured at fair value and whose changes are included in the current profits and losses
Financial liabilities measured at fair value and whose changes are included in the current profits and losses include trading
financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities measured at fair value and whose
changes are included in the 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.
2) The transfer of financial assets does not meet the conditions for derecognition or continues to involve financial liabilities
formed by the transferred financial assets.
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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 "Main Accounting Policies and Accounting Estimates - Financial Instruments".
3) 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 1) or 2) 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 "Main Accounting Policies and Accounting Estimates - Financial Instruments"; * the
balance after deducting the accumulated amortization amount determined in accordance with the revenue recognition method
described in the "Main Accounting Policies and Accounting Estimates - Revenue" from the initial recognition amount.
4) Financial liabilities measured at amortized costs
Except for the situations described in 1) 2) and 3) above the Company classifies all other financial liabilities as financial
liabilities measured at amortized costs.This type of financial liabilities is measured at the amortized cost using the effective interest rate method after initial recognition.Any gains or losses arising therefrom are included in current profits and losses upon derecognition or amortization in accordance with
the effective interest rate method.
(4) Equity instruments
Equity instrument refers to a contract that can prove that the Company has the remaining equity in the assets after deducting all
liabilities. The Company's issuance (including refinancing) repurchase sale or cancellation of equity instruments shall be treated as
changes in equity. Transaction costs related to equity transactions are deducted from equity. Any distribution of interests (exclusive of
dividends) paid to equity holders by the Company is deducted from shareholders' equity. The Company does not recognize changes in
the fair value of equity instruments.
2. Recognition basis and measurement method of financial asset transfer
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; (2) The sum of the
consideration received from the derecognized part and the amount corresponding to the derecognized part of the cumulative fair value
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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
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 "Main Accounting
Policies and Accounting Estimates - Fair Value".
5. Impairment of financial instruments
The Company performs impairment and recognizes loss provisions on financial assets measured at 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 "Main Accounting Policies and Accounting 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 arising from transactions governed by "Accounting Standards for Enterprises No. 14 - Revenue"
and lease receivables governed by "Accounting Standards for Enterprises No. 21 - Leases" 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
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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
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
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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.
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 "Main Accounting Policies and
Accounting 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 extremely
Bank acceptance bill portfolio 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 portfolio According to the credit rating of the acceptor.
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 "Main Accounting Policies and
Accounting 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 consolidated
Related party portfolio
financial statements
Aging portfolio Including accounts receivable other than the above portfolio
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.
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4. Criteria for determining the bad debt reserve made individually
The Company conducts separate impairment tests on accounts receivable with significantly different credit risk characteristics
such as a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of credit impairment.
15. Other receivables
1. Determination method and accounting treatment method of expected credit losses of other receivables
The Company determines the expected credit losses of other accounts receivable and makes accounting treatment in accordance
with the general method as described in "Impairment of Financial Instruments" of the "Main Accounting Policies and Accounting
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.
3. Calculation method of aging of the credit risk characteristic combination confirmed by aging
The Company calculates the aging of other accounts receivable based on the principle of first in first out.
4. Criteria for determining the bad debt reserve made individually
The Company conducts separate impairment tests on other accounts receivable with significantly different credit risk
characteristics such as a marked deterioration in the debtor's credit status a low possibility of future collection and the occurrence of
credit impairment.
16. Contract assets
1. Methods and standards for the recognition of contract assets
Contract assets refer to the right of the Company to receive consideration for the transfer of goods to customers and the right
depends on other factors other than the passage of time. The Company's unconditional (i.e. only depending on the time lapses) right
to collect consideration from the customers shall be listed as receivables.The Company offsets contract assets and contract liabilities under the same contract and presents them on a net basis.
2. Impairment of contract assets
(1) Determination methods and accounting treatment methods of the expected credit losses of contract assets
The Company determines the expected credit losses of contract assets and makes accounting treatment in accordance with the
simplified measurement method as described in "Impairment of Financial Instruments" of the "Main Accounting Policies and
Accounting 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
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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. Inventories
1. Inventory category valuation method for issuing inventory inventory taking system amortization method for low value
consumables and packaging materials
(1) Inventories include finished products or commodities held by the Company for sale in daily activities products in process of
production materials consumed in the process of production or provision of labor services in-transit materials consigned processing
materials and contract performance costs.
(2) Enterprises measure inventories at actual cost. 1) 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. 2) In debt restructuring
when the debtor uses inventory to settle debts the entry value of the inventory should be determined based on the fair value of the
creditor's claim waived and the directly attributable taxes and fees incurred to bring the inventory to its current location and condition.
3) 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. Provision for inventory write-down
Recognition criteria and accrual method of inventory falling price 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
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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 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.
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2. Initial measurement and subsequent measurement of held-for-sale non-current assets or disposal groups
For non-current assets or disposal groups that are classified as held for sale on the acquisition date the initial measurement
amount and the net amount of fair value (assuming that they are not classified as held for sale) minus selling expenses shall be compared
and the lower amount shall be measured at the initial measurement. Except for non-current assets or disposal groups obtained in a
business combination the difference arising from the initial measurement amount being the net amount of fair value minus selling
expenses of non-current assets or disposal groups is included in current profits and losses.Before the Company initially classifies a non-current asset or a disposal group as held for sale it measures the book values of the
individual assets and liabilities within the non-current asset or disposal group in accordance with the relevant accounting standards.When the Company initially measures or remeasures the non-current assets or disposal groups held for sale on the balance sheet date
if the book value is higher than the net value of fair value minus selling expenses the book value shall be written down to the net value
of fair value minus selling expenses and the amount written down shall be recognized as losses from impairment of assets and included
in current profits and losses. At the same time provision for impairment of held-for-sale assets shall be made. The non-current assets
held for sale or the non-current assets of the disposal group are not depreciated or amortized and the interest on debt and other fees of
the disposal group held for sale shall be recognized further.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 profit 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 profit 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 "Main Accounting Policies and Accounting Estimates -
Financial Instruments". On the balance sheet date the Company measures the credit loss of debt investments by the present value of
the difference between the contractual cash flows receivable from each individual debt investment and the expected cash flows to be
received.
20. Long-term receivables
The Company determines the expected credit losses of lease receivables and long-term receivables with significant financing
components formed by transactions regulated by the "Accounting Standards for Enterprises No. 14 - Revenue" in accordance with the
simplified measurement method described in "Impairment of Financial Instruments" of the "Main Accounting Policies and Accounting
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 "Main Accounting Policies and
Accounting Estimates - Financial Instruments". On the balance sheet date the Company measures the credit loss of long-term
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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 corporate bonds issued by the investee.
2. Determination of the initial investment cost of long-term equity investment
(1) In case of a business combination under the same control if the combining party pays cash transfers non-cash assets assumes
debts or issues equity securities as the combination consideration the initial investment cost shall be the share of the book value of the
owner's equity of the combined party in the ultimate controller's consolidated financial statements on the combination date. The
difference between the initial investment cost of long-term equity investment and the cash paid the book value of non-cash assets
transferred the book value of debts assumed or the total par value of shares issued shall be adjusted to the capital reserve. If the capital
reserve is insufficient to offset the retained earnings shall be adjusted. If the equity of the combined party under common control is
obtained step by step through multiple transactions and the business merger under common control is finally formed whether it belongs
to a "package deal" shall be dealt with respectively: if it belongs to a "package deal" each transaction shall be accounted for as a
transaction to obtain control. If it does not belong to the "package deal" on the combination date the initial investment cost of the
long-term equity investment shall be the share of the book value of the shareholders' equity of the combined party in the consolidated
financial statements of the ultimate controller. The capital reserve shall be adjusted according to the difference between the initial
investment cost of the long-term equity investment and the sum of the book value of the long-term equity investment before the merger
plus the book value of the new payment consideration for the shares further obtained on the merger date; if the capital reserve is
insufficient to offset the retained earnings shall be adjusted. Other comprehensive income recognized for equity investment held before
the combination date due to equity method accounting or other equity instrument investments is not subject to accounting treatment
for the time being.
(2) In case of a business combination under different control the Company recognizes the combination cost recognized on the
date of acquisition as the initial investment cost of long-term equity investment. The combination cost refers to the fair value of the
assets paid liabilities incurred or assumed and equity securities issued by the acquirer on the date of acquisition for the purpose of
acquiring the control over the acquiree. The agency fees and other related administrative expenses of the auditing legal 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
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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
(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
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and the book value of the long-term equity investment shall be adjusted. In recognition of the share of the net profit or loss of the
investee entity the net profit of the investee shall be adjusted and confirmed on the basis of the fair value of the identifiable assets of
the investee entity when the investment is made. The Company shall calculate the attributable part according to the profits or cash
dividends declared to be distributed by the investee and reduce the book value of long-term equity investment accordingly; the
Company shall adjust the book value of long-term equity investment and include it in the owner's equity for other changes in the
owner's equity of the investee other than net profits and losses other comprehensive income and profit distribution. The unrealized
profits or losses arising from the intra-company transactions amongst the Company and its associates and joint ventures are eliminated
in proportion to the Company's equity interest in the associates and joint ventures and then based on which the investment income is
recognized. The internal trading losses incurred but not realized between the Company and the investees belonging to asset impairment
losses shall be recognized in full amount.When the Company confirms that it shall share the losses incurred by the investee it shall handle them in the following order:
firstly offset the book value of long-term equity investments. Secondly if the book value of long-term equity investments is not
sufficient to offset investment losses shall be recognized to the extent of other long-term equity book values that essentially constitute
net investments in the investee and the book value of long-term accounts receivable shall be offset. Finally after the above processing
if the enterprise still bears additional obligations as stipulated in the investment contract or agreement the expected liabilities shall be
recognized based on the expected obligations and included in the current investment loss. If the investee entity realizes the net profit
in the later period the Company will resume the recognition of the revenue after the unrecognized loss share has been made up by the
revenue share.During the holding period of the investment if the investee prepares consolidated financial statements the calculation shall be
based on the amount attributable to the investee in the net profit other comprehensive income and other changes in owner's equity in
the consolidated financial statements.If the assets invested by the Company to the joint venture or associate constitute the business and the investor obtains the long-
term equity investment but does not obtain the control right the fair value of the investment business shall be taken as the initial
investment cost of the new long-term equity investment and the difference between the initial investment cost and the book value of
the investment business shall be fully included in current profits and losses. If the assets sold by the Company to joint ventures or
associates constitute a business the difference between the consideration obtained and the book value of the business shall be included
in current profits and losses. If the assets acquired by the Company from associates or joint ventures constitute a business the
accounting treatment shall be carried out in accordance with the "Accounting Standards for Business Enterprises No. 20 – Business
Combinations" and the gains or losses related to the transaction shall be recognized in full.
4. Disposal of long-term equity investments
When disposing of long-term equity investment the balance between the book value and actual price for acquisition shall be
included into the current profits and losses.
(1) Disposal of long-term equity investment accounted for using the equity method
For long-term equity investments accounted for using the equity method if the remaining equity is still accounted for using the
equity method after disposal the accounting treatment for the portion originally recognized in other comprehensive income shall be
carried out on the same basis as the direct disposal of relevant assets or liabilities by the investee in a corresponding proportion when
the investment is disposed of. The owner's equity which is recognized by the fluctuation of the investee's other owner's equity except
for the net profit or loss other comprehensive income and profit distribution shall be carried over into the current profits and losses as
per the proportion.If the Company loses joint control or significant influence on the investee due to the disposal of part of the equity investment
the remaining equity after the disposal shall be accounted for in accordance with the financial instrument recognition and measurement
standards. The difference between the fair value and the book value on the day when the joint control or significant influence is lost is
included in current profits and losses. The other comprehensive income recognized by the original equity investment due to the equity
method is used for accounting treatment on the same basis as the direct disposal of related assets or liabilities by the investee when the
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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 profits and losses 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 profits and losses 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.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 profits and losses.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
1. 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).
2. 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
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Company and their cost can be reliably measured. Otherwise subsequent expenditures should be recognized in current profits and
losses in which they are incurred.
3. 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.
4. 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 "Main Accounting Policies and Accounting Estimates".
5. If the investment real estate is disposed or permanently withdrawn from use and is expected to be unable to obtain economic
benefits from its disposal the confirmation of the investment real estate shall be terminated. The amount of proceeds on sale transfer
retirement or damage of any investment real estate net of the book value of the investment real estate and the relevant taxes shall be
accounted as current profits and losses.
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 0%-5% 2.00%-5.00%
Machinery equipment Straight-line method 5-10 years 0%-5% 10.00%-20.00%
Transportation vehicles Straight-line method 4-10 years 0%-5% 10.00%-25.00%
Electronic equipment
Straight-line method 3-5 years 0%-5% 20.00%-33.33%
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.
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24. Construction in progress
1. 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.
2. 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.
3. The impairment test method and impairment provision method for construction in progress are detailed in "Long-term assets
impairment" of the "Main Accounting Policies and Accounting 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. Capitalization period 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:
(1) The normal life cycle of the products produced by using the asset and information on the useful lives of similar assets; (2) The
current situation and future development trends in technology and processes; (3) The market demand for the products or services
provided by the asset; (4) The expected actions of current or potential competitors; (5) The expected maintenance expenditures to
maintain the asset's ability to generate economic benefits and the Company's ability to pay such expenditures; (6) Relevant legal
provisions or similar restrictions on the control period of the asset such as the term of a license or lease; (7) 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:
Basis for estimated useful
Item Period (year)
life
Software Benefit period 2-10
From obtaining the land use right to the termination
Land use rights Benefit period
date of the land use right
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Patents and patented technology Benefit period 8
Customer relations Benefit period 10
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:
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.
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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 methods for
determining the fair value are described in the "Main Accounting Policies and Accounting Estimates - Fair Value". 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 book value of such
goodwill apportioned to the asset group or the combination of asset groups then offset the book value of other assets proportionally
based on the proportion of the book value of other assets other than goodwill in the asset group or the combination of asset groups.Goodwill and intangible assets with indefinite useful lives shall be subject to impairment tests at least annually at the end of each
fiscal year.Once the above losses from impairment of assets are recognized they will not be reversed for the value recovered in the
subsequent periods.
28. Long-term deferred expenses
Long-term deferred expenses are recorded based on the actual amount incurred and amortized evenly over the benefit period or
specified period. If a long-term deferred expense item cannot benefit future accounting periods the amortized value of the item that
has not yet been amortized will be fully transferred to the current profits and losses.
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.
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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. Payroll that is 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 welfare
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 dismission welfare
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
dismission welfare whichever is earlier. But for the condition in which the dismission welfare cannot be fully paid within twelve
months after the date indicated on the annual report it should be paid as other long-term payroll.
31. Estimated liabilities
When the obligation related to 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.
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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
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
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each balance sheet date and settlement date before the settlement of relevant liabilities the fair value of liabilities shall be re-measured
and the changes shall be included in the current profits and losses.
(3) Modification and termination of share-based payment plans
If the modification increases the fair value of the granted equity instrument the Company recognizes the increase in the fair value
of the equity instrument as an increase in the amount of services obtained; if the modification increases the number of granted equity
instruments the Company recognizes the increase in the fair value of the additional equity instruments as an increase in the amount of
services obtained; if the company modifies the vesting conditions in a way that is favorable to the employees the Company considers
the modified vesting conditions when dealing with the vesting conditions.If the modification reduces the fair value of the granted equity instrument the Company continues to recognize the amount of
services obtained based on the fair value of the equity instrument on the grant date without considering the reduction in the fair value
of the equity instrument; if the modification reduces the number of granted equity instruments the Company treats the reduction as the
cancellation of the granted equity instruments; if the vesting conditions are modified in a way that is unfavorable to the employees the
modified vesting conditions are not considered when the Company deals with the vesting conditions.If the equity-settled share-based payment is cancelled it is treated as accelerated vesting on the cancellation date and the
unrecognized amount is immediately recognized (the amount that should be recognized during the remaining waiting period is
immediately included in current profits and losses and capital reserve is recognized at the same time). If the employee or other parties
are able to meet the non-vesting conditions but fail to do so during the waiting period it is treated as the cancellation of the equity-
settled share-based payment. However if new equity instruments are granted and it is determined on the grant date of the new equity
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. 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.
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If any of the following conditions is met the Company is deemed to have performed its performance obligations over a period
of time; otherwise it is deemed to perform its performance obligations at a point in time: (1) Customers obtain and consume the
economic benefits brought by the Company's performance at the same time as the Company's performance; (2) Customers can control
the goods under construction in the process of performance of the Company; (3) The goods produced in the process of performance by
the Company have irreplaceable uses and the Company has the right to collect payments for the accumulated performance so far during
the whole contract period.For the performance obligations within a certain period of time the Company recognizes the revenue in accordance with the
performance progress during the period except that the performance progress cannot be determined reasonably. When the performance
of the performance cannot be reasonably determined if the cost incurred by the Company is expected to be compensated the revenue
will be recognized according to the amount of cost incurred until the performance of the performance can be reasonably determined.For the performance obligations performed at a certain time point the Company recognizes revenue at the time when the customer
obtains control over the relevant goods. In the judgment of whether the customer has obtained the control over the goods the Company
will consider the following indications: (1) The Company enjoys the current collection right in respect of the goods that is the customer
has the current payment obligation in respect of the goods; (2) The Company has transferred the legal title of the goods to the customer
that is the customer already owns the legal title of the goods; (3) The Company has transferred the physical goods to the customer
that is the customer has possessed the physical goods; (4) The Company has transferred the main risks and rewards of the ownership
of the goods to the customer that is the customer has obtained the main risks and rewards of the ownership of the goods; (5) The
customer has accepted the product; (6) Other signs that customers have gained control of the goods.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 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 charges 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.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
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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:
(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 subsidies related to assets or a government subsidies 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 subsidies 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:
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(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
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 revenue 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
243ZKTeco 2025 Annual Report
business essence. Government subsidies unrelated to the Company's daily activities are included in non-operating revenue and
expenditure.
37. Deferred income tax assets/deferred tax liabilities
1. Recognition and measurement of deferred income tax assets and deferred tax liabilities
The Company adopts the balance sheet liabilities method to recognize deferred income tax based on the temporary difference
between the book value of assets/liabilities and tax basis at the balance sheet date. The current income tax and deferred income tax of
the Company are included in current profits and losses as income tax expense or income except for the income tax arising from the
following circumstances: (1) Business combination; (2) Transactions or events directly recognized in owner's equity; (3) Dividend
expenditures on financial instruments classified as equity instruments in accordance with the "Accounting Standards for Business
Enterprises No. 37 - Presentation of Financial Instruments" etc. can be deducted before corporate income tax in accordance with tax
policies provided that the distributed profits are derived from transactions or events previously recognized in the owner's equity.For any deductible temporary difference any deductible loss or tax credit that can be carried forward to future years the
corresponding deferred income tax assets shall be recognized to the extent that the amount of future taxable income to be offset by the
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 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 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 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.
244ZKTeco 2025 Annual Report
The recognition of deferred income tax assets is limited to the extent that it is probable that sufficient taxable income will be
available in future periods to utilize the deductible temporary differences. On the balance sheet date if there is conclusive evidence
that it is probable that sufficient taxable income will be available in future periods to utilize the deductible temporary differences the
Company recognizes deferred income tax assets that were not recognized in previous accounting periods. The book value of deferred
income tax assets is reviewed. If it is probable that sufficient taxable income will not be available in future periods to utilize the benefit
of deferred income tax assets the book value of deferred income tax assets is reduced. When it is probable that sufficient taxable
income will be available the reduction is reversed.
2. The current income tax assets and liabilities of the Company shall be presented as the net amount after being offset when the
Company has the legal right to carry out net settlement and intends to carry out net settlement or when the assets are acquired at the
same time when liabilities are paid off.When the Company has the legal right to settle current income tax assets and current income tax liabilities on a net basis and the
deferred income tax assets and deferred 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 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 commencement date of the lease term the Company recognizes the right-of-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 commencement date of the lease term the Company recognizes the lease liability for leases other than short-term leases
and low value asset leases. Lease liabilities are initially measured according to the present value of the unpaid lease payments. Lease
payments include: Fixed payment and substantial fixed payment. If there is lease incentive the relevant amount of lease incentive shall
be deducted; the variable lease payment amount which depends on the index or ratio. It is determined at the initial measurement based
on the index or ratio on the commencement date of the lease term. The exercise price of the purchase option provided that the Company
reasonably determines that the option will be exercised; the amount to be paid for the exercise of the option to terminate the lease
provided that the lease term reflects that the Company will exercise the option to terminate the lease; the amount expected to be paid
according to the residual value of the guarantee provided by the Company. The Company adopts the embedded interest rate of the lease
as the discount rate. if the embedded interest rate of the lease cannot be determined the incremental borrowing rate of the Company
shall be used as the discount rate.The Company calculates the interest expense of the lease liability in each period of the lease term according to the fixed periodic
interest rate and records it into the current profits and losses or the cost of relevant assets. The amount of variable lease payments not
245ZKTeco 2025 Annual Report
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 profits and losses 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 commencement 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 right-of-use assets generated from the original
lease. If the original lease is a short-term lease and the Company elects not to recognize a right-of-use asset and lease liability for the
original lease the Company classifies the sublease as an operating lease.
(1) Accounting treatment of operating lease
The lease receipts from operating leases are recognized as rental income on a straight-line method 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 commencement date of the lease term discounted at the interest
rate embedded in the lease.
246ZKTeco 2025 Annual Report
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 "Main
Accounting Policies and Accounting Estimates - Financial Instruments". The amount of variable lease payments not included in the
measurement of net lease investment shall be included in the current profits and losses 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. Other important accounting policies and estimates
In the application of accounting policies due to the inherent uncertainties in operating activities the Company needs to make
judgments estimates and assumptions regarding the book values of certain items in the financial statements that cannot be accurately
measured. These judgments estimates and assumptions are based on the past experience of the Company's management and are made
after considering other relevant factors. These judgments estimates and assumptions can affect the reported amounts of revenue
expenses assets and liabilities as well as the disclosure of contingent liabilities as of the balance sheet date. However the actual results
resulting from the uncertainties of these estimates may differ from the current estimates of the Company's management which may
lead to significant adjustments to the carrying amounts of affected assets or liabilities in the future. The Company regularly reviews
the aforementioned judgments estimates and assumptions on a going concern basis. Changes in accounting estimates that only affect
the current period are recognized in the period of change; changes that affect both the current period and future periods are recognized
in both the period of change and future periods. As of the balance sheet date the significant areas where the Company needs to make
judgments estimates and assumptions regarding the amounts of financial statement items are as follows:
1. Classification of leases
When the Company acts as a lessor in accordance with the "Accounting Standards for Enterprises No. 21 - Leases" leases are
classified as operating leases and finance leases. In making the classification management needs to analyze and judge whether all the
risks and rewards related to the ownership of the leased assets have been substantially transferred to the lessee.
2. Impairment of financial instruments
The Company assesses the impairment of accounts receivable measured at amortized cost debt investments contract assets and
receivable financing measured at fair value and included in other comprehensive income as well as other debt investments using the
expected credit loss model. The application of the expected credit loss model involves significant judgments and estimates by
management. Key parameters for measuring expected credit losses include probability of default loss given default and exposure at
default. The Company establishes models for probability of default loss given default and exposure at default based on quantitative
analysis of historical data and forward-looking information. Differences between the actual impairment results of financial instruments
and the original estimates will affect the book value of the financial instruments and the recognition or reversal of credit impairment
losses in the period when the estimates are changed.
3. Provision for inventory write-down
The Company measures inventories at the lower of cost and net realizable value in accordance with its inventory accounting
policy. Provision for inventory write-down is made for inventories with costs higher than net realizable value and for obsolete and
slow-moving inventories. The impairment of inventories to net realizable value is based on an assessment of the marketability of the
inventories and their net realizable value. The identification of inventory impairment requires management to make judgments and
247ZKTeco 2025 Annual Report
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. Impairment of non-financial non-current assets
On the balance sheet date the Company assesses whether there are indications of possible impairment for non-current assets
other than financial assets. For intangible assets with indefinite useful lives in addition to the annual impairment test an impairment
test is also performed when there are indications of impairment. Other non-current assets excluding financial assets are subject to an
impairment test when there are indications that their carrying amount is not recoverable.When the book value of an asset or a cash-generating unit exceeds its recoverable amount which is the higher of its fair value
less costs to sell and the present value of its estimated future cash flows an impairment is indicated.Fair value less costs to sell is determined by reference to the selling price in a binding sale agreement for a similar asset or
observable market prices in an arm's length transaction less the incremental costs directly attributable to the disposal of the asset. In
estimating the present value of future cash flows significant judgments are required regarding the output selling prices related
operating costs of the asset (or cash-generating unit) and the discount rate used to calculate the present value. The Company uses all
available relevant information when estimating the recoverable amount including forecasts of output selling prices and related
operating costs based on reasonable and supportable assumptions.The Company assesses whether goodwill is impaired at least annually which requires estimating the value in use of the cash-
generating units to which goodwill has been allocated. When estimating value in use the Company needs to estimate the future cash
flows from the cash-generating unit and select an appropriate discount rate to calculate the present value of those future cash flows.
5. 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.
6. 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.
7. 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.
8. Fair value measurement
Some of the Company's assets and liabilities are measured at fair value in the financial statements. When estimating the fair value
of an asset or liability the Company uses observable market data available; if the first level input values cannot be obtained it engages
a qualified third-party valuation agency to conduct the valuation during which the Company's management closely cooperates with it
to determine the appropriate valuation techniques and input values for the relevant models. Information on the valuation techniques
and input values used in determining the fair value of various assets and liabilities is detailed in "Disclosure of Fair Value" of this note.
248ZKTeco 2025 Annual Report
41. Changes of material accounting policies and accounting estimates
(1) Significant accounting policy changes
□ Applicable □Not applicable
(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
42. Others
None.VI. Taxation
1. Main tax types and tax rates
Tax Type Tax Basis Tax rates
Taxable value added amount is the
difference of VAT output calculated 13.00% 9.00% 6.00% 5.00% 3.00%
based on the revenue from sales of goods and applicable value-added tax rate for
VAT
and rendering of taxable services in overseas subsidiaries in their registered
accordance with tax laws less deductible location
VAT input of current period
Urban maintenance and construction tax Actual amount of turnover tax paid 7.00% 5.00%
Corporate income tax Taxable income Note
Education surcharge Actual amount of turnover tax paid 3%
Local education surcharges Actual amount of turnover tax paid 2%
Based on 70% of the original value of the
Property tax property (or rental income) as the tax 1.20% 12.00%
benchmark
Disclosure of information on taxpayers with different corporate income tax rates
Name of Taxpayer Income tax rate
ZKTECO CO. LTD. 15%
Xiamen Zkteco Biometric Identification Technology Co. Ltd. 20%
Shenzhen ZKTeco Biometric Identification Technology Co.
20%
Ltd.ZK INVESTMENTS INC. 21%
ZK TECHNOLOGY LLC Please refer to the note in Note VI 3 (1).ZKTeco Sales Co. Ltd. 25%
Hangzhou ZKTeco Hanlian E-commerce Co. Ltd. 20%
ZKCserv Technology Limited Co. Ltd. 20%
Dalian ZKTeco Co. Ltd. 20%
249ZKTeco 2025 Annual Report
Xiamen ZKTeco Co. Ltd. 15%
ZKTECO VIETNAM TECHNOLOGY COMPANY LIMITED 20%
ZKTeco (Guangdong) Co. Ltd. 15%
Xi'an ZKTeco Co. Ltd. 20%
ZKTECO CO. LIMITED 16.50% 8.25%
ZKTECO TURKEY ELEKTRONIK SANAYI VE TICARET
25%
LIMITED SIRKETI.ZKTECO LATAM S.A. DE C.V. 30%
ZK SOFTWARE DE MEXICO S.A. DE C.V. 30%
ZKTECO COLOMBIA SAS 35%
ZKTECO (M) SDN. BHD. 24%
ZKTECO BIOMETRICS INDIA PRIVATE LIMITED 25.6256%
ZKTECO EUROPE SL 25%
ZKTECO IRELAND LIMITED 12.5%
ZKTeco Deutschland GmbH 31.225%
ZKTECO ITALIA S.R.L. 27.9%
ZKTECO UK LTD 19.00% 25.00%
ZKTECO PERU SOCIEDAD ANONIMA CERRADA 29.5%
ZKTECO THAI CO. LTD. 20.00% 15.00% 0.00%
ZKTeco Chile SpA 27%
SOLUCIONES INTEGRALES Y SISTEMAS SpA 27%
ZKTECO SECURITY L.L.C 0.00% 9.00%
ZKTECO ARGENTINA S.A. 25.00% 30.00% 35.00%
Limited Liability Company "ZKTeco biometrics and security" 20%
ZKTECO Investment Inc. 21%
ZKTECO USA LLC Please refer to the note in Note VI 3 (1).ARMATURA LLC Please refer to the note in Note VI 3 (1).Armatura Co. Ltd. 25.00% 22.00% 20.00% 10.00%
RALVIE AI INC. 26.5%
ZKTeco Japan Co. Ltd. 23.2%
PT. ZKTECO BIOMETRICS INDONESIA 22.00% 11.00%
ZK INVESTIMENTOS DO BRASIL LTDA. 25%
ZKTECO DO BRASIL S.A. 25%
NGTECO CO. LIMITED 16.50% 8.25%
ZKTECO BIOMETRIC LIMITED 30%
ZKTECO PANAMA S.A. 5%
ZK INTELLIGENT SOLUTIONS (PTY) LTD 27%
ZKTECO BIOMETRICS KENYA LIMITED 30%
Hubei ZKTeco Co. Ltd. 20%
Wuhan ZKTeco Perception Technology Co. Ltd. 20%
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%
Armatura Tech Co. Ltd. 20.00% 15.00% 0.00%
ZKDIGIMAX (PTY) LTD 27%
PT. ZKDIGIMAX EXCEL NOBLE 22.00% 11.00%
ZKTeco Yunlian (Xiamen) Technology Co. Ltd. 20%
ZKDIGIMAX COLOMBIA SAS 35%
ZK TECHNOLOGY MOROCCO 30%
ZKTECO EGYPT LLC 22.5%
ZKTECO BUSINESS SOLUTIONS COMPANY 20%
NUR ALTTKNWLWJIA COMPANY 20%
ZKTeco Polska Sp. z o.o. 19.00% 9.00%
ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co.
20%
Ltd.Shenzhen Longzhiyuan Technology Co. Ltd. 15%
250ZKTeco 2025 Annual Report
Shenzhen Wojiaobao Intelligent Technology Co. Ltd. 20%
Wohome Technology Co. Ltd. 8.25%
Technos Technology Co. Ltd. 16.50% 8.25%
Haosong Technology Co. Ltd. 16.50% 8.25%
Haofan Technology Co. Ltd. 16.50% 8.25%
RICHFULL COMPANY LIMITED 0.00%
OPTICSLIFE INC 21%
Wotong Technology Co. Ltd. 8.25%
Woze Technology Co. Ltd. 8.25%
Tonghao Technology Co. Ltd. 8.25%
Zechen Technology Co. Ltd. 8.25%
Shanxing Technology Co. Ltd. 8.25%
Teyu Technology Co. Ltd. 8.25%
LONGZY PET.LTD. 4.25% 8.50% 17.00%
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 2025 Xiamen ZKTeco Co. Ltd. successfully passed the re-evaluation for a high-tech enterprise certificate (No.
GR202535100573) which is valid for three years.
3) In December 2025 Zkteco (Guangdong) Co. Ltd. successfully passed the re-evaluation for a high-tech enterprise certificate
(No. GR202544002332) which is valid for three years.
4) In December 2025 Shenzhen Longzhiyuan Technology Co. Ltd. successfully passed the re-evaluation for a high-tech
enterprise certificate (No. GR202544200341) which is valid for three years.
(2) According to the relevant provisions of the "Notice of the Ministry of Finance and the State Administration of Taxation on
Value-added Tax Policies for Software Products" (CS [2011] No. 100) and the "Notice on Questions of Policies on Encouraging the
Development of the Software and Integrated Circuit Industries" (CS [2000] No. 25) from January 1 2011 for general taxpayers of
value-added tax who sell software products developed and produced by themselves after value-added tax is levied at the applicable
tax rate a policy of taxation and drawback has been implemented for the portion of its actual value-added tax burden exceeding 3.00%.
(3) According to the "Announcement on Further Supporting the Development of Micro and Small Enterprises and Individual
Industrial and Commercial Households" (Announcement No. 12 of the State Administration of Taxation of the Ministry of Finance
2023) from January 1 2023 to December 31 2027 small-scale value-added tax taxpayers small and micro profit enterprises and
individual industrial and commercial households can reduce resource tax by half (excluding water resource tax) urban maintenance
and construction tax property tax urban land use tax stamp duty (excluding securities transaction stamp duty) farmland occupation
tax education surcharge and local education surcharge. The policy of reducing the taxable income of small and micro profit enterprises
by 25% 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 ZKTeco Co. Ltd. Xi'an
ZKTeco Co. Ltd. Hubei ZKTeco Co. Ltd. Wuhan ZKTeco Perception Technology Co. Ltd. ZKTeco Yunlian (Xiamen) Technology
Co. Ltd. ZKTeco Cloud Brain-Computer (Hangzhou) Technology Co. Ltd. and Shenzhen Wojiaobao Intelligent Technology Co.Ltd.
251ZKTeco 2025 Annual Report
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. is 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) The corporate income tax rate of ZKTECO BIOMETRICS INDIA PRIVATE LIMITED for the year 2025 was 25.6256%.
(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%.
(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%.
(8) 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)For ZKTECO CO. LIMITED NGTECO CO. LIMITED Wohome Technology Co. Ltd. Technos Technology Co. Ltd.
Haosong Technology Co. Ltd. Haofan Technology Co. Ltd. Wotong Technology Co. Ltd. Woze Technology Co. Ltd. Tonghao
Technology Co. Ltd. Zechen Technology Co. Ltd. Shanxing Technology Co. Ltd. and Teyu Technology Co. Ltd. the applicable
income tax rates are 8.25% and 16.50%; the tax rate is 8.25% for accounting profits within HKD 2 million and the tax rate is 16.50%
for those exceeding HKD 2 million.
(10) ZKTECO PANAMA S.A. obtained an SEM license on March 3 2022 and from March 2022 the corporate income tax rate
for sales revenue within Panama was 5.00%.
(11) The applicable income tax rates for For ZKTECO SG INVESTMENT PTE. LTD. ZKTECO SINGAPORE PTE. LTD.
ZKDIGIMAX PTE.LTD. and LONGZY PET.LTD. in 2025 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% resulting in a 15.00% federal income tax rate.The general corporate tax rate in Ontario is 11.5%. 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%.
252ZKTeco 2025 Annual Report
(15) The corporate tax of ZKTECO SECURITY L.L.C. is levied on taxable income at the following rates:
1) For enterprises with taxable income not exceeding the tax threshold stipulated in the Cabinet decision (375000 dirhams) the
applicable tax rate is 0.00%;
2) For enterprises with taxable income exceeding the tax threshold the applicable tax rate is 9.00%;
3) For the compliant income portion of free zone compliant enterprises the applicable tax rate is 0.00%;
4) For the non-compliant income portion of free zone compliant enterprises the applicable tax rate is 9.00%.
(16) RICHFULL COMPANY LIMITED enjoys an income tax preferential policy of exemption for two years and a 50% reduction
for five years starting from the first year of obtaining taxable income.
(17) For OPTICSLIFEINC the applicable tax rate is 21.00%.
(18) For ZKTeco Polska Sp. z o.o. a tax rate of 9.00% applies when it meets the conditions for a small taxpayer and its total
sales revenue for the previous year and the current year does not exceed 2 million Euros; otherwise a tax rate of 19.00% applies.VII. Notes to Consolidated Financial Statements
1. Monetary fund
Unit: RMB
Item Ending Balance Beginning Balance
Cash on hand 733770.10 772216.84
Cash in bank 1147554338.71 1423494905.16
Other monetary funds 94831302.42 49067783.97
Total 1243119411.23 1473334905.97
Including: total amount deposited
569128467.85359182516.43
abroad
Other explanations:
1. As of December 31 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 66843214.28 (December 31 2024: RMB 198918980.00) and
the amount of interest receivable that has not yet matured was RMB 1133019.32 (December 31 2024: RMB 12227894.14) which
are not classified as cash and cash equivalents. Please refer to the explanation in Note VII (62) "Supplementary information of cash
flow statement".
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".
3. For details on foreign currency monetary funds please refer to Note VII (64) "Foreign currency monetary items".
2. Trading financial assets
Unit: RMB
Item Ending Balance Beginning Balance
Financial assets measured at fair value
and whose changes are included in the 800444410.21 491331815.79
current profits and losses
Including:
Financial products 800444410.21 491331815.79
Including:
253ZKTeco 2025 Annual Report
Total 800444410.21 491331815.79
Other explanations:
3. Notes receivable
(1) Notes receivable listed by category
Unit: RMB
Item Ending Balance Beginning Balance
Banker's acceptance 538349.21 165450.00
Trade acceptance 0.00 0.00
Total 538349.21 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 Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Including:
Notes
receivable
for bad debt
538349.21100.00%538349.21165450.00100.00%165450.00
reserve
made by
portfolio
Including:
Bank
acceptance 538349.21 100.00% 538349.21 165450.00 100.00% 165450.00
bill
Total 538349.21 100.00% 538349.21 165450.00 100.00% 165450.00
If the bad debt reserve of notes receivable is made according to the general model of expected credit losses:
□ Applicable □Not applicable
4. Accounts receivable
(1) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 658880610.73 504979612.03
1-2 years 54791886.63 47589232.67
2-3 years 20611068.86 15397520.31
Over 3 years 18905552.45 5704760.98
3-4 years 13870879.43 3287160.38
254ZKTeco 2025 Annual Report
4-5 years 2734742.66 1197968.12
Over 5 years 2299930.36 1219632.48
Total 753189118.67 573671125.99
(2) Disclosure by bad debt accrual method
Unit: RMB
255ZKTeco 2025 Annual Report
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
bad debt reserve 35430368.32 4.70% 33419021.18 94.32% 2011347.14 19535854.24 3.41% 19535854.24 100.00% 0.00
made
individually
Including:
Accounts
receivable with
insignificant
single amount
35430368.324.70%33419021.1894.32%2011347.1419535854.243.41%19535854.24100.00%0.00
and bad debt
reserve
withdrawn
separately
Accounts
receivable with
bad debt reserve 717758750.35 95.30% 43386887.35 6.04% 674371863.00 554135271.75 96.59% 35120933.86 6.34% 519014337.89
made by
portfolio
Including:
Aging portfolio 717758750.35 95.30% 43386887.35 6.04% 674371863.00 554135271.75 96.59% 35120933.86 6.34% 519014337.89
Total 753189118.67 100.00% 76805908.53 10.20% 676383210.14 573671125.99 100.00% 54656788.10 9.53% 519014337.89
256ZKTeco 2025 Annual Report
Bad debt reserve made individually: 33419021.18
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-
13649377.2813649377.2813205816.6113205816.61100.00%
TRADING recoverable
LLC
DIYTECH Expected non-
4647805.394647805.39100.00%
S.R.L recoverable
Expected non-
Euroclima LLC 3154368.07 2486632.07 78.83%
recoverable
Hainan Jialing
Digital Expected non-
2032000.002032000.002032000.002032000.00100.00%
Technology recoverable
Co. Ltd.MegaSoft Expected non-
1445015.641445015.64100.00%
Panamá S.A recoverable
Nobus Comtec Expected non-
1327159.231327159.23100.00%
SA de CV recoverable
YECORE Expected non-
1238002.32247600.4120.00%
CONSTEC recoverable
Idem Secure Expected non-
749343.42749343.42100.00%
SA de CV recoverable
MAYRA
ISABEL Expected non-
710686.06710686.06100.00%
MARTINEZ recoverable
MARTINEZ
VI KHANG
TRADING
SERVICE
Expected non-
EQUIPMENT 683012.61 683012.61 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
GLOBAL
INGENIER Expected non-
545817.96192608.7335.29%
ELECTRONIC recoverable
S.A.C
Expected non-
BBT (Naira) 475843.65 475843.65 100.00%
recoverable
Noble IT
Expected non-
Solutions Co. 421686.28 421686.28 412323.82 412323.82 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 376995.64 376995.64 368625.42 368625.42 100.00%
recoverable
Securit
Al Asma Expected non-
360448.21360448.21348734.82348734.82100.00%
Technology recoverable
TIMEWATCH
Expected non-
INFOCOM 305211.28 305211.28 298434.84 298434.84 100.00%
recoverable
PVT. LTD.Shenzhen
Expected non-
Xuhui 270358.32 270358.32 270358.32 270358.32 100.00%
recoverable
Information
257ZKTeco 2025 Annual Report
Technology
Co. Ltd.Aisino Expected non-
232200.00232200.00100.00%
Corporation recoverable
Gansu Fourth
Expected non-
Construction 224676.00 224676.00 224676.00 224676.00 100.00%
recoverable
Group Co. Ltd.VENDEMMIA
COMERCIO Expected non-
204017.72204017.72199488.03199488.03100.00%
INTERNACIO recoverable
NAL LTDA
WIPAQ
Expected non-
TRADING 184354.49 184354.49 100.00%
recoverable
LLC
ASIA
IDENTIFICATI
ON AND
Expected non-
SECURITY 170370.11 170370.11 166587.48 166587.48 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
Wanqiao
Information Expected non-
165900.00165900.00165900.00165900.00100.00%
Technology recoverable
Co.Ltd.Tianjin Eagle
Eye Expected non-
162281.00162281.00162281.00162281.00100.00%
Biotechnology recoverable
Co. Ltd.One Network Expected non-
155420.83155420.83100.00%
(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 138733.61 138733.61 100.00%
recoverable
ES LIMITED
TELVIS
Expected non-
TECHNOLOGI 138615.84 138615.84 100.00%
recoverable
ES
Jiangsu
Xingyun Grid
Expected non-
Information 133983.00 133983.00 100.00%
recoverable
Technology
Co. Ltd.Hainan
Zhongkong
Expected non-
IOT 122173.74 122173.74 122173.74 122173.74 100.00%
recoverable
Technology
Co. Ltd.Ditec Solutions Expected non-
116918.30116918.30100.00%
SA de CV USD recoverable
Control de
Expected non-
Operacion de 106127.93 106127.93 100.00%
recoverable
Inmuebles SA
258ZKTeco 2025 Annual Report
de CV USD
PONTO RHJ Expected non-
101554.91101554.9199300.1599300.15100.00%
EIRELI - ME recoverable
SECUZAA
SECURITY
Expected non-
SOLUTIONS 99690.74 99690.74 97477.37 97477.37 100.00%
recoverable
LAB PRIVATE
LIMITED
Shanghai Leqi
Automation Expected non-
261950.00261950.0081950.0081950.00100.00%
Technology recoverable
Co. Ltd.Expected non-
U.S. Plast 81182.64 81182.64 100.00%
recoverable
Qianxinan
Mengku
Expected non-
Business 74672.00 74672.00 74672.00 74672.00 100.00%
recoverable
Service Co.Ltd.Especialistas
Nacionales en Expected non-
74162.2674162.26100.00%
Tecnologia e recoverable
Innovacio
INTELLISMA
RT Expected non-
75607.5975607.5973928.9273928.92100.00%
TECHNOLOG recoverable
Y INC.Rahat Telecom Expected non-
72801.4372801.43100.00%
LLC recoverable
True Security
Expected non-
Consultant 70791.19 70791.19 100.00%
recoverable
Limited
RBB
Expected non-
Technologies 61357.44 61357.44 57167.16 57167.16 100.00%
recoverable
Private Limited
Yichang Anlian
Intelligent
Expected non-
Technology 56085.00 56085.00 56085.00 56085.00 100.00%
recoverable
Development
Co. Ltd.Expected non-
Others 184148.98 184148.98 274749.77 274749.77 100.00%
recoverable
Total 19535854.24 19535854.24 35430368.32 33419021.18
Bad debt reserve made by portfolio: 43386887.35
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 717758750.35 43386887.35 6.04%
Total 717758750.35 43386887.35
Description 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:
259ZKTeco 2025 Annual Report
□ Applicable □Not applicable
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Provision for bad debt reserves in current period:
Unit: RMB
Current period change amount
Beginning
Category Return or Redeem/redem Ending Balance Balance Provision Others
reversal ption
Bad debt
reserve made 19535854.24 14834790.53 222847.35 328674.66 -400101.58 33419021.18
individually
Bad debt
reserve made 35120933.86 6016991.77 2248961.72 43386887.35
by portfolio
Total 54656788.10 20851782.30 222847.35 328674.66 1848860.14 76805908.53
(4) Actual verification of accounts receivable in the current period
Unit: RMB
Item Write-off amount
Accounts receivable actually written off 328674.66
(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 50738261.43 50738261.43 6.74% 2536913.07
Customer 2 43271255.94 43271255.94 5.74% 2608561.19
Customer 3 42849517.80 42849517.80 5.69% 2447193.26
32675981.6032675981.604.34%1971928.50
Customer 4
24632726.7424632726.743.27%1545892.84
Customer 5
194167743.51194167743.5125.78%11110488.86
Total
5. Contract assets
(1) Contract asset situation
Unit: RMB
260ZKTeco 2025 Annual Report
Ending Balance Beginning Balance
Item Bad debt Bad debt
Book balance Book value Book balance Book value
reserve reserve
Quality
guarantee
79475.4852525.7026949.78335494.48122699.34212795.14
deposit
receivable
Total 79475.48 52525.70 26949.78 335494.48 122699.34 212795.14
(2) Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Item Change amount Reasons for changes
(3) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category Book Book
Accrual Accrual
Amount Proportion Amount value Amount Proportion Amount value
proportion proportion
Bad debt
reserve
0.000.00%0.000.00%0.000.000.00%0.000.00%0.00
made
individually
Including:
Bad debt
reserve
79475.48100.00%52525.7066.09%26949.78335494.48100.00%122699.3436.57%212795.14
made by
portfolio
Including:
Aging
79475.48100.00%52525.7066.09%26949.78335494.48100.00%122699.3436.57%212795.14
portfolio
Total 79475.48 100.00% 52525.70 66.09% 26949.78 335494.48 100.00% 122699.34 36.57% 212795.14
Bad debt reserve made individually: 0
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Bad debt reserve made by portfolio: 52525.70
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 79475.48 52525.70 66.09%
Total 79475.48 52525.70
Description of the basis for determining the portfolio:
261ZKTeco 2025 Annual Report
Provision for bad debt reserve based on a general model of expected credit losses
□ Applicable □Not applicable
(4) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Provision in current Recovery or reversal in Charged or written off
Item Reasons
period the current period in current period
Impairment provisions
Provision for made based on the
-70173.640.000.00
impairment by portfolio aging distribution and
expected credit risk
-70173.640.000.00
Total ——
6. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Other receivables 52567928.29 41144121.16
Total 52567928.29 41144121.16
(1) Interest receivable
Other explanations:
(2) Dividends receivable
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 19891847.25 4674861.45
Guarantee deposit 14360258.11 14910797.93
Reserve funds and loans 2341571.03 3115748.90
Collection and payment on behalf of
2285006.392721289.57
others
Withholding and remitting of social
1916617.741642381.43
security and housing fund
262ZKTeco 2025 Annual Report
Export tax refund 14757353.57 15515710.55
Others 1337560.44 1778689.71
Total 56890214.53 44359479.54
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 40933480.25 28324198.88
1-2 years 1504592.56 1755594.41
2-3 years 924612.53 1554437.48
Over 3 years 13527529.19 12725248.77
3-4 years 1622827.53 2869212.53
4-5 years 2231478.89 221614.92
Over 5 years 9673222.77 9634421.32
Total 56890214.53 44359479.54
3) Disclosure by bad debt accrual method
□Applicable □ Not applicable
263ZKTeco 2025 Annual 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
Bad debt
reserve made 1996093.75 3.51% 1996093.75 100.00% 0.00 1608349.35 3.63% 1608349.35 100.00% 0.00
individually
Including:
Single item
1996093.753.51%1996093.75100.00%0.001608349.353.63%1608349.35100.00%0.00
provision
Bad debt
reserve made 54894120.78 96.49% 2326192.49 4.24% 52567928.29 42751130.19 96.37% 1607009.03 3.76% 41144121.16
by portfolio
Including:
Aging
18947788.8233.30%2326192.4912.28%16621596.332802184.006.32%1607009.0357.35%1195174.97
portfolio
Portfolio of
deposits
security
35946331.9663.19%0.000.00%35946331.9639948946.1990.05%0.000.00%39948946.19
deposits
employee
loans etc.Total 100.00% 4322286.24 7.60% 52567928.29 44359479.54 100.00% 3215358.38 7.25% 41144121.16
56890214.53
Bad debt reserve made individually: 1996093.75
264ZKTeco 2025 Annual Report
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
CNB
Expected non-
TECHNOLOG 1308756.05 1308756.05 1279698.47 1279698.47 100.00%
recoverable
Y INC.Expected non-
New bio 299593.30 299593.30 330395.28 330395.28 100.00%
recoverable
Expected non-
386000.00386000.00
Wang Jiaju 100.00% recoverable
Total 1608349.35 1608349.35 1996093.75 1996093.75
Bad debt reserve made by portfolio: 2326192.49
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 18947788.82 2326192.49 12.28%
Portfolio of deposits security
deposits employee loans 35946331.96 0.00%
export tax refunds etc.Total 54894120.78 2326192.49
Description of the basis for determining the portfolio:
Bad debt reserve made by portfolio: 2326192.49
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year (including 1
16987024.47849351.225.00%
year)
1-2 years 513091.48 51309.12 10.00%
2-3 years 31629.60 9488.88 30.00%
Over 3 years 1416043.27 1416043.27 100.00%
Total 18947788.82 2326192.49
Description 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
265ZKTeco 2025 Annual Report
1 2025 in the current
period
Provision in current
-403312.9718442.59418300.0033429.62
period
Canceled after
verification in the 32300.00 32300.00
current period
Other changes 1195208.37 -91154.53 1744.40 1105798.24
Balance as of 1996093.75 4322286.24
849351.221476841.27
December 31 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
Current period change amount
Beginning
Category
Balance Return or Write-off or
Ending Balance
Provision Others
reversal cancellation
Bad debt
reserve made 1608349.35 418300.00 32300.00 1744.40 1996093.75
individually
Bad debt
reserve made 1607009.03 -384870.38 1104053.84 2326192.49
by portfolio
Total 3215358.38 33429.62 32300.00 1105798.24 4322286.24
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
Other receivables actually written off 32300.00
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
Export tax refund Export tax refund 14757353.57 Within 1 year 25.94%
266ZKTeco 2025 Annual Report
C?ng ty TNHH
Current account 14711706.03 Within 1 year 25.86% 735585.30
Dobest
Zhangmutou
Branch of 8.44%
Guarantee deposit 4800000.00 Over 5 years
Dongguan Finance
Bureau
SUNG JIN
VIETNAM 2.97%
Current account 1686912.00 Within 1 year 84345.60
ELECTRONIC
CO.LTD
Within 1 year 1-2
ADVANNOTECH years 2-3 years 3- 2.62%
Current account 1489845.67 1429219.39
PTY LTD 4 years more than
5 years
65.82%
Total 37445817.27 2249150.29
7. Prepayments
(1) Prepayments listed by aging
Unit: RMB
Ending Balance Beginning Balance
Aging
Amount Proportion Amount Proportion
Within 1 year 16900286.41 93.72% 25493011.77 95.98%
1-2 years 1040685.63 5.77% 1044012.35 3.93%
2-3 years 82129.71 0.46% 450.85 0.00%
Over 3 years 9188.30 0.05% 23998.01 0.09%
Total 18032290.05 26561472.98
Description of the reasons why prepayments with an aging of over 1 year and significant amounts were not settled in a timely
manner:
(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 1698283.18 9.42%
Supplier 2 1223974.00 6.79%
Supplier 3 1059420.07 5.88%
Supplier 4 809366.32 4.49%
Supplier 5 744000.00 4.13%
267ZKTeco 2025 Annual Report
Subtotal 5535043.57 30.71%
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
Inventory Inventory
depreciation depreciation
reserves or reserves or
Item contract contract
Book balance Book value Book balance Book value
performance performance
cost cost
impairment impairment
reserves reserves
Raw materials 173992123.30 4519908.43 169472214.87 93407452.97 4182521.26 89224931.71
Products in
8569231.400.008569231.4010928773.180.0010928773.18
process
Inventory
294308801.0625742661.42268566139.64240786117.7413846891.80226939225.94
goods
Sending goods 17059101.34 492151.34 16566950.00 8482461.31 268995.00 8213466.31
Consigned
processing 5662528.21 0.00 5662528.21 0.00 0.00 0.00
materials
Total 499591785.31 30754721.19 468837064.12 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 1308707.50 425061.21 1421261.75 -24880.21 4519908.43
Products in
0.000.00
process
Inventory
13846891.8018041911.222066549.098475513.07-262822.3825742661.42
goods
Sending goods 268995.00 461991.75 11830.88 250542.27 124.02 492151.34
Total 18298408.06 19812610.47 2503441.18 10147317.09 -287578.57 30754721.19
268ZKTeco 2025 Annual Report
9. Non-current assets due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Debt investment due within one year 19802583.11
Long-term receivables due within one
2320265.60580655.24
year
Total 2320265.60 20383238.35
(1) Debt investment due within one year
□Applicable □ Not applicable
1) Information on debt investment due within one year
Unit: RMB
Ending Balance Beginning Balance
Portfolio Name Impairment Impairment
Book balance Book value Book balance Book value
provision provision
Time deposits 19802583.11 19802583.11
Total 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
3) Provision for impairment
Unit: RMB
Stage 1 Stage 2 Stage 3
Lifetime expected
Bad debt reserve Lifetime expected Expected credit loss in credit losses (credit Total
credit losses (credit
the future 12 months impairment not
impairment occurred)
occurred)
Balance as of January
1 2025 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
269ZKTeco 2025 Annual Report
Description of significant changes in the book balance with changes in loss provisions in the current period:
The basis for calculating the amount of provision for impairment or the current period and evaluating whether the credit risk of financial
instruments has significantly increased
4) Information on debt investment due within one year actually written off in the current period
Unit: RMB
Item Write-off amount
Information on verification of important debt investments due within one year
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
Other explanations:
1. Long-term receivables due within one year
Unit: RMB
Ending balance Opening balance
Discount
Item
Impairment Impairment rate range
Book balance Book value Book balance Book value
provision provision
Employee
3.50%-
long-term 2050095.05 - 2050095.05 580655.24 - 580655.24
4.30%
borrowings
Finance
lease 284390.05 14219.50 270170.55 - - - 26.16%
receivables
Subtotal 2334485.10 14219.50 2320265.60 580655.24 - 580655.24
(2) Other creditor's debt investment due within one year
□ Applicable □Not applicable
10. Other current assets
Unit: RMB
Item Ending Balance Beginning Balance
Cost of returning products receivable 986678.05
Advance payment of income tax 6039262.75 11474437.07
Value added tax deduction amount 24139297.30 21313002.62
Other prepaid taxes 1221681.27 283376.31
Financial product investments 72181060.30
270ZKTeco 2025 Annual Report
Total 104567979.67 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 -
28073846.1928073846.1935235692.0235235692.02
Principal
Bank CD -
903485.13903485.13342697.25342697.25
Interest
Debt
investment due 0.00 0.00 -19802583.11 -19802583.11
within one year
Total 28977331.32 28977331.32 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
(2) Important debt investments at the end of the period
Unit: RMB
Ending Balance Beginning Balance
Debt Effective Effective
items Face Coupon Due Overdue Face Coupon Due Overdue interest interest
value rate Date principal value rate Date principal
rate rate
(3) Provision for impairment
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
1 2025 in the current
period
Classification basis and bad debt reserve provision ratio for each stage
271ZKTeco 2025 Annual Report
(4) Actual verification of debt investments in the current period
Unit: RMB
Item Write-off amount
Information on important debt investment verification
Description of debt investment verification:
Changes in book balance with major changes in loss reserves during the current period
□ Applicable □Not applicable
Other explanations:
12. Long-term receivables
(1) Information on long-term receivables
Unit: RMB
Ending Balance Beginning Balance
Discount rate
Item Bad debt Book Bad debt
Book balance Book value Book value range
reserve balance reserve
Receivables
from finance 1343415.06 407692.43 935722.63 26.16%
leases
Employee
3.50%-
long-term 19317083.29 19317083.29 6059956.79 6059956.79
4.30%
borrowings
Long-term
receivables 3.50%-
-2334485.10-14219.50-2320265.60-580655.24-580655.24
due within 4.30%
one year
Total 18326013.25 393472.93 17932540.32 5479301.55 0.00 5479301.55
(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
Proporti value Proporti AmouAmount Amount proporti Amount proporti value
on on nt
on on
Bad debt
reserve
made 0.00 0.00 0.00 0.00 0.00 0.00
individua
lly
272ZKTeco 2025 Annual Report
Including:
Bad debt
reserve 2066049 100.00 407692. 2025280 6059956 100.00 6059956
1.97%0.00
made by 8.35 % 43 5.92 .79 % .79
portfolio
Including:
Aging 2066049 100.00 407692. 2025280 6059956 100.00 6059956
1.97%
portfolio 8.35 % 43 5.92 .79 % .79
2066049100.00407692.20252806059956100.006059956
Total 1.97%
8.35%435.92.79%.79
Bad debt reserve made by portfolio: 407692.43
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Aging portfolio 20660498.35 407692.43 1.97%
Total 20660498.35 407692.43
Description of the basis for determining the portfolio:
(3) Bad debt reserves withdrawn recovered or reversed in the current period
Unit: RMB
Current period change amount
Beginning
Category
Balance Return or Write-off or
Ending Balance
Provision Others
reversal cancellation
Bad debt
reserve made 391515.93 16176.50 407692.43
by portfolio
Total 391515.93 16176.50 407692.43
273ZKTeco 2025 Annual Report
13. Long-term equity investment
Unit: RMB
Increase or decrease in the current period
Beginning Investment Cash Ending Beginning
balance of gains or Other
Ending
Investee balance (book Changes dividends
balance of
impairment Additional Reduced losses comprehensive Impairment
balance (book
value) in other or profits Others
impairment
provision investment investment recognized income provision
value)
equities declared provision
under equity adjustments
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
--
1)CV SquaredInc. 3784728.11 0.00 0.00 0.00 0.00 0.00 0.00 1155606.35 0.00 1155606.35
2603177.2125944.55
2)ZKTECO SMART -
1436786.200.000.000.0069146.830.000.000.000.001472964.320.00
CITY(THAILAND)CO.LTD. 32968.71
3) Xiamen Xingniu Yunyu
Venture Capital Partnership
23760577.920.000.000.00-120687.660.000.000.000.000.0023639890.260.00
Enterprise (Limited
Partnership)
--
Subtotal 28982092.23 0.00 0.00 0.00 0.00 0.00 0.00 1155606.35 25112854.58 1155606.35
2654718.0458913.26
--
Total 28982092.23 0.00 0.00 0.00 0.00 0.00 0.00 1155606.35 25112854.58 1155606.35
2654718.0458913.26
274ZKTeco 2025 Annual Report
The recoverable amount is determined based on the net amount after deducting disposal expenses from fair value
□Applicable □ Not applicable
Unit: RMB
Method for
Basis for
Recoverable Impaired determining
Item Book value Key parameters determining
amount amount fair value
key parameters
disposal costs
Estimated
CV
1155606.35 0.00 1155606.35 liquidation / /
SquaredInc.proceeds
Total 1155606.35 0.00 1155606.35
The recoverable amount is determined based on the present value of expected future cash flows
□ Applicable □Not applicable
14. Investment real estate
(1) Investment real estate adopting cost measurement model
□Applicable □ Not applicable
Unit: RMB
Construction in
Item Houses and buildings Land use rights Total
progress
I. Original book value
1. Beginning
34416026.1534416026.15
Balance
2. Increase in
current period
(1)
Outsourcing
(2)
Transferred from
inventory fixed assets
and construction in
progress
(3) Increase
in business merger
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance 34416026.15 34416026.15
II. Accumulated
depreciation and
275ZKTeco 2025 Annual Report
accumulated
amortization
1. Beginning
12911709.3812911709.38
Balance
2. Increase in
1641172.081641172.08
current period
(1) Provision
1641172.081641172.08
or amortization
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance 14552881.46 14552881.46
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
current period
(1) Provision
3. Decrease in
current period
(1) Disposal
(2) Other
transfers out
4. Ending balance
IV. Book value
1. Ending book
19863144.6919863144.69
value
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
(2) Investment real estate adopting fair value measurement model
□ Applicable □Not applicable
276ZKTeco 2025 Annual Report
15. Fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Fixed assets 723300476.82 535337384.82
Total 723300476.82 535337384.82
(1) Status of fixed assets
Unit: RMB
Houses and Machinery Transportation Electronic and
Item Total
buildings equipment vehicles other equipment
I. Original book
value:
1. Beginning
517773308.9054643596.7213839192.69116723366.94702979465.25
Balance
2. Increase in
194837768.0914160846.133653400.8522358794.04235010809.11
current period
(1)
26737801.7910252467.642785528.4515645286.6855421084.56
Purchase
(2)
Transferred from
166019176.152216693.24168235869.39
construction in
progress
(3)
Increase in 3643330.69 162175.22 3562773.20 7368279.11
business merger
(4) Differences in
foreign currency
2080790.15230294.24134384.63-307133.662138335.36
statement
translation
(5) Internal
34753.56571312.551241174.581847240.69
reclassification
3. Decrease in
654123.722495703.51322127.605377529.128849483.95
current period
(1)
Disposal or 1598339.17 322127.60 4205414.22 6125880.99
retirement
(2) Internal
343810.24897364.34606066.111847240.69
reclassification
(3) Other
310313.48566048.79876362.27
decreases
4. Ending
711956953.2766308739.3417170465.94133704631.86929140790.41
balance
II. Accumulated
depreciation
1. Beginning
50390962.1931381296.759118656.3776751165.12167642080.43
Balance
2. Increase in
16236839.897451318.842438695.1818055004.4644181858.37
current period
(1)16127724.405761541.861853719.7217104481.6740847467.65
277ZKTeco 2025 Annual Report
Provision
(2) Increase in
1714472.16118575.221835915.683668963.06
business merger
(3) Differences in
foreign currency
109115.49-52787.6463881.01-1042297.88-922089.02
statement
translation
(4) Internal
28092.46402519.23156904.99587516.68
reclassification
3. Decrease in
202724.971306018.70308375.534166506.015983625.21
current period
(1)
Disposal or 1304796.14 308375.53 3509637.45 5122809.12
retirement
(2) Internal
155682.431222.56430611.69587516.68
reclassification
(3) Other transfers
47042.54226256.87273299.41
out
4. Ending
66425077.1137526596.8911248976.0290639663.57205840313.59
balance
III. Provision for
impairment
1. Beginning
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
645531876.1628782142.455921489.9243064968.29723300476.82
book value
2. Beginning
467382346.7123262299.974720536.3239972201.82535337384.82
book value
(2) Temporarily idle fixed assets
Unit: RMB
Original book Accumulated Impairment
Item Book value Remarks
value depreciation provision
278ZKTeco 2025 Annual Report
(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
ownership certificate
Other explanations:
(5) Impairment test of fixed assets
□ Applicable □Not applicable
(6) Disposal of fixed assets
Unit: RMB
Item Ending Balance Beginning Balance
Other explanations:
[Note] The original value of fixed assets that have been fully depreciated at the end of the period but are still
in use is RMB 49696615.90.
1. At the end of the period no obvious signs of impairment of fixed assets were found so no impairment provision was made.
2. At the end of the period there were no fixed assets for which property ownership certificates had not yet been obtained.
3. At the end of the period there was no fixed asset subject to any restrictions on ownership or use rights such
as mortgage pledge seizure freezing or detention.
16. Construction in progress
Unit: RMB
Item Ending Balance Beginning Balance
Construction in progress 113147627.97 226445932.02
Total 113147627.97 226445932.02
(1) Construction in progress
Unit: RMB
Ending Balance Beginning Balance
Item
Book balance Impairment Book value Book balance Impairment Book value
279ZKTeco 2025 Annual Report
provision provision
Multimodal
Biometrics
Digitalization
62028920.1762028920.17179899141.41179899141.41
Industrial Base
Construction
Project
Thai factory
construction
40007675.6540007675.65
and office
buildings
American
Manufacturing
Factory 49690642.68 49690642.68 6539114.96 6539114.96
Construction
Project
European
regional
headquarters 1428065.12 1428065.12
construction
project
Total 113147627.97 113147627.97 226445932.02 226445932.02
280ZKTeco 2025 Annual Report
(2) Current changes in important construction in progress
Unit: RMB
Proportion
Amount Other Including:
of Accumulated Current
transferred to decreases current
Beginning Increase in accumulated Engineering amount of interest
Project Name Budget amount fixed assets in in the Ending Balance interest Source of Funds
Balance current period project progress interest capitalization
the current current capitalized
investment capitalization rate
period period amount
to budget
Multimodal
Biometrics Partial
Digitalization completion
Raised funds
Industrial 284566264.91 179899141.41 7197754.87 125067976.11 62028920.17 68.71% and transfer
others1
Base to fixed
Construction assets
Project
It is expected
that parts of
American
the project
Manufacturing
will be Raised funds
Factory 74418500.00 6539114.96 43151527.72 49690642.68 66.77%
completed others1
Construction
and
Project
capitalized in
2026.
Thai factory
construction
109095400.00 40007675.65 3160217.63 43167893.28 0.00 76.11% Completed Other 2
and office
buildings
53509500.22111719562.85
Total 468080164.91 226445932.02 168235869.39
Note: 1. Raised funds and own funds
2. Own funds
281ZKTeco 2025 Annual Report
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
105951804.643367291.1823200.93109342296.75
Balance
2. Increase in
41339765.291819945.7543159711.04
current period
(1) Lease 25476951.32 1718507.60 27195458.92
(2) Increase in business
15563834.3615563834.36
merger
(3) Differences arising
from foreign currency 298979.61 101438.15 400417.76
statement translation
3. Decrease in
41238819.551513198.1023200.9342775218.58
current period
(1) Expiration of lease 30471808.88 1195048.92 31666857.80
(2) Lease change 2889140.87 2889140.87
(3) Termination of
7877869.80318149.1823200.938219219.91
lease
4. Ending balance 106052750.38 3674038.83 109726789.21
II. Accumulated
depreciation
1. Beginning
59181759.191790536.0517787.3760990082.61
Balance
2. Increase in
26095287.541614931.033866.8427714085.41
current period
(1) Provision 25221864.38 1575204.92 3866.84 26800936.14
(2) Increase in business
518374.56518374.56
merger
(3) Differences arising
from foreign currency 355048.60 39726.11 394774.71
statement translation
3. Decrease in
33231983.081513198.1021654.2134766835.39
current period
(1) Disposal
(2) Expiration of lease 28012247.86 1195048.92 29207296.78
(3) Lease change 2503360.36 2503360.36
(4) Termination of
2716374.86318149.1821654.213056178.25
lease
4. Ending balance 52045063.65 1892268.98 53937332.63
III. Provision for
impairment
1. Beginning
Balance
2. Increase in
current period
282ZKTeco 2025 Annual Report
(1) Provision
3. Decrease in
current period
(1) Disposal
4. Ending balance
IV. Book value
1. Ending book
54007686.731781769.8555789456.58
value
2. Beginning book
46770045.451576755.135413.5648352214.14
value
(2) Impairment test of right-of-use assets
□ Applicable □Not applicable
Other explanations:
18. Intangible assets
(1) Intangible assets
Unit: RMB
Land use Non-patent Customer
Item Patent rights Software Trademark Others Total
rights technology relations
I. Original
book value
1.
Beginning 83690229.40 39345602.92 116213.23 123152045.55
Balance
2.
Increase in
1920710.734026161.4257800000.0094600000.00110748.25
current 19900000.00 178357620.40
period
(1)
2739236.422739236.42
Purchase
(2)
Internal
R&D
(3)
Increase in
19900000.001090061.9057800000.0094600000.00112844.61
business 173502906.51
merger
Difference
on
translation of 1920710.73 196863.10 -2096.36 2115477.47
foreign
currency
283ZKTeco 2025 Annual Report
financial
statements
3.
Decrease in
188269.1233488.20221757.32
current
period
(1)
188269.1233488.20221757.32
Disposal
4.
Ending 85610940.13 19900000.00 43183495.22 57800000.00 94600000.00 193473.28
301287908.63
balance
II.Accumulated
amortization
1.
Beginning 12587135.35 10654231.55 66281.85 23307648.75
Balance
2.
Increase in 207291.67 788333.33 6695142.65
1242153.904443654.5313709.22
current
period
(1)207291.67788333.336181393.08
1242153.903926395.3017218.88
Provision
(2) Increase
in business 353356.51 353356.51
merger
(3)
Differences
in foreign
163902.72-3509.66160393.06
currency
statement
translation
3.
Decrease in
179951.01179951.01
current
period
(1)
179951.01179951.01
Disposal
4.
Ending 13829289.25 207291.67 14917935.07 788333.33 79991.07 29822840.39
balance
III. Provision
for
impairment
1.
Beginning
Balance
2.
Increase in
current
period
284ZKTeco 2025 Annual Report
(1)
Provision
3.
Decrease in
current
period
(1)
Disposal
4.
Ending
balance
IV. Book
value
1.
Ending book 71781650.88 28265560.15 57800000.00 93811666.67 113482.21
19692708.33271465068.24
value
2.
Beginning 71103094.05 28691371.37 49931.38 99844396.80
book value
The proportion of intangible assets formed through internal R&D of the company to the balance of intangible assets at the end of this
period is 0.00%.
(2) Data resources recognized as intangible assets
□ Applicable □Not applicable
(3) Land use rights without completed property ownership certificates
Unit: RMB
Reasons for not completing the property
Item Book value
ownership 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
Beginning
invested entity Formed by Exchange rate Exchange rate Ending Balance Balance Disposals
or matters business fluctuations fluctuations
285ZKTeco 2025 Annual Report
forming merger
goodwill
Shenzhen
Longzhiyuan
238889857.56238889857.56
Technology
Co. Ltd.ZKTECO (M)
175733.09-3901.70171831.39
SDN. BHD.ZK
INVESTIMEN
TOS DO 336604.16 -7473.44 329130.72
BRASIL
LTDA.Total 512337.25 238889857.56 -11375.14 239390819.67
(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 Exchange rate Ending Balance Balance
forming Provision Disposals fluctuations
goodwill
ZK
INVESTIMEN
TOS DO 334296.72 -5166.00 329130.72
BRASIL
LTDA.Total 334296.72 -5166.00 329130.72
(3) Information related to the asset group or portfolio of asset groups where goodwill is located
Composition and basis of the
Is it consistent with previous
Name asset group or portfolio to Operating segments and basis
years
which it belongs
Composition of the asset
group: Goodwill fixed assets
right-of-use assets intangible
assets and long-term deferred
expenses of Shenzhen
Shenzhen Longzhiyuan Longzhiyuan Technology
Not applicable 1
Technology Co. Ltd. Co. Ltd. The asset group of
Shenzhen Longzhiyuan
Technology Co. Ltd. can
independently generate cash
flows and can be identified as
a separate asset group.An asset group or portfolio of
asset groups that can
independently generate cash
ZKTECO (M) SDN. BHD. flow taking into account the Not applicable Yes
synergistic effects of business
mergers and the
management's management or
286ZKTeco 2025 Annual Report
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.Note 1: Not applicable
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
Unit: RMB
Basis for
Key Key determining
Duration of
Recoverable Impaired parameters of parameters of key
Item Book value the forecast
amount amount the forecast the stable parameters of
period
period period the stable
period
5-year
revenue
growth rates
are Operating
respectively: revenue Determined
12.70% growth rate based on the
Shenzhen
643300000. 21.84% of the stable forecast data
Longzhiyuan 601102656.
00 0.00 5 17.26% period: 0%; of the last
Technology 72
8.24% profit margin period of the
Co. Ltd.
1.50%. of the stable forecast
13.6% (after- period: period
tax discount 17.72%
rate) 15.52%
(pre-tax
discount rate)
643300000.
601102656.
Total 00 0.00
72
Reasons for significant discrepancies between the above information and the information or external information used in impairment
tests of previous years
287ZKTeco 2025 Annual Report
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
Unit: RMB
Impaired amount of
Achievement in performance commitments
goodwill
Item Current period Previous period
Current Previous
Committed Actual Completion Committed Actual Completion period period
performance performance rate performance performance rate
Shenzhen
Longzhiyuan
90000000.0072662590.9480.74%
Technology
Co. Ltd.Other explanations:
Note: The actual performance refers to the net profit attributable to shareholders of the parent company under the scope of
Longzhiyuan's consolidated financial statements after deducting non-recurring profits and losses and excluding the impact of share-
based payment.Longzhiyuan is the asset group or asset group combination to which the goodwill newly recognized this year belongs. The
performance commitment period is three consecutive fiscal years starting from the year the transaction is completed namely 2025
2026 and 2027. Longzhiyuan commits that the net profit attributable to shareholders of the parent company after deducting non-
recurring profits and losses and excluding the impact of share-based payment shall not be less than RMB 90000000.00 for the year
2025 not less than RMB 100000000.00 for the year 2026 and not less than RMB 110000000.00 for the year 2027. The cumulative
total for the three years shall not be less than RMB 300000000.00. After the expiration of the performance commitment period if the
cumulative net profit achieved by Longzhiyuan during the performance commitment period is less than the total committed net profit
then the performance obligor shall provide performance compensation to the Company.Longzhiyuan's audited net profit for 2025 was RMB 72.6626 million which was RMB 17.3374 million lower than the committed
amount failing to fulfill the performance commitment for the current year. Longzhiyuan failed to meet its annual performance
commitment due to declining market demand which led to a decrease in business volume. According to Longzhiyuan's management
forecast Longzhiyuan is expected to complete its three-year cumulative performance commitment thus having no impact on the
goodwill impairment test for the current period.
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 4857131.97 2419191.29 80168.91 6497410.95
Deferred interest 622274.12 2749815.72 565208.24 2806881.60
288ZKTeco 2025 Annual Report
on employee long-
term borrowings
Others 793624.31 1208608.82 941075.52 21.44 1061136.17
Total 5555537.61 8815556.51 3925475.05 80190.35 10365428.72
Other explanations:
21. Deferred income tax assets/deferred tax liabilities
(1) Deferred income tax assets not offset
Unit: RMB
Ending Balance Beginning Balance
Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for
62307992.748818471.3047192027.836521838.09
impairment of assets
Unrealized profits from
89056795.0821049010.5184185246.3517508200.23
internal transactions
Deductible losses 286902533.99 43015333.33 285896113.31 42872331.32
Withholding rebates 12220750.79 1642105.29 10022833.77 1393756.83
20233716.763040239.17
Share-based payments
Provision for inventory
20780358.703585619.5914186283.122370858.96
write-down
Deferred income 1364769.40 204715.41 1420041.44 213006.22
Lease liabilities 49421980.64 9378780.02 49257032.77 10466405.35
Payroll payable 275000.00 41250.00 2236010.00 342401.50
542563898.1090775524.62
Total 494395588.59 81688798.50
(2) Non-offsetting deferred tax liabilities
Unit: RMB
Ending Balance Beginning Balance
Item Taxable temporary Taxable temporary
Deferred tax liabilities Deferred tax liabilities
difference difference
Valuation and
appreciation of assets
178996559.4926779049.84
in the business merger
not under the same
control
Changes in fair value
of trading financial 3289828.26 522179.78 3617185.62 542577.84
instruments
Accelerated
depreciation of fixed 17359438.68 2603915.80 16600073.87 2490011.08
assets
Right-of-use assets 55789456.58 8328889.12 46681772.88 9697505.58
Total 255435283.01 38234034.54 66899032.37 12730094.50
289ZKTeco 2025 Annual Report
(3) Deferred income tax assets or liabilities listed at net amount after offset
Unit: RMB
Amount of mutual Amount of mutual
Ending balance of Beginning balance of
offset between deferred offset between deferred
deferred income tax deferred income tax
Item income tax assets and income tax assets and
assets and liabilities assets and liabilities
liabilities at the end of liabilities at the
after offset after offset
period beginning of period
Deferred income tax
8242366.7082533157.9281688798.50
assets
Deferred tax liabilities 8242366.70 29991667.84 12730094.50
(4) Details of unconfirmed deferred income tax assets
Unit: RMB
Item Ending Balance Beginning Balance
Deductible temporary difference 31081738.63 16623824.03
Deductible losses 126941014.17 96349663.36
Total 158022752.80 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
20251274747.09
20261197473.122241647.99
20275414110.566892984.64
202815923121.8815815109.76
202918201514.7218664838.49
2030 and beyond 86204793.89 51460335.39
Total 126941014.17 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 423995.07 423995.07 4620055.22 4620055.22
payment
Total 423995.07 423995.07 4620055.22 4620055.22
Other explanations:
290ZKTeco 2025 Annual Report
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
Bill deposit:
RMB
86849030.32
other deposits:
Bill deposit:
Deposits RMB
RMB
funds in 26081.66 Deposit and
Monetary 45703490.78
89424045.15 89424045.15 transit frozen funds in 47843704.40 47843704.40 funds in
funds funds in
litigation transit: RMB transit
transit: RMB
funds 2465563.17
2140213.62
frozen
litigation
funds: RMB
83370.00
Total 89424045.15 89424045.15 47843704.40 47843704.40
Other explanations:
24. Short-term loan
(1) Classification of short-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Bill discounting 51713359.30
L/C discounting 29387828.70
Total 81101188.00
Description of short-term loan classification:
None
25. Trading financial liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Including:
Financial liabilities measured at fair
value and whose changes are included in 208175000.00
the current profits and losses
Including:
Financial liabilities measured at fair
value and whose changes are included in 208175000.00
the current profits and losses
291ZKTeco 2025 Annual Report
Total 208175000.00
Other explanations:
Trading financial liabilities represent the contingent consideration arising from the Company's acquisition of 55% equity in
Shenzhen Longzhiyuan Technology Co. Ltd. in 2025.
26. Notes payable
Unit: RMB
Category Ending Balance Beginning Balance
Bank acceptance bill 239870823.79 134784219.75
Total 239870823.79 134784219.75
27. Accounts payable
(1) Listing of accounts payable
Unit: RMB
Item Ending Balance Beginning Balance
Material payment 369260477.12 173900619.81
Equipment payment 4482272.79 898794.71
Service fee 9686370.21 5020813.02
Project payment 15129483.60 42641363.41
Others 5891418.20 2953051.88
Total 404450021.92 225414642.83
(2) Are there any overdue and unpaid amounts to SMEs
Is it a large enterprise
□Yes □ No
Are there any overdue and unpaid amounts to SMEs
□ Yes □No
28. Other payables
Unit: RMB
Item Ending Balance Beginning Balance
Dividends payable 556900.00
70922462.71
Other payables 45821035.19
71479362.71
Total 45821035.19
(1) Interest payable
Unit: RMB
Item Ending Balance Beginning Balance
Important overdue and unpaid interest:
292ZKTeco 2025 Annual Report
Unit: RMB
Borrower Overdue amount Overdue reason
Other explanations:
(2) Dividends payable
Unit: RMB
Item Ending Balance Beginning Balance
Restricted share dividends 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:
(3) Other payables
1) List of other payables by nature of money
Unit: RMB
Item Ending Balance Beginning Balance
Employee reimbursement 2336100.94 1648647.92
Payment to be settled 7355965.12 5241858.41
Withholding and remitting of social
99189.00125966.01
security and housing fund
Current account 7086493.99 6093622.83
Collection and payment on behalf of
1698462.161552934.62
others
Guarantee deposit 2503691.10 2489844.38
Liabilities recognized for repurchase
obligations under share-based payment 14200950.00 0.00
arrangements
35641610.40
Others 28668161.02
70922462.71
Total 45821035.19
Other explanations:
29. Contract liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Advances on sales 76516595.89 71168318.91
Total 76516595.89 71168318.91
Significant contract liabilities with an aging of over 1 year
Unit: RMB
Item Ending Balance Reasons for non-repayment or carry-
293ZKTeco 2025 Annual Report
forward
Amount and reasons for significant changes in book value during the reporting period
Unit: RMB
Item Change amount Reasons for changes
30. 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 517033056.70 509257077.54
52837254.1860613233.34
compensation
II. Post-employment
welfare - defined 416810.35 27123221.66 26752616.66 787415.35
contribution plan
III. Dismission welfare 736909.78 3981904.27 3857968.67 860845.38
548138182.63539867662.87
Total 53990974.31 62261494.07
(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 486609643.49 478497859.12 58781688.22
50669903.85
allowance and subsidy
4242215.114244374.98238424.55
2. Payroll 240584.42
3.Social insurance 651724.81 19883481.31 20194207.86 340998.26
Including:
medical insurance 649683.10 18682524.16 19103342.10 228865.16
premium
Work-
related injury insurance 2041.71 784152.12 674060.73 112133.10
premium
Maternity
416805.03416805.03
insurance premium
4. Housing fund 92893.61 5718452.73 5742717.62 68628.72
5. Labor union
expenditure and
1182147.49579264.06577917.961183493.59
personnel education
fund
517033056.70509257077.54
Total 52837254.18 60613233.34
(3) List of defined contribution plan
Unit: RMB
Item Beginning Balance Increase in the current Decrease in the current Ending Balance
294ZKTeco 2025 Annual Report
period period
1. Basic endowment
397285.3526196656.5825810968.72782973.21
insurance expenses
2.Unemployment
19525.00926565.08941647.944442.14
insurance
Total 416810.35 27123221.66 26752616.66 787415.35
Other explanations:
None
31. Taxes payable
Unit: RMB
Item Ending Balance Beginning Balance
VAT 8243828.16 5579760.29
Corporate income tax 20613197.70 6705759.08
Individual income tax 6106955.58 5232563.89
Urban maintenance and construction tax 460901.65 444230.76
Property tax 503954.36 488175.02
Stamp duty 407063.41 407386.15
Education surcharge 449465.31 440506.80
Others 2092649.06 982716.97
Total 38878015.23 20281098.96
Other explanations:
None
32. Non-current liabilities due within one year
Unit: RMB
Item Ending Balance Beginning Balance
Long-term loans due within one year 6807107.58 964811.76
Lease liabilities due within one year 24051906.28 21857837.11
Total 30859013.86 22822648.87
Other explanations:
33. Other current liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Sales rebates payable 14700793.42 10022833.77
Tax to be transferred to output tax 2118948.99 2037746.19
Estimated payments for goods return 1951399.89 0.00
Total 18771142.30 12060579.96
295ZKTeco 2025 Annual Report
34. Long-term loan
(1) Classification of long-term loans
Unit: RMB
Item Ending Balance Beginning Balance
Credit borrowings 6946978.66 7986140.65
Long-term loans due within one year -6807107.58 -964811.76
Total 139871.08 7021328.89
Description of long-term loan classification:
Note: As of December 31 2025 the credit borrowings included an amount of RMB 7276.50 for accrued but unpaid interest
(December 31 2024: RMB 8211.50).
Other explanations including interest rate range:
35. Lease liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Lease payment amount 55610475.47 57524873.16
Unrecognized financing charges -6188494.83 -6558959.29
Lease liabilities due within one year -24051906.28 -21857837.11
Total 25370074.36 29108076.76
Other explanations:
36. Long-term payables
Unit: RMB
Item Ending Balance Beginning Balance
(1) Long-term payables listed by nature of payment
Unit: RMB
Item Ending Balance Beginning Balance
Other explanations:
(2) Special payables
Unit: RMB
Increase in the Decrease in the
Item Beginning Balance Ending Balance Cause of formation
current period current period
296ZKTeco 2025 Annual Report
Other explanations:
37. Deferred income
Unit: RMB
Increase in the Decrease in the
Item Beginning Balance Ending Balance Cause of formation
current period current period
Government Financial
1420041.4455272.041364769.40
subsidies allocation
Total 1420041.44 55272.04 1364769.40
Other explanations:
1. For government subsidies recognized in deferred income refer to Note XI "Government subsidies" in this chapter.
38. Other non-current liabilities
Unit: RMB
Item Ending Balance Beginning Balance
Other explanations:
39. Share capital
Unit: RMB
Increase/decrease in this change (+ -)
Beginning Share Ending
Balance Issue new transferred Bonus Others Subtotal Balance
shares from capital
reserve
196312325.39039225.039039225.0235351550.
Total Shares
000000
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.
40. Capital reserve
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Capital premium (share
2039432865.6058025465.621981407399.98
premium)
297ZKTeco 2025 Annual Report
19523227.41-87413995.04
Other capital reserves 67890767.63
19523227.4158025465.622068821395.02
Total 2107323633.23
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. * The Company waived other receivables from its
subsidiary Wuhan ZKTeco Perception Technology Co. Ltd. and the portion attributable to minority shareholders' profit and loss
reduced capital reserve by RMB 3224200.00. * The Company's subsidiary ZKTECO CO. LIMITED acquired minority interests in
ZKTECO ARGENTINA S.A. reducing capital reserve by RMB 496549.42. * The Company's subsidiary ZKTECO CO. LIMITED
increased capital contribution to ZKTECO EUROPE SL reducing capital reserve by RMB 218053.20.
(2) The increase of RMB 19523227.41 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 "Share-based payment".
41. Treasury stock
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Reduce registered
59683228.1015604338.0044078890.10
capital repurchase
Total 59683228.10 15604338.00 44078890.10
Other descriptions including changes in current period and reasons for changes:
The Company held the 7th Session of the Third Board Meeting on November 10 2023 and deliberated and approved the
"Proposal on Repurchasing Company Shares through Centralized Bidding Trading". The Company was agreed to use its own funds to
repurchase the issued RMB denominated ordinary shares of the Company through centralized bidding trading for employee stock
ownership plans or equity incentives.The 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
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.
298ZKTeco 2025 Annual Report
42. Other comprehensive income
Unit: RMB
Amount incurred in the current period
Less: the net
amount that is
Less: Profit
included in
and loss
Amount other
included in
incurred comprehensive
other Attributable Attributable
Beginning before income of Less: Ending
Item comprehensive to parent to minority
Balance income tax prior period income tax Balance
income at company shareholder
in the and retained expenses
early stage and after tax after tax
current earnings
transferred in
period transferred
the current
into the
period
current profits
and loss
I. Other
comprehensive
income to be -
41914807.74-438704.741676273.3339799829.67
reclassified into 2114978.07
profits and
losses
Translation
difference of
foreign -
41914807.74-438704.741676273.3339799829.67
currency 2114978.07
financial
statements
Total of other
-
comprehensive 41914807.74 -438704.74 1676273.33 39799829.67
2114978.07
income
Other explanations including adjusting the effective portion of cash flow hedging gains and losses to the initial recognition amount
of the hedged item:
43. Surplus reserves
Unit: RMB
Increase in the current Decrease in the current
Item Beginning Balance Ending Balance
period period
Legal surplus reserve 64002687.03 3455944.40 67458631.43
Total 64002687.03 3455944.40 67458631.43
Description of surplus reserve including changes in current period and reasons for changes:
In accordance with the "Company Law" and the Articles of Association the Company sets aside 10% of the net profit of the
parent company as the statutory surplus reserve.
299ZKTeco 2025 Annual Report
44. Undistributed profit
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
214710432.41183045997.93
company in this period
Less: withdrawal of legal surplus
3455944.403547264.53
reserves
Dividends payable on ordinary
97598062.5086602278.60
shares
Undistributed profit at the end of the
1114135904.691000479479.18
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.
Details of using capital reserve to cover losses:
Not applicable
45. 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 2123493637.12 1062295549.74 1983333772.25 1006601473.91
Other businesses 9296030.69 1656759.15 7866619.50 1641172.08
Total 2132789667.81 1063952308.89 1991200391.75 1008242645.99
The lowest of the Company's audited total profit net profit and net profit after deducting non-recurring profits and losses during the
reporting period is negative.□ Yes □No
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:
300ZKTeco 2025 Annual Report
Smart office 331601012.20 99056957.62 331601012.20 99056957.62
Smart space 1591817912.13 827410480.06 1591817912.13 827410480.06
Digital
identity 89136398.95 60533511.82 89136398.95 60533511.82
authentication
Smart
66955688.1751700091.9766955688.1751700091.97
business
Smart living 43982625.67 23594508.27 43982625.67 23594508.27
Other
9296030.691656759.159296030.691656759.15
products
Classification
by region of
operation
Including:
Domestic
523570689.10363081502.73523570689.10363081502.73
sales
Overseas
1609218978.71700870806.161609218978.71700870806.16
sales
Market or
customer type
Including:
Distribution 1436407854.82 793553448.15 1436407854.82 793553448.15
Direct sales 687085782.30 268742101.59 687085782.30 268742101.59
Others 9296030.69 1656759.15 9296030.69 1656759.15
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
Classification
by sales
channel
Including:
Total 2132789667.81 1063952308.89 2132789667.81 1063952308.89
Information related to performance obligations:
Nature of goods Expected Types of
Time for
that the Is it the main refunds to quality
fulfilling Important
Item Company responsible customers assurance
performance payment terms
promises to person borne by the provided by the
obligations
transfer Company Company and
301ZKTeco 2025 Annual Report
related
obligations
Other explanations:
Information related to the transaction price allocated to the remaining performance obligations:
The corresponding revenue amount for performance obligations that have been signed but have not yet been fulfilled or fully fulfilled
at the end of this reporting period is RMB 0.00. Among them RMB 0.00 is expected to be recognized as revenue in 2026 RMB 0.00
is expected to be recognized as revenue in 2027 and RMB 0.00 is expected to be recognized as revenue in 2028.Information related to variable consideration in the contract:
46. Tax and surcharges
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Urban maintenance and construction tax 2971440.67 3366145.88
Education surcharge 1759430.03 1992030.65
Property tax 3623219.75 2890612.33
Land use tax 298326.75 298326.75
Stamp duty 1278583.08 2022481.18
Local education surcharges 1172953.25 1328020.39
Other taxes and fees for overseas
12737615.5017344570.69
companies
Others 14622.20 23591.85
Total 23856191.23 29265779.72
Other explanations:
47. Administrative expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Payroll 57907183.91 50417534.06
Taxes 1185672.51 1526782.37
Office allowance 2418975.23 2961433.41
Depreciation and amortization 20541102.64 13186424.02
Business entertainment expenses 1792395.00 2243795.78
Repair fee 574473.16 507259.37
Travel expenses 1757370.21 2077900.81
Car expenses 1085915.75 1289240.53
Low value consumables 519826.72 525706.51
Agency fees 11408376.33 10432632.01
Communications fee 895371.97 906549.00
Depreciation and amortization of right-
5704316.136182069.72
of-use assets
Share-based payments 3012676.95 1561471.90
Software usage fee 1469252.94 2095226.38
Others 21675312.24 21645515.52
Total 131948221.69 117559541.39
302ZKTeco 2025 Annual Report
Other explanations:
48. Selling expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
283621308.05
Payroll 281002689.08
8275366.15
Depreciation and amortization 4656990.00
11901138.30
Exhibition and conference fees 11772017.30
4686534.80
Maintenance and testing fees 3879142.09
18092898.64
Service fees and commissions 15670917.01
6547362.77
Rental expenses 4260261.42
3656999.13
Business entertainment expenses 4487589.73
24742260.87
Travel expenses 21362422.58
11175225.62
Office allowance 10214366.20
5875777.55
Insurance premium 6161940.88
14592881.77
Agency fees 14284822.42
25004182.65
Advertising expenses 22326499.72
Depreciation and amortization of right- 16628361.96
17701344.47
of-use assets
9521646.70
Share-based payments 4667672.16
3951525.87
Software usage fee 3539639.57
21116046.28
Others 20521305.21
469389517.11
Total 446509619.84
Other explanations:
49. R&D expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Payroll 122300282.76 155949981.78
Depreciation and amortization 7481507.71 5655928.84
Office allowance 1086169.24 1538982.93
Travel expenses 2752535.96 3765461.40
R&D material costs 8325314.65 9453472.80
Software and technical service fees 25873509.18 18927297.70
Depreciation and amortization of right-
1706103.482766889.14
of-use assets
Share-based payments 4590369.64 4171987.22
Others 10492317.49 13240989.59
Total 184608110.11 215470991.40
303ZKTeco 2025 Annual Report
Other explanations:
50. Financial expenses
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest expenses 3257528.29 3871915.67
Including: interest expenses on lease
2955317.613598354.76
liabilities
Less: interest income 27447223.90 42321327.95
Exchange gains and losses 826349.59 2642378.63
Handling charge expenditure 2305234.20 1516388.04
Others 43034.06 16824.47
Total -21015077.76 -34273821.14
Other explanations:
51. Other income
Unit: RMB
Sources of other income generation Amount incurred in the current period Amount incurred in the previous period
Government subsidies related to daily
3564408.776728971.26
activities of the enterprise
Refund of individual income tax
247010.14256046.97
handling charges
Value added tax credit etc. 7734510.26 11382571.60
Total 11545929.17 18367589.83
52. 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 assets 15102322.02 14859953.45
Total 15102322.02 14859953.45
Other explanations:
53. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Long-term equity investment income
-1396664.523001156.73
accounted by equity method
Investment income from disposal of
-216007.07
long-term equity investment
304ZKTeco 2025 Annual Report
Investment income obtained from
3748162.721341696.08
financial products
Forward foreign exchange settlement and
285803.2368155.00
sales contract
Total 2637301.43 4195000.74
Other explanations:
54. 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 -20628934.95 -21166559.32
Bad debt losses on other receivables -33429.62 -40415.71
Bad debt losses on long-term receivables -391515.93
Total -21053880.50 -21206975.03
Other explanations:
55. 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 -13672030.88 -7571805.79
loss
II. Loss from long-term equity
-1155606.350.00
investment impairment
III. Loss from goodwill impairment -334296.72 0.00
IV. Impairment loss from contract assets 70173.64 -83091.87
Total -15091760.31 -7654897.66
Other explanations:
56. 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 312220.10 -653718.36
sale
Including: fixed assets 221570.94 -458532.59
Right-of-use assets 90649.16 -195185.77
305ZKTeco 2025 Annual Report
57. Non-operating revenue
Unit: RMB
Amount included in current
Amount incurred in the Amount incurred in the
Item non-recurring profits and
current period previous period
losses
Gains from impairment and
retirement of non-current 580675.53 8883.21 580675.53
assets
Payment not required 4029526.74
Penalty income 5000.00 12840.56 5000.00
Others 1348864.99 1494075.79 1348864.99
Total 1934540.52 5545326.30 1934540.52
Other explanations:
58. Non-operating expenditure
Unit: RMB
Amount included in current
Amount incurred in the Amount incurred in the
Item non-recurring profits and
current period previous period
losses
External donations 913830.39 2666843.49 913830.39
Extraordinary losses 1789438.76 2857897.51 1789438.76
Asset retirement damage and
1508966.63262103.901508966.63
loss
Penalty expenses 172878.28 24762.04 172878.28
Others 768677.36 702175.90 768677.36
Total 5153791.42 6513782.84 5153791.42
Other explanations:
59. Income tax expenses
(1) Income tax expense statement
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
32639339.62
Current income tax expenses 26862324.29
-7703205.84
Deferred income tax expenses -12030198.47
Total 24936133.78 14832125.82
(2) Accounting profit and income tax expense adjustment process
Unit: RMB
Item Amount incurred in the current period
270283277.55
Total profits
306ZKTeco 2025 Annual Report
Income tax expenses calculated based on statutory/applicable 40542491.63
tax rates
2391939.81
The impact of different tax rates applicable to subsidiaries
The impact of adjusting previous period income tax -2823483.50
The impact of non-taxable income -5390561.34
The impact of non-deductible costs expenses and losses 2440624.53
The impact of deductible losses on unrecognized deferred
-3117502.04
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 10734951.18
current period
The impact of additional deductions on R&D expenses -19830618.66
Salary paid for the placement of disabled individuals with
-51727.93
additional deductions
The impact of tax rate changes on the beginning deferred
40020.10
income tax
Income tax expenses 24936133.78
Other explanations:
None
60. Other comprehensive income
Please refer to Note VII 42. Other Comprehensive Income for details.
61. Cash flow statement items
(1) Cash relating to operating activities
Other cash received relating to operating activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Interest income 38838328.80 50495974.97
Received government subsidies 3509137.49 6295463.08
Bill deposit 43797183.20 168783921.25
Current account 26904252.18 33185739.49
Restricted funds such as restricted
8347044.047461401.81
guarantee deposit and funds in transit
Others 4297406.52 3647494.47
Total 125693352.23 269869995.07
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
246857080.21
Expense payment 235671385.20
307ZKTeco 2025 Annual Report
23498308.72
Current account 25853763.88
Restricted funds such as restricted 2548715.44
2140213.62
guarantee deposit and funds in transit
88842208.64
Bill deposit 117403463.32
1855386.04
Others 2125706.12
363601699.05
Total 383194532.14
Description of other cash paid relating to operating activities:
(2) Cash relating to investing activities
Other cash received related to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Investment income from forward foreign
285803.23
exchange settlement and sales
Total 285803.23
Significant cash received relating to investing activities
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Time deposits and wealth management 3116396276.42 1651510021.30
Expiration of forward foreign exchange
25167850.00
settlement
Disposal of associates 273552.36
Total 3141564126.42 1651783573.66
Description of other cash received relating to investing activities:
Other cash paid relating to investing 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 deposits and wealth management 3359959845.89 1631334606.67
Purchase of forward foreign exchange
25167850.00
settlement and sales
Total 3385127695.89 1631334606.67
Description of other cash paid relating to investing activities:
(3) Cash relating to financing activities
Other cash received related to financing activities
308ZKTeco 2025 Annual Report
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Receipt of bill discounting 155653238.16
Equity incentive subscription funds 14757850.00
Total 170411088.16
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 28741514.67 32270943.96
Repayment of discounted bill proceeds 74552050.16
Share repurchase 58898528.10
Total 103293564.83 91169472.06
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 155653238.16 74552050.16 81101188.00
Non-current
37809157.6529424954.49347838.17
liabilities due 22822648.87 30859013.86
within one year
Long-term 8670.61 97530.44 6792597.98
7021328.89139871.08
borrowings
23146086.37269647.2426614441.53
Lease liabilities 29108076.76 25370074.36
33754877.68
Total 58952054.52 155653238.16 60963914.63 104344182.33 137470147.30
(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
309ZKTeco 2025 Annual Report
62. Supplementary information of cash flow statement
(1) Supplementary information of cash flow statement
Unit: RMB
Supplementary information Amount in current period Amount of previous period
1. Reconciliation of net profit to cash
flows from operating activities
Net profit 245347143.77 200532005.16
Plus: provision for asset impairment 36145640.81 28861872.69
Depreciation of fixed assets
consumption of oil and gas assets and 42488639.73 35203382.67
productive biological assets
Depreciation of right-of-use
26800936.1429010707.32
assets
Amortization of intangible assets 6181393.08 4082151.69
Amortization of long-term
3925475.052140578.12
deferred expenses
Loss from disposal of fixed
assets intangible assets and other long- -312220.10 653718.36
term assets (gains expressed with "-")
Loss on retirement of fixed assets
928291.10253220.69
(gains expressed with "-")
Loss from changes in fair value
-15102322.02-14859953.45
(gains expressed with "-")
Financial expenses (gains
4083877.886514294.30
expressed with "-")
Investment loss (gains expressed
-1379247.91-589995.31
with "-")
Decrease of deferred income tax 2455372.01
-14431239.49
assets (increase expressed with "-")
Increases of deferred tax -9935037.17
2401041.02
liabilities (decrease expressed with "-")
Decrease of inventory (increase
-65810296.3927585758.07
expressed with "-")
Decreases of operational -129122171.69
-69488680.66
receivables (increase expressed with "-")
Increases of operating accounts 217025547.86
-20743580.37
payable (decrease expressed with "-")
18752008.66
Others 11211302.24
Net cash flows from operating 382473030.81
228336583.05
activities
2. Major investment and financing
activities not relating to cash deposit and
withdrawal
Conversion of debt into capital
Convertible corporate bonds due
within one year
310ZKTeco 2025 Annual Report
Fixed assets under financing lease 27195458.92 43908657.41
3. Net change of cash and cash
equivalents:
Ending balance of cash 1085719132.48 1214344327.43
Less: beginning balance of cash 1214344327.43 1317020553.02
Plus: ending balance of cash
equivalents
Less: beginning balance of cash
equivalents
Net increase in cash and cash
-128625194.95-102676225.59
equivalents
(2) Net cash paid for acquiring subsidiaries in the current period
Unit: RMB
Amount
Cash or cash equivalents paid for business merger in the
208175000.00
current period
Including:
Shenzhen Longzhiyuan Technology Co. Ltd. 208175000.00
Less: cash and cash equivalents held by the Company on the
125897742.45
date of acquisition
Including:
Shenzhen Longzhiyuan Technology Co. Ltd. 125897742.45
Including:
Net cash paid for acquiring subsidiaries 82277257.55
Other explanations:
(3) Net cash received from disposal of subsidiaries in the current period
Other explanations:
(4) Composition of cash and cash equivalents
Unit: RMB
Item Ending Balance Beginning Balance
I. Cash 1085719132.48 1214344327.43
Including: Cash on hand 733770.10 772216.84
Bank deposit available for
1079578105.111212348031.02
payment at any time
Other monetary funds available
5407257.271224079.57
for payment at any time
311ZKTeco 2025 Annual Report
III. Ending balance of cash and cash
1085719132.481214344327.43
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
Please refer to the note in
outstanding interest 67976233.60 211146874.14
Note VII 1 Monetary funds.receivable
Not available for use at any
Bank Acceptance Bill Margin 86849030.32 45703490.78
time
Not actually credited to the
Funds in transit 2465563.17 2140213.62
account
Not available for use at any
Other restricted funds 109451.66
time
Total 157400278.75 258990578.54
Other explanations:
63. 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
64. Foreign currency monetary items
(1) Foreign currency monetary items
Unit: RMB
Ending foreign currency Ending equivalent RMB
Item Conversion rate
balance Balance
Monetary funds 925237224.99
Including: USD 113872286.48 7.0288 800385527.22
EUR 4183560.96 8.2355 34453716.29
HKD 2588688.14 0.9032 2338154.90
GBP 186963.01 9.4346 1763921.21
MYR 2702220.75 1.7319 4680061.57
INR 26247596.90 0.0783 2055130.99
COP 400293206.70 0.0019 746224.79
312ZKTeco 2025 Annual Report
MXN 3666878.39 0.3899 1429637.95
PEN 15078.19 2.0899 31511.19
TRL 3407872.77 0.1631 555972.57
ZAR 34183080.01 0.4224 14440300.78
THB 17311567.74 0.2225 3852151.26
AED 19440537.93 1.9071 37074791.99
IDR 11960277337.87 0.0004 4992268.57
CLP 247137269.00 0.0078 1929283.28
ARS 127827976.68 0.0048 618999.16
RUB 1590132.25 0.0881 140015.87
UYU 2.00 0.1795 0.36
KRW 284755866.00 0.0049 1383989.63
BRL 681636.27 1.2832 874644.70
SGD 472685.24 5.4586 2580199.65
KES 1512488.86 0.0545 82474.64
PYG 878000.00 0.0011 940.04
NGN 38960609.71 0.0048 188232.53
VND 8179974523.00 0.0003 2189050.25
AUD 1298.96 4.6892 6091.08
JPY 108089859.24 0.0448 4842101.42
DZD 11400.00 0.0543 618.77
RSD 110.00 0.0704 7.74
MAD 109879.48 0.7709 84701.95
EGP 149390.98 0.1473 22004.18
CAD 48799.61 5.1142 249570.97
PLN 220083.27 1.9497 429104.23
SAR 436726.51 1.868 815823.26
Accounts receivable 751397564.43
Including: USD 86652290.34 7.0288 609061618.34
EUR 2027135.75 8.2355 16694476.47
HKD 449.00 0.9032 405.55
AED 24498084.41 1.9071 46719971.79
MXN 41013953.43 0.3899 15990468.80
INR 136681505.26 0.0783 10701871.05
THB 47435992.98 0.2225 10555405.65
KRW 1101545991.00 0.0049 5353807.98
BRL 2090669.96 1.2832 2682652.73
ZAR 14067557.59 0.4224 5942699.22
JPY 69046503.89 0.0448 3093076.23
CLP 427787685.00 0.0078 3339535.28
SGD 38848.38 5.4586 212057.77
MYR 1500634.79 1.7319 2598996.85
TRL 8359759.99 0.1631 1363841.18
COP 1293506568.70 0.0019 2411349.13
NGN 476179510.88 0.0048 2300592.20
IDR 19023412718.70 0.0004 7940450.09
VND 782626875.00 0.0003 209439.47
ARS 14382338.13 0.0048 69645.59
RUB 148260.00 0.0881 13054.73
PLN 1538002.28 1.9497 2998698.12
GBP 113913.52 9.4346 1074728.50
CAD 13378.21 5.1142 68418.85
SEK 397.62 0.7617 302.86
Other receivables 31732946.06
Including: USD 3210842.75 7.0288 22568371.55
313ZKTeco 2025 Annual Report
THB 2534800.00 0.2225 564040.94
INR 17337243.14 0.0783 1357469.25
MXN 2940313.93 0.3899 1146365.91
EUR 71160.96 8.2355 586046.09
COP 64582355.12 0.0019 120394.14
JPY 11155696.00 0.0448 499741.71
BRL 342486.71 1.2832 439463.39
KRW 86337000.00 0.0049 419620.90
AED 142231.96 1.9071 271248.68
CLP 49722129.00 0.0078 388157.05
SGD 61767.86 5.4586 337166.04
PLN 97501.49 1.9497 190102.15
MYR 61348.57 1.7319 106251.53
VND 7311991328.39 0.0003 1956768.50
NGN 16178432.94 0.0048 78163.75
ARS 14930626.52 0.0048 72300.65
RUB 87000.00 0.0881 7660.61
ZAR 102353.73 0.4224 43238.31
KES 455000.00 0.0545 24810.74
SAR 15145.00 1.8680 28291.49
IDR 70027600.00 0.0004 29229.81
EGP 123056.00 0.1473 18125.23
HK$ 151188.00 0.9032 136556.03
PHP 180000.00 0.1195 21509.97
MMK 5450000.00 0.0033 18241.41
BDT 2072168.75 0.0572 118557.96
XOF 14757690.00 0.0125 185052.27
Accounts payable 133356965.07
Including: USD 17000154.39 7.0288 119490685.18
THB 7087720.38 0.2225 1577151.84
INR 9213704.86 0.0783 721413.49
MXN 16337517.04 0.3899 6369650.68
EUR 49997.04 8.2355 411750.62
COP 8212192.59 0.0019 15309.13
BRL 306563.48 1.2832 393368.33
AED 49867.71 1.9071 95102.05
CLP 63681662.00 0.0078 497132.49
MAD 7460.00 0.7709 5750.63
MYR 7541.90 1.7319 13062.06
VND 1778352153.32 0.0003 475906.40
NGN 25538804.10 0.0048 123387.03
ARS 5038445.73 0.0048 24398.37
RUB 3820.12 0.0881 336.37
ZAR 673675.58 0.4224 284587.52
TRL 5268.85 0.1631 859.58
IDR 6477958567.00 0.0004 2703926.34
GBP 16236.72 9.4346 153186.96
Other payables 30712981.03
Including: USD 3741664.37 7.0288 26299410.50
THB 2660993.05 0.2225 592121.28
INR 1202278.07 0.0783 94135.81
MXN 295529.17 0.3899 115220.54
EUR 77890.16 8.2355 641464.42
JPY 1723121.00 0.0448 77190.65
KRW 30880247.72 0.0049 150086.26
CLP 58372181.00 0.0078 455683.89
314ZKTeco 2025 Annual Report
SGD 1617.97 5.4586 8831.85
MAD 49321.09 0.7709 38019.77
PLN 37906.58 1.9497 73907.82
MYR 19237.73 1.7319 33318.43
VND 4732393812.39 0.0003 1266440.12
NGN 48173050.31 0.0048 232741.10
ARS 6303947.54 0.0048 30526.48
RUB 310.80 0.0881 27.37
ZAR 2407.74 0.4224 1017.13
KES 966978.51 0.0545 52728.46
TRL 60796.29 0.1631 9918.52
EGP 2104991.11 0.1473 310049.49
HK$ 58520.22 0.9032 52856.63
MMK 106355.57 0.0033 355.98
CAD 644.10 5.1142 3294.06
GBP 18404.01 9.4346 173634.47
Long-term borrowings 139871.09
Including: USD
EUR
HKD
MYR 53078.21 1.7319 91927.83
ZAR 113491.29 0.4224 47943.26
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
1. Description of overseas operational entity
Main business
Name Recording currency Selection basis
place
Sales and procurement are mainly priced in
ZKTECO CO. LIMITED Hong Kong USD
USD
ARMATURA TECH CO.LTD Thailand THB Currency used in the place of operation
ZKTECO SECURITY L.L.C Dubai AED Currency used in the place of operation
ZKTECO EUROPE SL Spain EUR Currency used in the place of operation
ZK TECHNOLOGY LLC America USD Currency used in the place of operation
ZKTECO USA LLC America USD Currency used in the place of operation
ZKTECO BIOMETRICS INDIA
India INR Currency used in the place of operation
PRIVATE LIMITED
Sales and procurement are mainly priced in
ZKTECO PANAMA S.A. Panama USD
USD
315ZKTeco 2025 Annual Report
ZKTECO LATAM S.A DE C.V. Mexico MXN Currency used in the place of operation
ZK INTELLIGENT SOLUTIONS
South Africa ZAR Currency used in the place of operation
(PTY) LTD
Sales and procurement are mainly priced in
NGTECO CO.LIMITED Hong Kong USD
USD
Sales and procurement are mainly priced in
Haofan Technology Co. Ltd. Hong Kong RMB
RMB
65. 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
1. For the original book value accumulated depreciation and impairment provisions for various right-of-use assets refer to
Note VII 17 Right-of-use assets.
2. Interest expenses on lease liabilities
Item Amount in the Current Period
Interest on lease liabilities included in financial expenses 2955317.61
3. Simplified rental fees for short-term leases or low value asset leases
Item Amount in the Current Period
Short-term lease fee 4291938.70
Low-value asset lease fee 3004446.97
Total 7296385.67
4. Total cash outflows related to the lease
Item Amount in the Current Period
Cash paid for repayment of principal and interest on lease liabilities 28741514.67
Simplified short-term lease payments and low-value asset lease payments made 7296385.67
316ZKTeco 2025 Annual Report
Total 36037900.34
5. For the maturity analysis of lease liabilities and the management of related liquidity risk refer to Note XII 3 Liquidity risk.
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 4973227.25
Total 4973227.25
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 4233691.26 3007244.72
2nd year 3120329.53 2861997.32
3rd year 2945250.85 2906646.62
4th year 2794474.94 2836497.96
2786532.72
5th year 2786532.77
Total undiscounted lease receivables 4179799.08
6966331.93
after five years
Reconciliation table of undiscounted lease receivables and net investment in leases
(3) Gains or losses from finance lease sales recognized as a manufacturer or dealer
□ Applicable □Not applicable
66. Others
317ZKTeco 2025 Annual Report
VIII. R&D expenditures
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Payroll 122300282.76 155949981.78
Depreciation and amortization 7481507.71 5655928.84
Office allowance 1086169.24 1538982.93
Travel expenses 2752535.96 3765461.40
R&D material costs 8325314.65 9453472.80
Software and technical service fees 25873509.18 18927297.70
Depreciation and amortization of right-
1706103.482766889.14
of-use assets
Share-based payments 4590369.64 4171987.22
Others 10492317.49 13240989.59
Total 184608110.11 215470991.40
Including: Expensed R&D expenditures 184608110.11 215470991.40
Capitalized R&D expenditures 0.00 0.00
IX. Changes to the scope of consolidation
1. Business merger not under common control
(1) Business merger not under common control in the current period
Unit: RMB
Net profit of Cash flow of
Revenue of the
Determination the acquiree the acquiree
Time point for Percentage of Means for acquiree from
Name of the Cost for equity Acquisition basis for from the from the date
equity acquired equity the acquisition
acquiree acquisition date acquisition acquisition of acquisition
acquisition equity acquisition date to the end
date date to the end to the end of
of term
of term term
Shenzhen Date of
Longzhiyuan obtaining
November 18 November 18
Technology 416350000.00 55.00% Purchase control over 44651064.61 7802920.54 15500616.41
20252025
Co. Ltd. and the target
its subsidiaries company
Other explanations:
According to the 22nd Session of the Third Board Meeting of the Company the Company signed the "Equity Acquisition
Agreement" with Yu Mengchu Li Weihua Chengtian Limited Longdingxing Longjuxin Longhexin Longyixin Wolonghui and Li
Weixiong on October 17 2025. The Company acquired 55% equity of Shenzhen Longzhiyuan Technology Co. Ltd. collectively held
by Yu Mengchu Li Weihua Chengtian Limited Longdingxing Longjuxin Longhexin Longyixin Wolonghui and Li Weixiong for
RMB 416350000. The Company had paid 50% of the equity transfer payment RMB 208175000 by December 31 2025. Shenzhen
Longzhiyuan Technology Co. Ltd. completed the industrial and commercial change registration procedures on November 18 2025.Concurrently the new Board of Directors of Shenzhen Longzhiyuan Technology Co. Ltd. was established on November 18 2025. In
the new Board of Directors the directors dispatched by the Company constituted a majority and the Company obtained de facto control
over the Company on November 18 2025. For easier accounting it was included in the scope of the consolidated financial statements
from December 1 2025.
318ZKTeco 2025 Annual Report
(2) Merger costs and goodwill
Unit: RMB
Merger costs Shenzhen Longzhiyuan Technology Co. Ltd.--Cash 416350000.00
-- Fair value of non-cash assets
-- Fair value of debt issued or assumed
-- Fair value of equity securities issued
-- Fair value of contingent consideration
-- Fair value of equity(held prior to acquisition date) on
acquisition date
--Others
Merger cost in total 416350000.00
177460142.44
Less: fair value shares of obtained net identifiable assets
The amount of goodwill/merger cost less than the fair value 238889857.56
share of identifiable net assets obtained
Determination method of fair value of merger costs:
After Tianyuan Asset Appraisal Co. Ltd. appraised 100% shareholder's equity of Longzhiyuan as of March 31 2025 (Tianyuan
Appraisal Report No. [2025] 0998) the appraised value of shareholder's equity determined by the income approach was RMB
757400000.00. Based on this all parties to the transaction negotiated and determined 55% shareholder's equity of Longzhiyuan to be
RMB 416350000.00. The cash consolidation consideration paid this time was RMB 416350000.00 and the consolidation cost was
recognized accordingly.Description of contingent consideration and its changes
Not applicable
Main reasons for the formation of significant goodwill:
The Company acquired 55.00% equity of Shenzhen Longzhiyuan Technology Co. Ltd. at a consolidation cost of RMB
416350000.00. The excess of the consolidation cost over the fair value of the identifiable net assets attributable to the acquired equity
percentage amounting to RMB 238889857.56 was recognized as goodwill related to the acquisition of Shenzhen Longzhiyuan
Technology Co. Ltd.'s equity.Other explanations:
(3) The identifiable assets and liabilities of the acquiree on the date of acquisition
Unit: RMB
Shenzhen Longzhiyuan Technology Co. Ltd.Fair value on the acquisition date Book value at the acquisition date
Asset:
Monetary funds 140022195.03 140022195.03
Accounts receivable 47941831.76 47941831.76
Inventories 81679980.04 74529300.02
Fixed assets 3699316.05 2425993.45
319ZKTeco 2025 Annual Report
Intangible assets 173149550.00 736705.39
Prepayments 3203912.78 3203912.78
Other receivables 27183221.91 27183221.91
Other current assets 1924443.15 1924443.15
Construction in progress 274517.52 274517.52
Right-of-use assets 15045459.80 15045459.80
Long-term deferred expenses 1104745.36 1104745.36
Deferred income tax assets 2528512.68 2528512.68
Liabilities:
Borrowing
Payables 103780230.04 103780230.04
Deferred tax liabilities 27196610.51 0.00
Notes payable 7595092.69 7595092.69
Contract liabilities 12681806.37 12681806.37
Payroll payable 3780523.84 3780523.84
Taxes payable 9602897.70 9602897.70
Non-current liabilities due within one
2137317.032137317.03
year
Other current liabilities 608982.60 608982.60
Other payables 4710900.64 4710900.64
Lease liabilities 3008520.23 3008520.23
Net assets 322654804.43 169014567.71
Minus: Minority interests 145194661.99
Acquired net asset 177460142.44
Determination method for fair value of identifiable assets and liabilities:
The fair value of identifiable assets and liabilities of Shenzhen Longzhiyuan Technology Co. Ltd. is determined based on the
valuation results by Tianyuan Asset Appraisal Co. Ltd. using the asset-based approach.Contingent liabilities of the acquiree assumed in a business combination:
Other explanations:
(4) Gains or losses arising from remeasuring equity held before the date of acquisition at fair value
Is there any transaction that achieves business merger through multiple transactions and obtains control during the reporting period
□ Yes □No
2. 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
320ZKTeco 2025 Annual Report
□ Yes □No
3. 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:
Establishment Registered Shareholding ratio Reason for
S/N Company Name
Date Capital (%) Change
1 ZKTECO ROMANIA S.R.L. September 8 2022 250. RON 100% Cancellation
NUR ALTTKNWLWJIA
2 August 14 2025 5625000. SAR 60% New establishment
COMPANY
Note 1: On April 23 2025 ZKTECO ROMANIA S.R.L. completed its company deregistration.
4. Others
X. Equity in other entities
1. Equity in subsidiaries
(1) Composition of the enterprise group
Unit: RMB
Main Percentage of shares
Registration Nature of Acquisition
Name of Subsidiaries Registered Capital business
place business
place Direct Indirect
method
1. Xiamen Zkteco
Software
Biometric Identification 38500000.00 Xiamen Xiamen 100.00% Acquisition
development
Technology Co. Ltd.
2. Shenzhen ZKTeco
Sales of
Biometric Identification 1000000.00 Shenzhen Shenzhen 100.00% Acquisition
goods
Technology Co. Ltd.
2.1.ZK INVESTMENTS
100.001 America America Investment 100.00% Establishment
INC.
2.1.1.ZK TECHNOLOGY Sales of
Not applicable America America 76.92% Establishment
LLC goods
Sales of
3. ZKTeco Sales Co. Ltd. 50000000.00 Dongguan Dongguan 100.00% Establishment
goods
4. Hangzhou ZKTeco
Hanlian E-commerce Co. 2000000.00 Hangzhou Hangzhou E-commerce 100.00% Establishment
Ltd.
5. ZKCserv Technology Software
1000000.00 Shenzhen Shenzhen 51.00% Establishment
Limited Co. Ltd. development
Software
6. Dalian ZKTeco Co. Ltd. 3000000.00 Dalian Dalian development 100.00% Establishment
and sales
Software
7. Xiamen ZKTeco Co.
100000000.00 Xiamen Xiamen development 100.00% Establishment
Ltd.and sales
321ZKTeco 2025 Annual Report
7.1.ZKTECO VIETNAM
Sales of
TECHNOLOGY 4550000000.0023 Vietnam Vietnam 100.00% Establishment
goods
COMPANY LIMITED
Production
8. ZKTeco (Guangdong)
800000000.00 Dongguan Dongguan and sales of 100.00% Establishment
Co. Ltd.goods
Sales of
9. Xi'an ZKTeco Co. Ltd. 1060000.00 Xi'an Xi'an 100.00% Acquisition
goods
10. ZKTeco Cloud Brain-
Software
Computer (Hangzhou) 20000000.00 Hangzhou Hangzhou 100.00% Establishment
development
Technology Co. Ltd.
11. ZKTECO CO. Hong Kong Hong Kong Sales of
15000000.001 100.00% Establishment
LIMITED China China goods
11.1.ZKTECO TURKEY
ELEKTRONIK SANAYI Sales of
1200000.0017 Turkey Turkey 90.26% Establishment
VE TICARET LIMITED goods
SIRKETI.
11.2.ZKTECO LATAM Sales of
4426000.008 Mexico Mexico 100.00% Establishment
S.A. DE C.V. goods
11.3.ZK SOFTWARE DE Sales of
3748688.008 Mexico Mexico 100.00% Establishment
MEXICOS.A.DEC.V. goods
11.4.ZKTECO Sales
968393000.007 Columbia Columbia 100.00% Establishment
COLOMBIA SAS services
11.5.ZKTECO （M） Sales of
1000000.0020 Malaysia Malaysia 51.00% Acquisition
SDN.BHD. goods
11.6.ZKTECO R&D and
BIOMETRICS INDIA 132765240.0016 India India sales of 99.15% Establishment
PRIVATE LIMITED goods
11.7.ZKTECO EUROPE Sales of
658600.002 Spain Spain 80.12% Acquisition
SL goods
11.7.1.ZKTECO Sales
60000.002 Ireland Ireland 80.12% Establishment
IRELAND LIMITED services
11.7.2.ZKTeco Sales of
100000.002 Germany Germany 80.12% Establishment
Deutschland GmbH goods
11.7.3.ZKTECO Sales of
350000.002 Italy Italy 75.54% Establishment
ITALIAS.R.L. goods
Sales of
11.7.4.ZKTECO UK LTD 1500000.003 UK UK 80.12% Establishment
goods
11.7.5.ZKTeco Polska Sp. Sales of
2131500.0011 Poland Poland 80.12% Establishment
z o.o. goods
11.8.ZKTECO PERU
Sales
SOCIEDAD ANONIMA 1274336.0022 Peru Peru 100.00% Acquisition
services
CERRADA
11.9.ZKTECO THAI Sales of
10000000.005 Thailand Thailand 99.80% Acquisition
CO.LTD. goods
Sales
11.10.ZKTeco Chile SpA 146370000.009 Chile Chile 100.00% Establishment
services
11.10.1.SOLUCIONES
Sales
INTEGRALES Y 60000000.009 Chile Chile 100.00% Establishment
services
SISTEMAS SpA
11.11.ZKTECO Sales of
300000.0014 Dubai Dubai 100.00% Acquisition
SECURITY L.L.C goods
11.12.ZKTECO Sales of
4000000.0026 Argentina Argentina 98.00% Acquisition
ARGENTINA S.A. goods
11.13. Limited Liability
Sales of
Company "ZKTeco 17850554.8018 Russia Russia 100.00% Establishment
goods
biometrics and security"
322ZKTeco 2025 Annual Report
11.14.ZKTECO
80000.001 America America Investment 100.00% Establishment
Investment Inc.
11.14.1.ZKTECO USA Sales of
Not applicable America America 80.00% Establishment
LLC goods
Sales of
11.14.4.ARMATURA LLC Not applicable America America 100.00% Establishment
goods
R&D and
11.14.5.RALVIE AI INC. 10000.001 Canada Canada sales of 100.00% Establishment
goods
11.15. PT. ZKTECO
Sales of
BIOMETRICS 2657200000.006 Indonesia Indonesia 95.00% Establishment
goods
INDONESIA
11.16. ZK
INVESTIMENTOS DO 611440.0010 Brazil Brazil Investment 99.68% Acquisition
BRASIL LTDA.
11.16.1 ZKTECO DO Sales of
1085403.0610 Brazil Brazil 74.76% Acquisition
BRASIL S.A. goods
11.17.NGTECO Hong Kong Hong Kong Sales of
10000.004 100.00% Establishment
CO.LIMITED China China goods
11.18. ZKTECO Sales of
100000000.0015 Nigeria Nigeria 60.00% Establishment
BIOMETRIC LIMITED goods
11.19. ZKTECO Sales of
360000.001 Panama Panama 99.86% Establishment
PANAMA S.A. goods
11.20. ZK INTELLIGENT Sales of
Not applicable South Africa South Africa 100.00% Establishment
SOLUTIONS (PTY) LTD goods
11.21. ZKTECO
Sales
BIOMETRICS KENYA 10910000.0012 Kenya Kenya 100.00% Establishment
services
LIMITED
11.22 ZKTECO
Sales
BUSINESS SOLUTIONS 1000000.0019 Saudi Arabia Saudi Arabia 100.00% Establishment
services
COMPANY
11.23 NUR Production
ALTTKNWLWJIA 5625000.0019 Saudi Arabia Saudi Arabia and sales of 60.00% Establishment
COMPANY goods
Sales of
11.24 Armatura Co.Ltd. 118960000.0024 Korea Korea 90.00% Acquisition
goods
11.25 ZKTeco Japan Sales of
100000000.0025 Japan Japan 100.00% Establishment
Co.Ltd. goods
12. Hubei ZKTeco Co. Sales of
10000000.00 Wuhan Wuhan 100.00% Establishment
Ltd. goods
13. Wuhan ZKTeco
Sales of
Perception Technology 1000000.00 Wuhan Wuhan 51.00% Establishment
goods
Co. Ltd.
14. ZKTECO SG
1000000.001 Singapore Singapore Investment 100.00% Establishment
INVESTMENT PTE. LTD.
14.1. ZKTECO Sales of
500000.0027 Singapore Singapore 100.00% Establishment
SINGAPORE PTE. LTD. goods
Production
14.2. ARMATURA TECH
602983200.005 Thailand Thailand and sales of 99.99% Acquisition
CO.LTD.goods
14.3. ZKDIGIMAX PTE. Sales of
20000000.001 Singapore Singapore 80.00% Establishment
LTD. goods
14.3.1. ZKDIGIMAX Sales of
10000.001 Panama Panama 80.00% Establishment
PANAMA S.A. goods
14.3.2. ZKDIGIMAX Sales of
10000000.007 Columbia Columbia 80.00% Establishment
COLOMBIA SAS goods
14.3.3.ZKDIGIMAX(PTY) Not applicable South Africa South Africa Sales of 80.00% Establishment
323ZKTeco 2025 Annual Report
LTD goods
14.3.4. PT. ZKDIGIMAX Sales of
10010000000.006 Indonesia Indonesia 56.00% Establishment
EXCEL NOBLE goods
14.3.5 ZKTeco Yunlian
Sales of
(Xiamen) Technology Co. 300000.001 Xiamen Xiamen 20.00% 80.00% Establishment
goods
Ltd.
14.3.6. ZK
Sales
TECHNOLOGY 1515000.0013 Morocco Morocco 100.00% Establishment
services
MOROCCO
14.3.7 ZKTECO EGYPT Sales
120000.001 Egypt Egypt 100.00% Establishment
LLC services
Production
15. Shenzhen Longzhiyuan
30231030.00 Shenzhen Shenzhen and sales of 55.00% Acquisition
Technology Co. Ltd.goods
15.1 Shenzhen Wojiaobao
Sales of
Intelligent Technology Co. 1000000.00 Shenzhen Shenzhen 55.00% Acquisition
goods
Ltd.
15.2 Wohome Technology Hong Kong Hong Kong Sales of
1000000.004 55.00% Acquisition
Co. Ltd. China China goods
15.2.1 Technos Technology Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Co. Ltd. China China goods
15.2.2 Haosong Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Technology Co. Ltd. China China goods
15.2.3 Haofan Technology Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Co. Ltd. China China goods
Production
15.2.3.1RICHFULL
500000.001 Vietnam Vietnam and sales of 55.00% Acquisition
COMPANY LIMITED
goods
Sales of
15.2.4 OPTICSLIFE INC 1000.001 America America 55.00% Acquisition
goods
15.2.5 Wotong Technology Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Co. Ltd. China China goods
15.2.6 LONGZY PET.LTD 100000.001 Singapore Singapore Investment 55.00% Acquisition
15.2.7 Woze Technology Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Co. Ltd. China China goods
15.2.7.1 Tonghao Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Technology Co. Ltd. China China goods
15.2.7.2 Zechen Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Technology Co. Ltd. China China goods
15.2.7.3 Shanxing Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Technology Co. Ltd. China China goods
15.2.7.4 Teyu Technology Hong Kong Hong Kong Sales of
10000.004 55.00% Acquisition
Co. Ltd. China China goods
Notes:
USD 1
2. EUR
3. GBP
4. HKD
5. THB
6. IDR
7. COP
8. MXN
324ZKTeco 2025 Annual Report
9. CLP
10. BRL
11. PLN
12. KES
13. MAD
14. AED
15. NGN
16. Rs
17. TRL
18. RUB
19. SAR
20. MYR
22. PEN
23. VND
24. KRW
25. JPY
26. ARS
27. SGD
Description of the fact that shareholding percentage is different from the proportion of voting rights in the subsidiaries:
Not applicable
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:
Not applicable
For important structured entities included in the consolidation scope the basis for control is:
Not applicable
Basis for determining whether the Company is an agent or principal:
Not applicable
Other explanations:
Not applicable
(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 interests
period current period
ZK TECHNOLOGY
23.08%28963263.6625700843.0810445491.88
LLC
Shenzhen Longzhiyuan 45.00% 3511314.24 149044232.29
325ZKTeco 2025 Annual Report
Technology Co. Ltd.Description of the fact that shareholding percentage is different from the proportion of voting rights for minority shareholders in the
subsidiaries:
Other explanations:
326ZKTeco 2025 Annual Report
(3) Main financial information of important partly-owned subsidiaries
Unit: RMB
Ending Balance Beginning Balance
Name of Non-
Non-current Current Non-current Non-current Current Total
Subsidiaries Current assets Total assets Total liabilities Current assets Total assets current
assets liabilities liabilities assets liabilities liabilities
liabilities
ZK
TECHNOLOGY 89942491.04 3452252.48 93394743.52 53990104.25 1896837.80 55886942.05 70297290.30 1700956.02 71998246.32 44197796.74 390771.06 44588567.80
LLC
Shenzhen
Longzhiyuan
290817153.30194978224.91485795378.21124981030.7529604942.38154585973.13
Technology Co.Ltd. and its
subsidiaries
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 183159174.37 96544212.19 95767599.87 106445035.35 142360759.61 69005127.60 69401711.46 76067028.49
LLC
Shenzhen
Longzhiyuan
7802920.547821075.99
Technology Co. 44651064.61 15500616.41
Ltd. and its
subsidiaries
Other explanations:
327ZKTeco 2025 Annual 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
1) 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 changed to 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 December 31 2025 ZKTECO CO. LIMITED has completed the payment.
2) The shareholders of ZKTECO EUROPE SL a subsidiary of the Company are ZKTECO CO. LIMITED and Fernando Ducay
Real with ZKTECO CO. LIMITED holding 4076 shares (75.69% equity stake) and Fernando Ducay Real holding 1309 shares (24.31%
equity stake).On January 6 2025 ZKTECO CO. LIMITED increased its capital by USD 2598001.12. Following the capital increase the
equity stake of ZKTECO CO. LIMITED in ZKTECO EUROPE SL was changed to 80.12% and that of Fernando Ducay Real in
ZKTECO EUROPE SL was 19.88%. As of December 31 2025 ZKTECO CO. LIMITED has completed the payment.
(2) Effect of transactions on minority interests and owners' equity attributable to the parent company
Unit: RMB
ZKTECO ARGENTINA S.A.Acquisition cost/disposal consideration
--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:
Unit: RMB
ZKTECO EUROPE SL
Acquisition cost/disposal consideration
--Cash 18673392.85
-- Fair value of non-cash assets -
328ZKTeco 2025 Annual Report
Total cost/disposal consideration 18673392.85
Less: Net assets of the subsidiaries calculated based on the proportion of assets
18455339.63
acquired/disposed
Difference 218053.22
Including: Adjustment to the capital reserves 218053.22
Adjustment to surplus reserve -
Adjustment to undistributed profit -
3. Equity in joint ventures or associates
(1) Important joint ventures or associates
Percentage of shares Accounting
treatment
Name of joint
Main business Registration Nature of methods for
venture or
place place business Direct Indirect investments in associate
joint ventures
or associates
Description of the fact that shareholding percentage is different from the proportion of voting rights in the joint ventures or
associates:
Basis for holding less than 20% of voting rights but having significant impact or holding 20% or more of voting rights but not
having significant impact:
(2) Main financial information of important joint ventures
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Current assets
Including: Cash and cash equivalents
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority interests
Shareholders' equity attributable to the
parent company
Net asset share calculated based on
329ZKTeco 2025 Annual Report
shareholding ratio
Adjustment matters
--Goodwill
--Unrealized profits from internal
transactions
--Others
Book value of equity investment in joint
ventures
Fair value of equity investment in joint
ventures with public offer
Operating revenue
Financial expenses
Income tax expenses
Net profit
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from joint ventures
of current year
Other explanations:
(3) Main financial information of important associates
Unit: RMB
Beginning balance/amount incurred in
Ending balance/current amount incurred
the previous period
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Minority interests
Shareholders' equity attributable to the
parent company
Net asset share calculated based on
shareholding ratio
Adjustment matters
--Goodwill
--Unrealized profits from internal
transactions
330ZKTeco 2025 Annual Report
--Others
Book value of equity investment in
associates
Fair value of equity investments in
associates with public offers
Operating revenue
Net profit
Net profit from discontinued operations
Other comprehensive income
Total comprehensive income
Dividends received from associates this
year
Other explanations:
(4) 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 25112854.58 28982092.23
The total number of the following items
calculated based on shareholding ratio
-- Net profit -2654718.04 -603848.55
-- Other comprehensive income 84474.50
--Total comprehensive incomes -2570243.54 -603848.55
Other explanations:
(5) Description of significant limitations on the ability of joint ventures or associates to transfer funds to the
Company
(6) Excess losses incurred by joint ventures or associates
Unit: RMB
Name of joint venture or Accumulated unrecognized Unrecognized losses in the Accumulated unrecognized
associate losses accumulated in the current period (or net profit losses at the end of this period
331ZKTeco 2025 Annual Report
previous period shared in the current period)
ZKTECO SOLUTIONS INC. -871279.86 -1106620.35 -1977900.21
PT. ZKTECO SECURITY
-473315.60-109877.64-583193.24
INDONESIA
Other explanations:
(7) Unrecognized commitments related to joint venture investments
(8) Contingent liabilities related to investments in joint ventures or associates
4. Important joint operations
Name of Joint Main business Shareholding Ratio / Shares Held
Registration place Nature of business
Operation place Direct Indirect
Description of why the shareholding ratio or number of shares held in the joint operation is different from the proportion of voting
rights:
Basis for classifying a joint operation as such when the joint operation is a separate entity:
Other explanations:
5. Equity in structured entities not included in the scope of consolidated financial statements
Description of structured entities not included in the scope of consolidated financial statements:
6. Others
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
332ZKTeco 2025 Annual Report
2. Liability items involving government subsidies
□Applicable □ Not applicable
Unit: RMB
Amount
Newly added included in Amount of
Other
subsidy non- other income
Accounting Beginning changes in Ending Assets/Incom
amount in operating transferred in
Subject Balance the current Balance e-related
current revenue for the current
period
period the current period
period
Deferred Assets-
1420041.4455272.041364769.40
income related
Total 1420041.44 55272.04 1364769.40
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 3564408.77 6728971.26
Other explanations:
None
XII. Risks Related to Financial Instruments
1. 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 V. 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
333ZKTeco 2025 Annual Report
Market risk associated with financial instruments refers to the risk that fair value or future cash flows of financial instruments
fluctuate due to variations in market prices and it includes foreign exchange rate risk interest rate risk and other price risks.
(1) Exchange rate risk
Exchange rate risk refers to the risk that fair value or future cash flows of financial instruments fluctuates due to variations in
foreign exchange rate. The main business of the Company is operated within the territory of China which is settled in RMB. However
there are still foreign exchange risks in the foreign currency assets and liabilities recognized and future foreign currency transactions
of the Company (the valuation currency for foreign currency assets and liabilities as well as foreign currency transactions is mainly
USD). The relevant foreign currency assets and liabilities include: monetary funds denominated in foreign currencies accounts
receivable other receivables accounts payable other payables non-current liabilities due within one year and long-term loans. The
amounts of foreign currency financial assets and foreign currency financial liabilities converted into RMB are presented in Note VII
(64) "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 (64) "Foreign currency
monetary items".Assuming all other variables remain unchanged if the RMB appreciates or depreciates by 5% against foreign currencies the
Company's total profit for the current year will increase or decrease by RMB 77.1887 million.
(2) Interest rate risk
Interest rate risk refers to the risk of fluctuations in the fair value or future cash flows of financial instruments due to changes in
market interest rates. The risk of changes in market interest rates faced by the Company is mainly related to the borrowings of the
Company that are interest-bearing at floating rates. The interest rate risk of the Company mainly arises from long-term bank borrowings
and other long-term interest-bearing debts. Floating-rate financial liabilities expose the Company to cash flow interest rate risk while
fixed-rate financial liabilities expose the Company to fair value interest rate risk. The Company determines the relative proportion of
fixed-rate and floating-rate contracts based on the prevailing market conditions at that time and maintains an appropriate mix of fixed-
and floating-rate instruments through regular review and monitoring.The Finance Department of the Company continuously monitors the Company's interest rate level. The increases in interest rate
will increase the costs of the new interest-bearing debts and the interest expenses of interest-bearing debts failing to be paid up by the
Company and subject to the interest calculation at floating interest rate and will significantly and adversely affect the Company's
financial results; the management will make an adjustment according to the latest market conditions to reduce the interest rate risks.
(3) Other price risks
The Company does not hold equity investments in other listed companies and is not exposed to other price risks.
2. Credit risk
Credit risk refers to the risk of financial 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.
334ZKTeco 2025 Annual Report
The credit risk of other financial assets of the Company including monetary funds other receivables debt investments etc.arises from counterparty defaults and the maximum credit risk exposure is the carrying amount of each financial asset on the balance
sheet. The Company has not provided any other guarantee that may expose the Company to credit risk.The monetary funds held by the Company are mainly deposited in state-owned holding banks and other large and medium-sized
commercial banks and other financial institutions. The management believes that these commercial banks have a high reputation and
good asset status there is no significant credit risk and there will be no significant losses caused by the default of the counterparty.The Company's policy is to control the amount of deposits held in deposits based on the market reputation business scale and financial
background of well-known financial institutions in order to limit the credit risk amount to any individual financial institution.As part of the Company's credit risk asset management the Company uses aging to assess impairment losses on accounts
receivable and other receivables. The Company's accounts receivable and other receivables involve a large number of customers and
the aging information can reflect the solvency and bad debt risk of these customers for accounts receivable and other receivables. The
Company calculates the historical actual bad debt rate for different aging periods based on historical data and takes into account current
and future economic forecasts such as forward-looking information like national GDP growth rate total infrastructure investment and
national monetary policy to adjust the expected loss rate. For long-term receivables the Company takes into account the settlement
period payment period stipulated in the contract the financial position of the debtor and the economic situation of the debtor's industry
and adjusts the expected credit loss based on the forward-looking information mentioned above.The Company's maximum credit risk exposure is the book value of each financial asset in the balance sheet.For the bank financial products invested by the Company the counterparty must have a credit rating higher than or equal to that
of the Company. Given the good credit rating of the counterparty the Company's management does not anticipate that the counterparty
will be unable to fulfill its obligations.
3. Liquidity risk
The liquidity risk refers to the risk of capital shortage of an enterprise taking place in the course of cash payment or settlement
via other financial assets. The policy of the Company is to ensure that there is sufficient cash for the payment of the matured debts.Each member enterprise of the Company is responsible for its cash flow forecast. The Finance Department under the Company
continuously monitors the Company's short-term and long-term funding needs at the company level based on the cash flow forecast
results of each member enterprise to ensure the maintenance of sufficient cash reserves; simultaneously the Finance Department
continuously monitors whether it complies with the provisions of the loan agreement and obtains commitments from major financial
institutions to provide sufficient reserve funds to meet short-term and long-term funding needs. In addition the Company has entered
into financing and credit agreements with major correspondent banks to provide support for the Company's obligations related to
commercial bills.The financial liabilities and off-balance sheet guarantee items held by the Company are analyzed by the maturity of the remaining
undiscounted contractual cash flows as follows (in RMB):
Ending balance
Item
Within 1 year 1-5 years Over 5 years Total
Short-term loan 81101188.00 81101188.00
Trading financial
208175000.00208175000.00
liabilities
Notes payable 239870823.79 - - 239870823.79
Accounts payable 404450021.92 - - 404450021.92
Other payables 71479362.71 - - 71479362.71
335ZKTeco 2025 Annual Report
Non-current
liabilities due within 30859013.86 - - 30859013.86
one year
Other current
16652193.31--16652193.31
liabilities
Lease liabilities - 31558569.19 - 31558569.19
Long-term
-139871.08-139871.08
borrowings
Total 1052587603.59 31698440.27 - 1084286043.86
Continued:
Opening balance
Item
Within 1 year 1-5 years Over 5 years Total
Notes payable 134784219.75 - - 134784219.75
Accounts payable 225414642.83 - - 225414642.83
Other payables 45821035.19 - - 45821035.19
Non-current
liabilities due within 22822648.87 - - 22822648.87
one year
Other current
10022833.77--10022833.77
liabilities
Lease liabilities - 35667036.05 - 35667036.05
Long-term
-7246091.36-7246091.36
borrowings
Total 438865380.41 42913127.41 - 481778507.82
4. Capital management
The objective of the Company's capital management policy is to ensure the Company's sustainable operation thereby providing
returns to shareholders and benefiting other stakeholders while maintaining an optimal capital structure to minimize the cost of capital.To maintain or adjust the capital structure the Company may adjust the amount of dividends paid to shareholders return capital to
shareholders issue new shares or sell assets to reduce debt. The Company monitors the capital structure based on the asset liability
ratio (that is total liabilities divided by total assets). As of December 31 2025 the Company's asset liability ratio was 26.02%
(December 31 2024: 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 800444410.21 800444410.21
336ZKTeco 2025 Annual Report
assets
1. Financial assets
measured at fair value
and whose changes are 800444410.21 800444410.21
included in the current
profits and losses
(4) Bank financing 800444410.21 800444410.21
Total assets
continuously measured 800444410.21 800444410.21
at fair value
(VI) Trading financial
208175000.00208175000.00
liabilities
(VII) Financial
liabilities measured at
fair value and whose
208175000.00208175000.00
changes are included in
current profits and
losses
Total liabilities
continuously measured 208175000.00 208175000.00
at fair value
II. Continuous fair
--------
value measurement
2. Qualitative and quantitative information on valuation techniques and important parameters used for
continuous and non-continuous second level fair value measurement items
The Company divides its bank financial products into financial assets measured at fair value and whose changes are included in
the current profits and losses and subsequently measures them at fair value. At the end of the period the expected income is
calculated based on the expected return rate of the bank financial products and it is used as the fair value with the principal at the end
of the period.
3. Fair value of financial assets and liabilities not measured at fair value
For contingent consideration arising from business merger not under common control within trading financial liabilities the
Company continuously monitors the operating and financial conditions of the investee company. Its fair value is calculated and
determined based on the actual completion of performance commitments or the estimated completion of performance commitments
taking into account relevant estimated risk factors in accordance with the terms of the Equity Transfer Agreement.XIV. Related Parties and Related Party Transactions
1. Information of the parent company of the enterprise
Share proportion Proportion of
Name of the parent
Registration place Nature of business Registered Capital held by parent voting rights of the
company
company in the parent company to
337ZKTeco 2025 Annual Report
enterprise the Company
Shenzhen ZKTeco
Times Investment Shenzhen Investment RMB 9 million 29.83% 29.83%
Co. Ltd.Description 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
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 27.47% stake in Shenzhen JYLX Consulting
Enterprise (Limited Partnership) which in turn held 1.69% of
the Company's shares as of December 31 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
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 Former Supervisor
Other explanations:
The Company acquired all the minority shareholders' equity of subsidiary ZK SOFTWARE DE MEXICO S.A. DE C.V. in
August 2023. TVCENLINEA.COM SA DE CV was a company controlled by minority shareholders. According to the relevant
338ZKTeco 2025 Annual Report
provisions of the "Rules Governing the Listing of Shares on the ChiNext Market of Shenzhen Stock Exchange" from August 2023 to
August 2024 TVCENLINEA.COM SA DE CV was still be considered as a related party of the listed company. During this period
the transactions between TVCENLINEA.COM SA DE CV and the listed company still constitute related party transactions. Therefore
the transactions between the Company and TVCENLINEA.COM SA DE CV from January to August 2024 constitute related party
transactions.
5. Related party transactions
(1) Related party transactions for purchasing and selling goods providing and receiving labor services
Table of Purchasing Goods/Accepting Labor Services
Unit: RMB
Amount incurred Amount incurred
Content of related Approved Does it exceed the
Related party in the current in the previous
party transaction transaction limit transaction limit
period period
TVCENLINEA.C
Purchasing goods 0.00 0.00 No 2093526.92
OM SA DE CV
ZKTECO SMART
CITY(THAILAN Purchasing goods 84108.11 0.00 Yes 107587.16
D) CO. LTD.PT. ZKTECO
Marketing
SECURITY 248858.64 0.00 Yes 451840.72
expenses
INDONESIA
Total 332966.75 0.00 2652954.80
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 2989824.41 3120868.81
INDONESIA
ZKTECO SMART
CITY(THAILAND) CO. Selling goods 2266091.78 2051095.32
LTD.TVCENLINEA.COM SA DE
Selling goods 0.00 54000420.58
CV
PSD SECURITY S.L. Selling goods 5280673.39 3456201.63
ZKTECO SOLUTIONS INC. Selling goods 18514833.06 18907183.07
Silk ID Systems Inc. Selling goods 0.00 47378.56
CV Squared Inc. System platform development 1275140.00 0.00
Total 30326562.64 81583147.97
Description of related party transactions for purchasing and selling goods providing and receiving labor services
Note: 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
339ZKTeco 2025 Annual Report
Company's appropriate adjustments based on business conditions and there is no situation that damages the Company and shareholders'
rights and interests which will not affect the independence of the Company.
(2) Related entrusted management/contracting and entrusted management/outsourcing situation
Table of entrusted management/contracting situation of the Company:
Unit: RMB
Custody Income/
Pricing Basis for
Name of Start Date of Termination Date Contracting
Name of Trustee/ Type of Entrusted/ Custody Income/
Principal/ Entrusting/ of Entrusting/ Income
Contractor Contracted Assets Contracting
Outsourcer Contracting Contracting Recognized in
Income
Current Period
Description of related custody/contracting situation
The Company's Entrusted Management/Outsourcing Situation:
Unit: RMB
Pricing Basis Custody
Termination
Name of Name of Entrusted/Outs Start Date of for Custody Fee/Contracting
Date of
Principal/ Trustee/ ourced Asset Entrusting/ Fee/ Fee Recognized
Entrusting/
Outsourcer Contractor Type Outsourcing Outsourcing in Current
Outsourcing
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 277056.70 190872.39
INDONESIA
Sibolan (Xiamen) Life
Science and Technology Co. Houses and buildings 22018.32 1834.86
Ltd.Dongguan LX Investment
Partnership Enterprise Houses and buildings 5045.92 -
(Limited Partnership)
The Company as lessee:
Unit: RMB
Variable lease
Simplified rental fees payments not
Types of Interest expenses
Name of for short-term leases included in the Increased right-of-use
leased Rent paid on lease liabilities
lessor and low value asset measurement of assets
assets assumed
leases (if applicable) lease liabilities
(if applicable)
340ZKTeco 2025 Annual Report
Amount Amount Amount Amount Amount Amount Amount
Amount Amount
incurred in incurred incurred incurred in incurred incurred in incurred Amount
incurred in incurred in
the in the in the the in the the in the incurred in the
the current the current
previous current previous previous current previous current previous period
period period
period period period period period period period
Houses
Che
and 30000.00 106089.40 0.00 0.00 30000.00 762372.46 0.00 12249.36 0.00 -2481817.75
Quanzhong
buildings
Xinhuaxin
(Xi'an) Houses
Information and 0.00 22935.78 0.00 0.00 0.00 25000.00 0.00 0.00 0.00 0.00
Technology buildings
Co. Ltd.Houses
Che
and 723868.00 0.00 0.00 0.00 723868.00 0.00 0.00 0.00 0.00 0.00
Quanhong
buildings
Total 753868.00 129025.18 0.00 0.00 753868.00 787372.46 0.00 12249.36 0.00 -2481817.75
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
341ZKTeco 2025 Annual Report
(7) Compensation for key management personnel
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Number of key management personnel 14.00 14.00
Number of personnel receiving
14.0014.00
remuneration from the Company
Total remuneration 6661748.77 6722979.73
(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 4949677.22 332509.39 6058310.39 781857.75
receivable
INDONESIA
ZKTECO SMART
Accounts
CITY(THAILAN 401550.32 27013.85 1301360.13 65713.17
receivable
D) CO. LTD.ZKTECO
Accounts
SOLUTIONS 24632726.74 1545892.86 19486553.08 1051921.51
receivable
INC.Accounts PSD SECURITY
1805270.8590263.551406173.5870308.68
receivable S.L.Sibolan (Xiamen)
Life Science and
Other receivables 2000.00
Technology Co.Ltd.Other receivables Che Quanhong 510322.00 767631.62
Other receivables Yang Xianfeng 27771.62
(2) Accounts payable
Unit: RMB
Project Name Related party Closing book balance Opening book balance
ZKTECO SMART
Accounts payable CITY(THAILAND) CO. 297.62 1709.19
LTD.Other payables Yang Xianfeng 1048.71
Dongguan LX Investment
Other payables Partnership Enterprise 500.00
(Limited Partnership)
Other payables Che Quanhong 142245.06
ZKTECO SMART
Other payables 143781.30
CITY(THAILAND). LTD.
342ZKTeco 2025 Annual Report
PT. ZKTECO SECURITY
Other payables 87475.64
INDONESIA
Contract liabilities CV SquaredInc. 1275140.00
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
managers
middle
managers
and core
technology
(business) 3234970.00 43442912.18
backbone
employees
of the
Company
(including
branches and
subsidiaries)
Directors
senior
managers
and core
employees
of
Longzhiyuan
Total 3234970.00 43442912.18
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
Grant object category end
Range of exercise price Remaining term of the Range of exercise price Remaining term of the
343ZKTeco 2025 Annual Report
contract contract
The remaining
unlocking period for
the Company's
outstanding 2025
restricted share
Directors senior
The exercise price for contract is March 28
managers middle
both the restricted 2025 - March 27 2028.managers and core
shares granted by the The remaining
technology (business)
Company and the unlocking period of the
backbone employees of
employee stock Company's employee
the Company
ownership plan was stock ownership plan
(including branches
RMB 13.25/share. will vest in three
and subsidiaries)
tranches with vesting
dates on May 22 2026
May 22 2027 and
May 22 2028
respectively.Other explanations:
1. 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. 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.
2. 2025 Employee Stock Ownership 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. 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. Equity incentive implemented by Longzhiyuan a subsidiary of the Company
An employee stock ownership platform consisting of directors senior managers and core employees of Longzhiyuan made
capital contributions to Longzhiyuan which constituted share-based payment with a total of 3639560 shares granted.
2. Equity settled share-based payments
□Applicable □ Not applicable
Unit: RMB
344ZKTeco 2025 Annual Report
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
None
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
18752008.67
recognized in capital reserve
The total amount of expenses recognized for equity settled
18752008.67
share-based payments in this period
Other explanations:
None
3. Cash settled share-based payments
□ Applicable □Not applicable
4. Share-based payment fees in the current period
□Applicable □ Not applicable
Unit: RMB
Grant object category Equity settled share-based payment fees Cash settled share-based payment fees
Directors senior managers middle
managers and core technology (business) 18018484.01
backbone employees of the Company
(including branches and subsidiaries)
Directors senior managers and core 733524.66
employees of Longzhiyuan
Total 18752008.67
Other explanations:
None
5. Modification and termination of share-based payment
During the current period there were no modifications or terminations of share-based payment.
6. Others
None
345ZKTeco 2025 Annual Report
XVI. Commitments and Contingencies
1. Significant commitments
Significant commitments on the balance sheet date
The Company professional investment institutions and related parties registered and established ecological innovation fund
Xiamen Xingniu Yunyu Venture Capital Partnership Enterprise (Limited Partnership) in August 2023. The Company as a limited
partner contributes RMB 48 million of its own funds with a subscribed capital ratio of 40%. According to the partnership agreement
the fund will make its capital contribution in two installments unless the executive partner decides otherwise. In principle each
installment of the capital contribution shall be fifty percent of the committed capital contribution. If the first installment of the capital
contribution is actually used up by more than 50% (including this number) the general partner has the right to require each partner to
make the second installment of the capital contribution. The Company made a paid-in capital contribution of RMB 24 million in
September 2023. As of December 31 2025 there is still RMB 24 million to be injected upon the fulfillment of certain conditions.According to the "Equity Acquisition Agreement for Shenzhen Longzhiyuan Technology Co. Ltd." (hereinafter referred to as
the "Acquisition Agreement") the Company shall pay the shareholders of Longzhiyuan an equity acquisition payment of RMB
416350000 in installments. As of December 31 2025 the Company has paid the first installment of the transaction price RMB
208175000 which is 50.00% of the transaction consideration. The second installment of the transaction price RMB 62452500 (15%
of the transaction consideration) shall be paid within ten working days from the date when the accounting firm engaged by the
Company issues the special audit report for Longzhiyuan for the year 2025 and all the preconditions described in Article 7.3 of the
"Acquisition Agreement" are met. The third installment of the transaction price RMB 62452500 (15% of the transaction
consideration) shall be paid within ten working days from the date when the accounting firm engaged by the Company issues the
special audit report for Longzhiyuan for the year 2026. The fourth installment of the transaction price RMB 83270000 (20% of the
transaction consideration) shall be paid within ten working days from the date when the accounting firm engaged by the Company
issues the special audit report for Longzhiyuan for the year 2027.Apart from the matters mentioned above as of the balance sheet date the Company has no other significant commitment matters
that need to be disclosed.
2. Contingencies
(1) Significant contingencies on the balance sheet date
There are no significant contingencies that need to be disclosed by the Company.
(2) The Company shall also provide a description if there are no important contingencies that need to be
disclosed
There are no significant contingencies that need to be disclosed by the Company.
3. Others
None
346ZKTeco 2025 Annual Report
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
The Company's subsidiary
Zkteco (Guangdong) Co.Ltd. had its Dongguan Bank
account frozen by the
Dongguan Third People's
Court on March 3 2026 due
to a dispute with Hengfu
Construction Group Co. Ltd.involving funds of RMB
21293090.44. To ensure the
normal conduct of the
Company's daily operating
The lawsuit has not yet been
Pending litigation activities Zkteco
adjudicated.(Guangdong) Co. Ltd.opened a new account at
Dongguan Bank and
deposited RMB
21294000.00 on March 11
2026 to replace the funds in
the originally frozen account.This account freezing and
replacement did not have a
significant adverse impact on
the Company's production
and operations.On April 9 2026 the
Company issued an
announcement stating that it
is planning an overseas
issuance of shares (H shares)
and applying for listing on the
Stock Exchange of Hong
Kong Limited (hereinafter
referred to as "the H-share
issuance and listing"). As of
the date the financial report
Relevant details have not yet
Planning for H-share listing was approved for issuance
been determined.the Company is discussing
with relevant intermediaries
regarding the related work for
the H-share issuance and
listing and relevant details
have not yet been determined.The Company's H-share
issuance and listing matter
needs to be submitted to the
Company's Board of
Directors and shareholders'
347ZKTeco 2025 Annual Report
meeting for deliberation and
approval.
2. Profit distribution
Proposed distribution of dividends per 10 shares (RMB) 4.8
Proposed distribution of bonus shares per 10 shares (share) 0
Proposed distribution of additional shares converted from
0
capital reserves per 10 shares (share)
On April 21 2026 the Company's Fourth Board of Directors
held its second meeting and approved the 2025 profit
distribution plan. Based on the total share capital on the
registration date of future equity distribution after deducting
the repurchased shares in the Company's repurchase special
account the Company proposed to distribute cash dividend of
Profit distribution plan
RMB 4.8 (tax inclusive) per 10 shares to all shareholders. No
bonus shares will be issued and use capital reserve to increase
0 shares per 10 shares to all shareholders. The above dividend
distribution plan still needs to be submitted to the Company's
2025 annual shareholders' meeting for deliberation and
approval before it can be implemented.
3. Sales return
None
4. Description of other events after the balance sheet date
As of the balance sheet date the Company has no other significant events to be disclosed.XVIII. 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) 340765550.28 471787442.13
1-2 years 66578618.90 35016611.18
2-3 years 18453746.80 19976746.03
Over 3 years 19031140.84 3550379.93
3-4 years 16967115.14 1814634.08
4-5 years 1763673.68 631687.17
Over 5 years 300352.02 1104058.68
Total 444829056.82 530331179.27
348ZKTeco 2025 Annual Report
(2) Disclosure by bad debt accrual method
Unit: RMB
Ending Balance Beginning Balance
Book balance Bad debt reserve Book balance Bad debt reserve
Category
Accrual Book value Accrual Book value
Amount Proportion Amount Amount Proportion Amount
proportion proportion
Accounts
receivable with
bad debt reserve 9219944.92 2.07% 8552208.92 92.76% 667736.00 4702784.12 0.89% 4702784.12 100.00% 0.00
made
individually
Including:
Accounts
receivable with
insignificant
single amount
9219944.922.07%8552208.9292.76%667736.004702784.120.89%4702784.12100.00%0.00
and bad debt
reserve
withdrawn
separately
Accounts
receivable with
bad debt reserve 435609111.90 97.93% 8051664.14 1.85% 427557447.76 525628395.15 99.11% 9191334.34 1.75% 516437060.81
made by
portfolio
Including:
Related party
334785556.5975.26%334785556.59390141325.0073.56%0.00%390141325.00
portfolio
Aging portfolio 100823555.31 22.67% 8051664.14 7.99% 92771891.17 135487070.15 25.55% 9191334.34 6.78% 126295735.81
Total 444829056.82 100.00% 16603873.06 3.73% 428225183.76 530331179.27 100.00% 13894118.46 2.62% 516437060.81
349ZKTeco 2025 Annual Report
Bad debt reserve made individually: 8552208.92
Unit: RMB
Beginning Balance Ending Balance
Name Bad debt Bad debt Accrual Reasons for
Book balance Book balance
reserve reserve proportion provision
Expected non-
Euroclima LLC 0.00 0.00 3154368.07 2486632.07 78.83%
recoverable
Hainan Jialing
Digital Expected non-
2032000.002032000.002032000.002032000.00100.00%
Technology recoverable
Co. Ltd.VI KHANG
TRADING
SERVICE
Expected non-
EQUIPMENT 0.00 0.00 683012.61 683012.61 100.00%
recoverable
TECHNOLOG
Y COMPANY
LIMITED
Noble IT
Expected non-
Solutions Co. 421686.28 421686.28 412323.82 412323.82 100.00%
recoverable
Ltd
Zicom
Expected non-
Electronic 376995.64 376995.64 368625.42 368625.42 100.00%
recoverable
Securit
Shenzhen
Xuhui
Expected non-
Information 270358.32 270358.32 270358.32 270358.32 100.00%
recoverable
Technology
Co. Ltd.Aisino Expected non-
0.000.00232200.00232200.00100.00%
Corporation recoverable
Gansu Fourth
Expected non-
Construction 224676.00 224676.00 224676.00 224676.00 100.00%
recoverable
Group Co. Ltd.VENDEMMIA
COMERCIO Expected non-
204017.72204017.72199488.03199488.03100.00%
INTERNACIO recoverable
NAL LTDA
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-
0.000.00155420.83155420.83100.00%
(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 0.00 0.00 138733.61 138733.61 100.00%
recoverable
ES LIMITED
350ZKTeco 2025 Annual Report
Jiangsu
Xingyun Grid
Expected non-
Information 0.00 0.00 133983.00 133983.00 100.00%
recoverable
Technology
Co. Ltd.PONTO RHJ Expected non-
101554.91101554.9199300.1599300.15100.00%
EIRELI - ME recoverable
Hainan
Zhongkong
Expected non-
IOT 98773.74 98773.74 98773.74 98773.74 100.00%
recoverable
Technology
Co. Ltd.Shanghai Leqi
Automation Expected non-
261950.00261950.0081950.0081950.00100.00%
Technology recoverable
Co. Ltd.Expected non-
U.S. Plast 0.00 0.00 81182.64 81182.64 100.00%
recoverable
Qianxinan
Mengku
Expected non-
Business 74672.00 74672.00 74672.00 74672.00 100.00%
recoverable
Service Co.Ltd.INTELLISMA
RT Expected non-
75607.5975607.5973928.9273928.92100.00%
TECHNOLOG recoverable
Y INC.Rahat Telecom Expected non-
0.000.0072801.4372801.43100.00%
LLC recoverable
True Security
Expected non-
Consultant 0.00 0.00 70791.19 70791.19 100.00%
recoverable
Limited
KWK
CELLPHONE
Expected non-
AND 38065.52 38065.52 37220.38 37220.38 100.00%
recoverable
ACCESSORIE
S
ELECTRONIC
Expected non-
A GHANA 23253.40 23253.40 15708.31 15708.31 100.00%
recoverable
LIMITED
Nanjing Xianji
Expected non-
Technology 15570.00 15570.00 15570.00 15570.00 100.00%
recoverable
Co. Ltd.Rhythm Expected non-
0.000.009383.459383.45100.00%
Technologies recoverable
Expected non-
Others 130.00 130.00
recoverable
Total 4702784.12 4702784.12 9219944.92 8552208.92
Bad debt reserve made by portfolio: 8051664.14
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 334785556.59
Aging portfolio 100823555.31 8051664.14 7.99%
351ZKTeco 2025 Annual Report
Total 435609111.90 8051664.14
Description of the basis for determining the portfolio:
Bad debt reserve made by portfolio: 8051664.14
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Within 1 year (including 1
82716575.554135828.815.00%
year)
1-2 years 13646075.20 1364607.53 10.00%
2-3 years 2728109.65 818432.89 30.00%
Over 3 years 1732794.91 1732794.91 100.00%
Total 100823555.31 8051664.14
Description 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 Return or Redeem/redem Ending Balance Balance Provision Others
reversal ption
Bad debt
reserve made 4702784.12 4036453.60 187028.80 8552208.92
individually
Bad debt
reserve made 9191334.34 -1139670.20 8051664.14
by portfolio
Total 13894118.46 2896783.40 187028.80 16603873.06
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
352ZKTeco 2025 Annual Report
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
Description 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
No. 1 190604915.22 190604915.22 42.84% 0.00
No. 2 53110351.55 53110351.55 11.94% 0.00
No. 3 21619456.17 21619456.17 4.86% 0.00
No. 4 12446914.43 12446914.43 2.80% 622345.72
No. 5 10930892.19 10930892.19 2.46% 860801.12
Total 288712529.56 288712529.56 64.90% 1483146.84
2. Other receivables
Unit: RMB
Item Ending Balance Beginning Balance
Interest receivable 46922.03 46922.03
Other receivables 31272024.39 28421132.37
Total 31318946.42 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
353ZKTeco 2025 Annual Report
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:
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
Description of writing off:
Other explanations:
354ZKTeco 2025 Annual Report
(2) Other receivables
1) Classification of other receivables based on nature of payment
Unit: RMB
Payment nature Closing book balance Opening book balance
Current account 24850391.28 15954593.23
Guarantee deposit 1535580.19 2035338.71
Reserve funds and loans 1276794.46 1572655.42
Collection and payment on behalf of
1297439.642180706.91
others
Withholding and remitting of social
512420.85723607.47
security and housing fund
Export tax refund 2120766.74 5921725.86
Others 102031.90 51379.06
Total 31695425.06 28440006.66
2) Disclosure by aging
Unit: RMB
Aging Closing book balance Opening book balance
Within 1 year (including 1 year) 24360083.45 16527198.43
1-2 years 3434342.81 920284.48
2-3 years 201703.90 8880717.85
3699294.90
Over 3 years 2111805.90
52753.00
3-4 years 388876.50
563755.71
4-5 years 249210.72
3082786.19
Over 5 years 1473718.68
31695425.06
Total 28440006.66
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
Bad debt
reserve made 386000.00 1.22% 386000.00 100.00% 0.00 0.00 0.00% 0.00 0.00% 0.00
individually
Including:
Bad debt
reserve made 31309425.06 98.78% 37400.67 0.12% 31272024.39 28440006.66 100.00% 18874.29 0.07% 28421132.37
by portfolio
Including:
Related party
24850391.2878.40%0.00%24850391.2815577107.5254.77%15577107.52
portfolio
355ZKTeco 2025 Annual Report
Portfolio of
deposits
security
6085027.0719.20%0.00%6085027.0712485413.4343.90%12485413.43
deposits
employee
loans etc.Aging
374006.711.18%37400.6710.00%336606.04377485.711.33%18874.295.00%358611.42
portfolio
Total 31695425.06 100.00% 423400.67 1.34% 31272024.39 28440006.66 100.00% 18874.29 0.07% 28421132.37
Bad debt reserve made individually: 386000.00
Unit: RMB
Beginning Balance Ending Balance
Name
Book Bad debt Bad debt Accrual Reasons for
Book balance
balance reserve reserve proportion provision
Wuhan ZKTeco Perception Expected non-
0.000.00386000.00386000.00100.00%
Technology Co. Ltd. recoverable
Total 0.00 0.00 386000.00 386000.00
Bad debt reserve made by portfolio: 37400.67
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Related party portfolio 24850391.28
Portfolio of deposits security
deposits employee loans 6085027.07
export tax refunds etc.Aging portfolio 374006.71 37400.67 10.00%
Total 31309425.06 37400.67
Description of the basis for determining the portfolio:
Bad debt reserve made by portfolio: aging portfolio
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
1-2 years 374006.71 37400.67 10.00%
Total 374006.71 37400.67
Description of the basis for determining the portfolio:
Bad debt reserve made by portfolio:
Unit: RMB
Ending Balance
Name
Book balance Bad debt reserve Accrual proportion
Description of the basis for determining the portfolio:
356ZKTeco 2025 Annual Report
Provision for bad debt reserve based on a general model of expected credit losses:
Unit: RMB
Stage 1 Stage 2 Stage 3
Expected credit loss Expected credit loss
Bad debt reserve Expected credit loss in within whole duration within whole duration Total
the future 12 months (no credit impairment (credit impairment has
occur) occurred)
Balance as of January
18874.2918874.29
12025
Balance as of January
1 2025 in the current
period
Provision in current
-18874.2937400.676998300.007016826.38
period
Canceled after
6612300.006612300.00
verification in the
current period
Balance as of 386000.00 423400.67
37400.67
December 31 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
Current period change amount
Beginning
Category Return or Write-off or Ending Balance Balance Provision Others
reversal cancellation
Bad debt
reserve made 6998300.00 6612300.00 386000.00
individually
Bad debt
reserve made 18874.29 18526.38 37400.67
by portfolio
Total 18874.29 7016826.38 6612300.00 423400.67
5) Other accounts receivable actually written off in the current period
Unit: RMB
Item Write-off amount
6612300.00
Other receivables actually written off
Other major receivable written off:
357ZKTeco 2025 Annual Report
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
Wuhan ZKTeco
Perception Bad debt write off
Current account 6580000.00 Nonrecoverable Yes
Technology Co. process
Ltd.Total 6580000.00
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
ZKTeco
Within 1 year 1-2
(Guangdong) Co. Current account 20910776.31 65.97%
years
Ltd.Export tax refund Export tax refund 2120766.74 Within 1 year 6.69%
ZKCserv
Technology Current account 1780000.00 Over 5 years 5.62%
Limited Co. Ltd.Within 1 year 1-2
Hubei ZKTeco
Current account 512153.55 years 4-5 years 1.62%
Co. Ltd.more than 5 years
Dalian ZKTeco Within 1 year 1-2
Current account 505119.47 1.59%
Co. Ltd. years
Total 25828816.07 81.49%
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
1813674231.010.001813674231.011336607464.410.001336607464.41
subsidiaries
Investment in
affiliated and 23639890.26 0.00 23639890.26 23760577.92 0.00 23760577.92
joint ventures
Total 1837314121.27 0.00 1837314121.27 1360368042.33 0.00 1360368042.33
358ZKTeco 2025 Annual Report
(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
value) Others
(book value) impairment
provision investment investment provision provision
Shenzhen
ZKTeco
Biometric
12608518.140.0028232.8712636751.01
Identification
Technology
Co. Ltd.Hangzhou
ZKTeco
Hanlian E- 2103348.40 0.00 3881.11 2107229.51
commerce Co.Ltd.ZKTECO CO.
197126656.030.0044652341.85133934.43241912932.31
LIMITED
Xiamen
ZKTeco Co. 107075312.69 0.00 2271463.80 109346776.49
Ltd.ZKTeco
(Guangdong) 806159928.79 0.00 5976855.80 812136784.59
Co. Ltd.ZKTeco Sales
21523355.440.0056465.7221579821.16
Co. Ltd.Xiamen Zkteco
Biometric
Identification 38986734.80 0.00 38986734.80
Technology
Co. Ltd.ZKCserv
Technology
510000.000.00510000.00
Limited Co.Ltd.Dalian ZKTeco
4232906.900.0079052.014311958.91
Co. Ltd.Xi'an ZKTeco
518684.810.00141986.25660671.06
Co. Ltd.Hubei ZKTeco
3518105.760.00118578.023636683.78
Co. Ltd.ZKTECO SG
INVESTMENT 137943912.65 0.00 2705525.56 140649438.21
PTE.LTD.ZKTeco Cloud
Brain-
Computer
4300000.000.004300000.00248449.188848449.18
(Hangzhou)
Technology
Co. Ltd.Shenzhen
Longzhiyuan
0.00416350000.00416350000.00
Technology
Co. Ltd.
359ZKTeco 2025 Annual Report
Total 1336607464.41 0.00 468007867.41 9058899.19 1813674231.01
(2) Investment in affiliated and joint ventures
Unit: RMB
Increase or decrease in the current period
Investment
Beginning Cash Ending
Beginning gains or Other Ending
balance of Changes dividends balance of
Investee balance (book Additional Reduced losses comprehensive Impairment balance (book
impairment in other or profits Others impairment
value) investment investment recognized income provision value)
provision equities declared provision
under equity adjustments
to pay
method
I. Joint ventures
II. Joint venture
Xiamen
Xingniu
Yunyu
Venture
Capital 23760577.92 -120687.66 23639890.26
Partnership
Enterprise
(Limited
Partnership)
Subtotal 23760577.92 -120687.66 23639890.26
Total 23760577.92 -120687.66 23639890.26
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
Other changes in this period resulted from the implementation of the employee stock ownership plan and the
grant of Class II restricted shares equity incentives to incentive personnel of its subsidiaries totaling RMB
9058899.19.
4. Operating revenue and operating cost
Unit: RMB
360ZKTeco 2025 Annual Report
Amount incurred in the current period Amount incurred in the previous period
Item
Income Cost Income Cost
Main business 771775017.19 537266589.97 1331085325.63 1020838497.53
Other businesses 33355809.54 23589110.24 12818559.01 10164768.69
Total 805130826.73 560855700.21 1343903884.64 1031003266.22
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:
Smart office 39041464.13 25836216.86 39041464.13 25836216.86
Smart space 647409035.50 435696898.63 647409035.50 435696898.63
Digital
identity 67317173.13 59178322.51 67317173.13 59178322.51
authentication
Smart
18007344.4316555151.9718007344.4316555151.97
business
Others 33355809.54 23589110.24 33355809.54 23589110.24
Classification
by region of
operation
Including:
Domestic
331792330.98270434298.28331792330.98270434298.28
sales
Overseas
473338495.75290421401.93473338495.75290421401.93
sales
Market or
customer type
Including:
Type of
contract
Including:
Classification
by time of
transfer of
goods
Including:
Classification
by contract
term
Including:
361ZKTeco 2025 Annual Report
Classification
by sales
channel
Including:
Total 805130826.73 560855700.21 805130826.73 560855700.21
5. Investment income
Unit: RMB
Item Amount incurred in the current period Amount incurred in the previous period
Income from long-term equity
19000000.0016000000.00
investment accounted with cost method
Long-term equity investment income
-120687.66-239422.08
accounted by equity method
Investment income during the holding of
2342987.00442077.81
trading financial assets
Gains from remeasuring the remaining
-5100000.00
equity at fair value after loss of control
Forward foreign exchange settlement and
285803.2368155.00
sales contract
Total 21508102.57 11170810.73
XIX. 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-
-616071.00
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
3429031.25
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 Mainly due to investment income and
financial assets and financial liabilities 18783279.32 fair value changes generated by financial
by non-financial enterprises as well as products
the gains and losses arising from the
362ZKTeco 2025 Annual Report
disposal of financial assets and financial
liabilities except for effective hedging
business related to the normal operation
of the Company
Capital occupancy fees charged to non-
financial enterprises included in current 0.00
profits and losses
Reversal of the provision on receivables
with impairment test conducted on an 222847.35
individual basis
Other non-operating revenue and
-2290959.80
expenses other than the above items
Less: income tax impact 1867993.80
Minority interest impact (after tax) 186441.90
Total 17473691.42 --
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
2. Net return on assets and EPS
Profit during the reporting Weighted average return on EPS
period net assets Basic EPS (RMB/share) Diluted EPS (RMB/share)
Net profit attributable to
ordinary shareholders of the 6.30% 0.9186 0.9149
Company
Net profit attributable to
ordinary shareholders of the
Company after deducting 5.79% 0.8438 0.8405
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
363ZKTeco 2025 Annual Report
(3) Description of the reasons for differences in accounting data under 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
364
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