大华股份:2019年半年度报告(英文版)

                     2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




Zhejiang Dahua Technology Co., Ltd.

         2019 Interim Report




            August 2019




                                                                             1
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             Section I Important Notes, Contents And Definitions

     The Board of Directors, Board of Supervisors, Directors, Supervisors and Senior Management
of Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as the "Company") hereby
guarantee that the information presented in this interim report shall be authentic, accurate and
complete and free of any false records, misleading statements or material omissions, and they will
bear joint and several liabilities for such information.

     Fu Liquan, the Company's legal representative, Wei Meizhong, chief accountant, and Xu
Qiaofen, person in charge of accounting institution (Accounting Officer) hereby declare and warrant
that the financial statements in this interim report are authentic, accurate and complete.

     All directors attended the meeting of the Board of Directors for deliberation of this annual
report.

     In the reporting period, there are no major changes in the risks faced by the Company, and the
Company has always been striving to identify all the risks, and actively taking the countermeasures
to avoid and lower the risks:

     The Company invites each investor to carefully read the interim report and pay particular
attention to the following risk factors:

     1. Risk of technology upgrade

     The video surveillance industry is a typical technology-intensive industry, which is changing
extremely fast. The Company has always attached importance to technical innovation and R&D of
new products, with a strong ability of continuous innovation. If the Company is unable to keep up
with development trends in the industry's technology, to pay full attention to customers' diversified
individual needs, and to be followed by sufficient R&D investments, it will still face the risk of
losing market competitiveness due to discontinuous innovation.

     2. Risk of business model transformation

     With the development of network communications, cloud computing, and big data, as well as
the upgrade of smart phones application, the business model in the IoT era may have an impact on

                                                                                                                   2
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the traditional industry development model. If an enterprise cannot timely grasp opportunities
brought about by the business model transformation, it may face the risk that the original market
structure becomes broken.

     3. Risk of product information security

     The Company attaches great importance to and continuously strengthens resource investment
to ensure safe and reliable operations of the security system so as to respond to the product
information security risks on the Internet. However, there may still exist hackers, computer viruses,
physical    security    vulnerabilities,   natural    disasters,     accidents,       power       interruptions,
telecommunications failures, and other terrorism or warfare events, which exert influences such as
security vulnerabilities, system failures, or service interruptions.

     4. Risk of intellectual property rights

     The acceleration of the Company's globalization and self-owned brand strategy will likely
bring intellectual property risks such as IP rights protection and patent infringement. Preventions of
and responses to the above risk such as rights claims or lawsuits, whether active or passive, all
feature high costs, long cycles and high uncertainty, and may bring about risks such as fluctuations
in business relations and public opinions environment, increased legal litigations and rising costs.

     5. Risk of exchange rate

     The Company's export transactions are mostly settled in United States Dollars ("USD"), while
overseas sales have increased continuously. Therefore, fluctuations in the foreign exchange rate
have the potential to affect the profits of the Company.

     6. Risk of decline in local fiscal spending power

     At present, local fiscal revenues are declining, while the debt is relatively high. If the local
fiscal paying capacity is reduced, it may lead to the slowdown in the growth of some industry
demands, extensions of project time, longer periods for companies to withdraw capital, and
customers' payment delay.

     7. Risk of international operation

     The Company's products and solutions cover many overseas countries and regions.


                                                                                                                 3
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International business operation may face trade protection, political conflict, debt problem, and
localized operation compliance in the countries where they operate, which may bring negative
impact on the Company's local business development.

     The Company plans not to distribute cash dividends, send bonus shares, and not to convert
capital reserves to share capital.




                                                                                                              4
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Section I Important Notes, Contents And Definitions ....................................................................................................................... 2
Section II Company Profile and Main Financial Indicators............................................................................................................. 12
Section III Corporate Business Overview ...................................................................................................................................... 15
Section IV Discussion and Analysis on Business Circumstance ...................................................................................................... 16
Section V Significant Events......................................................................................................................................................... 29
Section VI Changes in Shares and Information about Shareholders ................................................................................................ 45
Section VII Information of Preferred Shares .................................................................................................................................. 52
Section VIII Information about Directors, Supervisors and Senior Management ............................................................................. 53
Section IX Corporate Bonds ......................................................................................................................................................... 55
Section X Financial Reports.......................................................................................................................................................... 56
Section XI Documents Available for Inspection ........................................................................................................................... 205




                                                                                                                                                                                      5
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                                                   Definitions


                                             Refers
                      Item                                                         Definitions
                                              To

                                             Refers
Reporting Period                                      From January 1, 2019 to June 30, 2019
                                              To

                                             Refers
Dahua Technology                                      Zhejiang Dahua Technology Co., Ltd.
                                              To

Dahua System Engineering, System Engineering Refers
                                                      Zhejiang Dahua System Engineering Co., Ltd.
Company                                       To

                                             Refers
Dahua Vision Technology                               Zhejiang Dahua Vision Technology Co., Ltd.
                                              To

                                             Refers
Dahua Security Network, Operation Company             Zhejiang Dahua Security Network Operation Service Co., Ltd.
                                              To

                                             Refers
Dahua Ju'an                                           Zhejiang Dahua Ju'an Technology Co., Ltd.
                                              To

                                             Refers
Guangxi Dahua Information                             Guangxi Dahua Information Technology Co., Ltd.
                                              To

                                             Refers
Dahua Security                                        Zhejiang Dahua Security Service Co., Ltd.
                                              To

                                             Refers
Guangxi Security                                      Guangxi Dahua Security Service Co., Ltd.
                                              To

                                             Refers
Huatu Microchip                                       Zhejiang Huatu Microchip Technology Co., Ltd.
                                              To

                                             Refers
Dahua Zhongzhi                                        Guangxi Dahua Zhongzhi Technology Co., Ltd.
                                              To

                                             Refers
Xiaohua Technology, Hangzhou Xiaohua                  Hangzhou Xiaohua Technology CO., LTD.
                                              To

                                             Refers
Dahua Zhilian                                         Zhejiang Dahua Zhilian Co., Ltd.
                                              To

                                             Refers
Tecomore Technology                                   Hangzhou Tecomore Technology Co., Ltd.
                                              To

Dahua Investment, Dahua Investment           Refers
                                                      Zhejiang Dahua Investment Management Co., Ltd.
Management                                    To

South North United                           Refers South North United Information Technology Co., Ltd.


                                                                                                                          6
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                                       To

                                      Refers
Guangxi Zhicheng, Dahua Zhicheng               Guangxi Dahua Zhicheng Co., Ltd.
                                       To

                                      Refers
Hangzhou Huacheng, Huacheng Network            Hangzhou Huacheng Network Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Information                           Xinjiang Dahua Zhixin Information Technology Co., Ltd.
                                       To

                                      Refers
HuaRay Technology                              Zhejiang HuaRay Technology Co., Ltd.
                                       To

                                      Refers
Fuyang Hua'ao                                  Hangzhou Fuyang Hua'ao Technology Co., Ltd.
                                       To

                                      Refers
Huafei Intelligent                             Zhejiang Huafei Intelligent Technology CO., LTD.
                                       To

                                      Refers
Huachuang Vision                               Zhejiang Huachuang Vision Technology Co., Ltd.
                                       To

                                      Refers
Guizhou Huayi                                  Guizhou Huayi Shixin Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Dahua Information                     Xinjiang Dahua Information Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Intelligence                          Xinjiang Dahua Intelligence Technology Co., Ltd.
                                       To

                                      Refers
Guizhou Intelligence                           Guizhou Dahua Intelligence Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Zhihe                                 Xinjiang Dahua Zhihe Information Technology Co., Ltd.
                                       To

                                      Refers
China Standard Intelligent Security            China Standard Intelligent Security Technology Co., Ltd.
                                       To

                                      Refers
Guangxi Huacheng                               Guangxi Huacheng Technology Co., Ltd.
                                       To

                                      Refers
Meitan Dahua Technology                        Guizhou Meitan Dahua Information Technology Co., Ltd.
                                       To

                                      Refers
Inner Mongolia Zhimeng                         Inner Mongolia Dahua Zhimeng Information Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Zhitian                               Xinjiang Dahua Zhitian Information Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Xinzhi                                Xinjiang Dahua Xinzhi Information Technology Co., Ltd.
                                       To

                                      Refers
Xinjiang Huayue                                Xinjiang Dahua Huayue Information Technology Co., Ltd.
                                       To


                                                                                                                    7
                                                                2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                           Refers
Dahua HK                                            Dahua Technology (HK) Limited
                                            To

                                           Refers
Leapmotor Technology                                Zhejiang Leapmotor Technology Co., Ltd.
                                            To

                                           Refers
Leapmotor Automobile                                Leapmotor Automobile Co., Ltd.
                                            To

                                           Refers
Tianjin Dahua Information, Tianjin Dahua            Tianjin Dahua Information Technology Co., Ltd.
                                            To

                                           Refers
Hunan Dahua Zhilong, Dahua Zhilong                  Hunan Dahua Zhilong Information Technology Co., Ltd.
                                            To

                                           Refers
Huaxiao Technology                                  Zhejiang Huaxiao Technology Co., Ltd.
                                            To

                                           Refers
Vision Technology                                   Zhejiang Fengshi Technology Co., Ltd.
                                            To

                                           Refers
Xi’an Dahua Zhilian, Xi’an Dahua                  Xi'an Dahua Zhilian Technology Co., Ltd.
                                            To

                                           Refers
Wuxi Ruipin                                         Wuxi Dahua Ruipin Technology Co., Ltd.
                                            To

                                           Refers
Dahua Robot                                         Zhejiang Dahua Robot Technology Co., Ltd.
                                            To

                                           Refers
Beijing Huayue                                      Beijing Huayue Shangcheng Information Technology Service Co., Ltd.
                                            To

                                           Refers
Shanghai Huashang                                   Shanghai Huashang Chengyue Information Technology Service Co., Ltd.
                                            To

                                           Refers
Dahua Jinzhi                                        Zhejiang Dahua Jinzhi Technology Co., Ltd.
                                            To

                                           Refers
Dahua Guangxun                                      Sichuan Dahua Guangxun Photoelectric Technology Co., Ltd.
                                            To

                                           Refers
Huajuan Technology                                  Hangzhou Huajuan Technology Co., Ltd.
                                            To

                                           Refers
Dahua HK, Dahua Hong Kong                           Dahua Technology (HK) Limited
                                            To

                                           Refers
Zhoushan Operation                                  Zhejiang Zhoushan Digital Development Operation Co., Ltd.
                                            To

                                           Refers
Dahua USA                                           Dahua Technology USA Inc.
                                            To

                                           Refers
Dahua Europe                                        Dahua Europe B.V.
                                            To




                                                                                                                          8
                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                     Refers
Dahua Middle East             Dahua Technology Middle East FZE
                      To

                     Refers
Dahua Mexico                  Dahua Technology Mexico S.A. DE C.V
                      To

                     Refers
Dahua Chile                   Dahua Technology Chile SpA
                      To

                     Refers
Dahua Malaysia                Dahua Security Malaysia SDN. BHD.
                      To

                     Refers
Dahua Korea                   Dahua Technology Korea Company Limited
                      To

                     Refers
Dahua Indonesia               PT. Dahua Vision Technology Indonesia
                      To

                     Refers
Dahua Colombia                Dahua Technology Colombia S.A.S
                      To

                     Refers
Dahua Australia               Dahua Technology Australia PTY LTD
                      To

                     Refers
Dahua Singapore               Dahua Technology Singapore Pte. Ltd.
                      To

                     Refers
Dahua South Africa            Dahua Technology South Africa Proprietary Limited
                      To

                     Refers
Dahua Peru                    Dahua Technology PerúS.A.C
                      To

                     Refers
Dahua Russia                  Dahua Technology Rus Limited Liability Company
                      To

                     Refers DAHUA TECHNOLOGY BRASIL COMRCIO E SERVIOS EM
Dahua Brazil
                      To      SEGURANA ELETRNICA LTDA

                     Refers
Dahua Canada                  Dahua Technology Canada INC.
                      To

                     Refers
Dahua Panama                  Dahua Technology Panama S.A.
                      To

                     Refers
Dahua Hungary                 Dahua Technology Hungary Kft
                      To

                     Refers
Dahua Poland                  Dahua Technology Poland Sp. z o.o.
                      To

                     Refers
Dahua Tunisia                 Dahua Technology Tunisia
                      To

                     Refers
Dahua Kenya                   Dahua Technology Kenya Limited
                      To




                                                                                                  9
                                                 2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                            Refers
Dahua UK                             Dahua Technology UK Limited
                             To

                            Refers
Dahua Bulgaria                       Dahua Technology Bulgaria EOOD
                             To

                            Refers
Dahua Germany                        Dahua Technology GmbH
                             To

                            Refers
Dahua Serbia                         Dahua Technology SRB d.o.o.
                             To

                            Refers
Dahua India                          Dahua Technology India Private Limited
                             To

                            Refers
Dahua Turkey                         Dahua Guvenlik Teknolojileri Sanayi ve Ticaret A.S.
                             To

                            Refers
Dahua Czech                          Dahua Technology Czech s.r.o.
                             To

                            Refers
Dahua Argentina                      Dahua Argentina S.A.
                             To

                            Refers
Dahua Spain                          Dahua Iberia, S.L.
                             To

                            Refers
Dahua Kazakhstan                     Dahua Technology Kazakhstan LLP
                             To

                            Refers
Dahua Denmark                        Dahua Technology Denmark Aps.
                             To

                            Refers
Dahua France                         Dahua Technology France
                             To

                            Refers
American Lechange                    Lechange Inc.
                             To

                            Refers
Dahua Technology Holdings            Dahua Technology Holdings Limited
                             To

                            Refers
Dahua New Zealand                    Dahua Technology New Zealand Limited
                             To

                            Refers
Dahua Netherlands                    Dahua Technology Netherlands B.V.
                             To

                            Refers
Dahua Morocco                        Dahua Technology Morocco SARL
                             To

                            Refers
Dahua Romania                        Dahua Technology S.R.L.
                             To

                            Refers
Dahua Uzbekistan                     DAHUA VISION LLC
                             To




                                                                                                        10
                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                         Refers
Dahua Technology Italy            Dahua Technology Italy S.R.L.
                          To

                         Refers
Dahua Lorex                       Dahua Technology Inc.
                          To

                         Refers
Dahua Bulgaria                    Dahua Technology Bulgaria EOOD
                          To

                         Refers
Dahua Sri Lanka                   Dahua Technology China (Pvt) LTD
                          To

                         Refers
Dahua Pakistan                    Dahua Technology Pakistan (private) Limited
                          To

                         Refers
Dahua Thailand                    Dahua Technology(Thailand) Co.,LTD.
                          To




                                                                                                     11
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




           Section II Company Profile and Main Financial Indicators

I. Corporate Information

Stock Abbreviation                Dahua                                   Stock Code                    002236

Stock Exchange Where the
Shares of the Company are         Shenzhen Stock Exchange
Listed

Company Name in Chinese           浙江大华技术股份有限公司

Abbr. of the Company Name
                                  大华股份
in Chinese (If Any)

Company Name in English (If
                                  ZHEJIANG DAHUA TECHNOLOGY CO.,LTD
Any)

Legal Representative              Fu Liquan


II. Contacts and Contact Information

                                                           Board Secretary                     Securities Affairs Representative

Name                                          Wu Jian                                     Lou Qiongyu

                                              No. 1199, Bin'an Road, Binjiang District,   No. 1199, Bin'an Road, Binjiang District,
Address
                                              Hangzhou City, Zhejiang Province            Hangzhou City, Zhejiang Province

Tel.                                          0571-28939522                               0571-28939522

Fax                                           0571-28051737                               0571-28051737

E-mail                                        zqsw@dahuatech.com                          zqsw@dahuatech.com


III. Other Relevant Information

1. Contact information of the Company

Are there any changes in the registered address, office address, postal code, website and email of the Company during the reporting
period
□ Applicable √ Not applicable
There are no changes in the registered address, office address, postal code, website and email of the Company during the reporting
period. For details, refer to 2018 Annual Report.


2. Information disclosure and place of the report

Are there any changes in the information disclosure and place for report preparation during the reporting period



                                                                                                                                      12
                                                                             2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


□ Applicable √ Not applicable
There are no changes in the newspaper designated by the Company for information disclosure, website specified by CSRC for release
of the interim report and place for interim report preparation during the reporting period. For details, refer to 2018 Annual Report.


IV. Key Accounting Data and Financial Indicators

Whether the Company requires retroactive adjustment or restatement of accounting data in prior years
□ Yes √ No

                                                                               Corresponding Period of
                                               Current Reporting Period                                         YoY Change (%)
                                                                                      Last Year

Operating Revenue (RMB)                                10,806,566,370.89                9,814,041,352.48                         10.11%

Net Profit Attributable to Shareholders of
                                                        1,238,880,948.74                1,081,916,886.52                        14.51%
the Listed Company (RMB)

Net Profit Attributable to Shareholders of
the Listed Company after Deducting                      1,138,651,748.03                1,107,484,389.00                             2.81%
Non-recurring Gains and Losses (RMB)

Net Cash Flow Generated by Operational
                                                         -870,467,092.88               -1,096,356,837.00                        20.60%
Activities (RMB)

Basic Earnings per Share (RMB/Share)                                  0.42                            0.37                      13.51%

Diluted Earnings per Share (RMB/Share)                                0.42                            0.37                      13.51%

Weighted Average ROE                                               9.40%                          9.91%                          -0.51%

                                               At the End of the Current
                                                                                   End of Last Year             YoY Change (%)
                                                   Reporting Period

Total Assets (RMB)                                     27,427,525,950.44              26,350,599,778.15                              4.09%

Net Assets Attributable to Shareholders of
                                                       13,557,642,896.49              12,618,758,918.48                              7.44%
the Listed Company (RMB)


V. Differences in Accounting Data between Domestic and Overseas Accounting Standards

1. Difference in the financial report of net profits and net assets according to the disclosure of International
Accounting Standards and China Accounting Standards

□ Applicable √ Not applicable
There are no differences of net profits and net assets in the financial report disclosed according to the international accounting
standards and Chinese accounting standards during the reporting period.


2. Difference in the financial report of net profits and net assets according to the disclosure of Overseas
Accounting Standards and China Accounting Standards

□ Applicable √ Not applicable
There are no differences of net profits and net assets in the financial reports disclosed according to the overseas accounting standards

                                                                                                                                         13
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


and Chinese accounting standards during the reporting period.


VI. Items and Amounts of Non-recurring Gains and Losses

√ Applicable □ Not applicable
                                                                                                                          Unit: RMB

                                         Item Name                                                Amount                 Note

Profits or Losses From Disposal of Non-Current Assets (Including the Write-Off for the
                                                                                                   10,503,852.18
Accrued Impairment of Assets)

The Government Subsidies Included in the Current Profits and Losses (Excluding the
Government Subsidies Closely Related to Regular Businesses of the Company and Issued               79,439,313.69
in the Quota or Quantity Based on the National Standards

Profits and Losses Resulting from the Changes in Fair Value for Holding Trading Financial
Assets and Trading Financial Liabilities, and Investment Income from Disposal of Trading
Financial Assets, Trading Financial Liabilities, and Financial Assets Available for Trading,       30,141,194.90
Excluding the Effective Hedging Businesses Related to the Regular Business Operation of
the Company

Non-operating Revenue and Expenses Other Than the Above                                             2,248,870.06

Other Gains and Losses Items that Fit the Definition of Non-recurring Gains and Losses             18,436,697.18

Less: Impact of Income Tax                                                                          3,667,332.94

     Impact of Minority Equity (after tax)                                                       100,229,200.71           --

For items defined as non-recurring gains and losses according to the No. 1 Explanatory Announcement on Information Disclosure for
Companies Offering Their Securities to Public - Non-recurring Gains and Losses, or non-recurring gains and losses items listed in the
said document defined as recurring ones, please specify the reasons.
□ Applicable √ Not applicable
In the reporting period, the Company did not define any non-recurring gains and losses items defined and listed in the No. 1
Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to Public - Non-recurring Gains and
Losses, as recurring gains and losses items.




                                                                                                                                  14
                                                                        2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




                             Section III Corporate Business Overview

I. The Principal Business of the Company during the Reporting Period

There are no significant changes in the principal business of the Company during the reporting period. For details, refer to 2018
Annual Report.


II. Material Changes to Major Assets

1. Major changes in main assets


Major Assets                                                 Explanation of Material Changes


Equity Assets         No major changes.

Fixed Assets          No major changes.

Intangible Assets     No major changes.

Construction        in Increase by 38.79% compared with the beginning of the year, mainly due to the increase in the investment of
Progress              Phase II of Hangzhou Smart Manufacturing Base Project, Smart IoT solutions R&D and industrial projects.

                      Decrease by 48.79% compared with the beginning of the years, mainly due to the decrease of settlement of
Notes Receivable
                      sales notes in this period.

Long-term             Increase by 41.88% compared with the beginning of the year, mainly due to the acceptance of installment
Receivables           payment for selling products.


2. Major overseas assets

□ Applicable √ Not applicable


III. Core Competitiveness Analysis

There are no significant changes in the core competitiveness of the Company during the reporting period. For details, refer to 2018
Annual Report.




                                                                                                                                      15
                                                                        2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




         Section IV Discussion and Analysis on Business Circumstance

I. Overview

     During the first half year of 2019, despite the complex environment at home and abroad, the Company has been focusing on
technological innovation as the foundation, customer demands as the orientation and customer success as the goal. Supported by its
constant technological innovation, extensive industry experience and wide customer coverage, the Company continuously improves
its video-centric smart IoT solutions, and proactively grasps the market and industry trends to promote stable growth of business
performance. During the reporting period, the Company has achieved RMB 10.807 billion in operating revenue, a year-over-year
increase of 10.11% and RMB 1.239 billion in net profits attributable to shareholders of the listed company, a year-over-year increase
of 14.51%.
     Main business strategies of the Company include:
     1. Continuously increasing the investment in R&D, and improving the capabilities to come up with comprehensive
solutions
     The Company is committed to taking technological innovation as the core, facilitates the layout of artificial intelligence, cloud
computing, big data, chip, machine vision, robots and other advanced technologies and continuously increases the investment in
R&D. The Company gains deep insight into the industry and technology trends, constructs a differential technology system orient ed
toward "Full Sensing, Full Intelligence, Full Computing and Full Ecosystem (4 Full)" and continuously improves the capability to
come up with comprehensive end-to-end solutions oriented to the pain points of customers; as well as strengthens the construction of
software structuring competence and gradually establishes the operation capability for complete process from software development,
sales to delivery.
     2. Enhancing operation capability for value customers and improving systematic marketing ability
     The Company further develops the customer interface, establishes and improves the tiered and hierarchical customer
management strategies and refined customer management mechanisms, and enhances the operational capability for value customers.
The Company focuses on the management of strategic opportunities, invests resources accurately, strengthens the planning and
organization capability of major projects and improves systematic marketing capability.
     3. Further constructing the global marketing system and strengthening the global delivery and service capability
     In the domestic market, the Company continuously promotes the construction of channel system and refined operation channel,
establishes the tiered and hierarchical project management system and improves the project operation capability; in the overs eas
market, the Company persistently extends its global marketing network, strengthens channel extension and improves the coverage of
overseas market and its brand awareness.
     The Company constantly strengthens its end-to-end supply chain prediction capability and inventory management capability and
improves its supply capability oriented toward the global market with high efficiency and low cost. The Company deepens the
integration of organization, and establishes a systematic delivery and service capability through organization matching and service
system matching. The Company continues to improve the compliance operation system to support the sustainable development of
business.
     4. Continuously promoting systematic management reform and improving organizational capability and operation
efficiency
     The Company constantly carries out the systematic management reform, and improves internal management level and operation
efficiency by carrying out LTC, IPD, ISD and ITR and other core business process reform projects to realize the smoothness of
end-to-end process and provide supports for subsequent high-;'.quality development.

                                                                                                                                   16
                                                                           2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


II. Main Business Analysis

Overview
See "I. Overview" in "Discussion and Analysis on Business Circumstance".
Changes in key financial data over the corresponding period of last year
                                                                                                                             Unit: RMB

                                                                       YoY
                         Current Reporting       Corresponding
                                                                     Change                         Reason of Changes
                                  Period       Period of Last Year
                                                                       (%)

Operating Revenue         10,806,566,370.89       9,814,041,352.48     10.11%

Operating Cost             6,443,429,151.03       6,230,120,445.06      3.42%

Sales Expenses             1,539,714,255.33       1,252,741,900.83     22.91%

Management Fees              346,919,167.36        269,199,404.53      28.87%

                                                                                 Mainly due to increase in exchange loss in the
Financial Expenses            11,045,548.40         -22,880,395.85    148.28% current period as a result of exchange rate
                                                                                 fluctuation.

Income Tax Expense           163,173,365.97        165,721,533.63      -1.54%

R&D Investment             1,245,261,201.77        865,129,052.09      43.94% Mainly due to increase in the investment in R&D

Net Cash Flow
Generated by                 -870,467,092.88     -1,096,356,837.00     20.60%
Operational Activities

Net Cash Flow
Generated by                 -282,555,064.78       -349,648,911.60     19.19%
Investment Activities

Net Cash Flow
                                                                                 Mainly due to the increase in bank loans in the
Generated by                 988,389,356.92        233,280,496.68     323.69%
                                                                                 current period
Financing Activities

Net Additions to
                                                                                 Mainly due to the increase in net cash flow generated
Balance of                   -157,333,633.07     -1,197,623,717.25     86.86%
                                                                                 by financing activities
Equivalents

Significant changes in the profit structure or profit source of the Company in the reporting period
□ Applicable √ Not applicable
No significant changes in the profit structure or profit source of the Company in the reporting period
Operating income structure
                                                                                                                             Unit: RMB

                                  Current Reporting Period              Corresponding Period of Last Year

                                                  Proportion to                                   Proportion to     YoY Change (%)
                              Amount                                        Amount
                                               Operating Revenue                            Operating Revenue

Total Operating          10,806,566,370.89                   100%       9,814,041,352.48                     100%                 10.11%


                                                                                                                                       17
                                                                            2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Revenue

Classified by Industry

Security Industry         10,806,566,370.89                 100.00%        9,814,041,352.48                100.00%                  10.11%

Classified by Product

Solutions                  5,626,141,239.99                  52.06%        5,018,508,530.50                 51.13%                  12.11%

Product                    4,537,889,480.14                  41.99%        4,054,905,104.84                 41.32%                  11.91%

Others                       642,535,650.76                    5.95%          740,627,717.14                 7.55%                  -13.24%

Classified by Region

Domestic                   7,087,773,045.42                  65.59%        6,375,294,969.60                 64.96%                  11.18%

Overseas                   3,718,793,325.47                  34.41%        3,438,746,382.88                 35.04%                      8.14%

Industry, product, or region that accounts for over 10% of the Company's operating income or profit
√ Applicable □ Not applicable
                                                                                                                                  Unit: RMB

                                                                                    Increase or         Increase or           Increase or
                                                                                    Decrease of         Decrease of          Decrease of
                                                                                     Operating        Operating Cost       Gross Profit over
                                                               Gross Profit
                 Operating Revenue        Operating Cost                         Revenue over the         over the                the
                                                                  Margin
                                                                                  Corresponding       Corresponding         Corresponding
                                                                                 Period of the Last Period of the Last Period of the Last
                                                                                       Year                 Year                 Year

Classified by Industry

Security
                    10,806,566,370.89 6,443,429,151.03                 40.37%              10.11%                  3.42%                3.85%
Industry

Classified by Product

Solutions            5,626,141,239.99 3,144,638,108.68                 44.11%              12.11%                  8.00%                2.13%

Product              4,537,889,480.14 2,713,726,371.28                 40.20%              11.91%                  4.22%                4.41%

Classified by Region

Domestic             7,087,773,045.42 4,432,123,646.82                 37.47%              11.18%                  9.38%                1.03%

Overseas             3,718,793,325.47 2,011,305,504.21                 45.92%                 8.14%             -7.66%                  9.26%

When the statistical caliber of the Company's main business data is adjusted in the reporting period, the Company's main business
data should be subject to the one after the statistical caliber at the end of the reporting period is adjusted in the most recent year.
□ Applicable √ Not applicable
Reasons for over 30% changes in related data on year-on-year basis
□ Applicable √ Not applicable


III. Non-main Business Analysis

□ Applicable √ Not applicable


                                                                                                                                            18
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


IV. Analysis of Assets and Liabilities

1. Significant changes in assets composition

                                                                                                                                 Unit: RMB

                                                          At the End of the
                     At the End of the Current
                                                     Corresponding Period of Last
                         Reporting Period
                                                                Year                   Proportion
                                                                                                         Note on Significant Changes
                                        Proportio                        Proportio      Change
                        Amount          n to Total       Amount          n to Total
                                         Assets                           Assets

Cash and Bank
                     4,201,568,114.35     15.32%      4,160,153,847.06     15.79%         -0.47% No Significant Change
Balances

Accounts
                    11,134,944,437.85     40.60% 10,191,372,777.38         38.68%          1.92% No Significant Change
Receivable

Inventory            3,358,049,330.64     12.24%      3,035,579,709.14     11.52%          0.72% No Significant Change

Investment
                       344,460,740.53       1.26%       346,831,376.55        1.32%       -0.06% No Significant Change
Property

Long-term
Equity                 165,358,482.24       0.60%       185,872,021.58        0.71%       -0.11% No Significant Change
Investment

Fixed Assets         1,386,805,962.53       5.06%     1,407,471,330.83        5.34%       -0.28% No Significant Change

                                                                                                    Mainly due to the increase in the
                                                                                                    investment of Phase II of Hangzhou
Construction in
                       313,934,611.81       1.14%       226,191,587.11        0.86%        0.28% Smart Manufacturing Base Project,
Progress
                                                                                                    Smart IoT solutions R&D and
                                                                                                    industrial projects

Short-term                                                                                          Mainly due to the increase in demands
                     3,084,859,034.59     11.25%      1,851,709,561.83        7.03%        4.22%
Loans                                                                                               for short-term capital turnover

Long-term
                       154,000,000.00       0.56%       179,000,000.00        0.68%       -0.12% No Significant Change
Loans


2. Assets and liabilities measured at fair value

√ Applicable □ Not applicable
                                                                                                                                 Unit: RMB

                      At the        Changes in Fair        Cumulative    Impairment         Purchase           Sales
                   Beginning of     Value Gains and        Fair Value    Loss of the Amount of the Amount of At the End of the
  Item Name
                   the Reporting     Losses in the         Changes in     Reporting         Reporting           the       Reporting Period
                      Period        Current Period           Equity           Period         Period          Reporting



                                                                                                                                         19
                                                                       2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                                       Period

Financial
Assets

1. Trading
Financial
Assets
(excluding
Derivative
Financial
Assets)

2. Derivative
Financial                                7,056,942.13                                                                 7,056,942.13
Assets

3. Other Debt
Investments

4. Other Equity
Instrument
Investments

5. Other
Non-current
                    82,970,227.00                                                      1,000,000.00                  83,970,227.00
Financial
Assets

Subtotal of
Financial           82,970,227.00        7,056,942.13                                  1,000,000.00                  91,027,169.13
Assets

Investment
Property

Productive
Biological
Assets

Others



Total               82,970,227.00        7,056,942.13                                  1,000,000.00                  91,027,169.13

Financial
                    38,602,602.30       38,602,602.30                                                                           0
Liabilities

Are there any significant changes in the measurement attributes of the company's main assets during the reporting period?
□ Yes √ No




                                                                                                                                20
                                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


3. Restrictions on asset rights as of the end of the reporting period

     As of June 30, 2019, the Company pledged monetary funds of RMB 660,602,442.92 for bank borrowings and issuance of bank
acceptance bill and letters of guarantee; pledged notes receivable of RMB 1,127,284,255.91 for issuance of bank acceptance bill;
pledged long-term accounts receivable (including those due within one year) amounting of RMB 314,646,279.46 for bank
borrowings.


V. Investment analysis

1. Overview

√ Applicable □ Not applicable

  Investment during the Reporting Period          Investment over the Corresponding Period
                                                                                                                   Fluctuation (%)
                     (RMB)                                       of Last Year

               168,115,641.06                                   433,638,796.38                                        -61.23%


2. Significant equity investments acquired during the reporting period

□ Applicable √ Not applicable


3. Major non-equity investments underway during the reporting period

√ Applicable □ Not applicable
                                                                                                                                        Unit: RMB

                                                                                                                   Reasons
                                                                                                        Cumulati     for
                                                            Cumulative                                    ve       Unreach
                     Fixed                                                                      Anti
            Invest                        Investment          Actual                                    Income        ed     Date of
                     Assets Project                                        Source               cipat                                   Disclosu
 Project    ment                          during the       Investment by             Project             by the    Planned Disclosu
                     Invest industr                                          of                  ed                                     re Index
  Name      Meth                            Current         the End of               Progress            End of Progress       re (If
                     ment         y                                        funds                Inco                                    (If Any)
              od                        Reporting Period    Reporting                                     the        and      Any)
                     or not                                                                     me
                                                              Period                                    Reportin Anticipat
                                                                                                        g Period      ed
                                                                                                                   Income

 Phase I
technolo                                                                                                                                Juchao
  gical                       Video                                                                                                     Informati
 innovati Self-c              surveil                                      Self-ra                                                      on
                                                                                                                             August
   on       onstru Yes        lance       91,881,069.89 221,502,729.66 ised           13.12%                       N/A                  Website
                                                                                                                             17, 2019
 project ction                industr                                      funds                                                        http://cni
   and                        y                                                                                                         nfo.com.
 Phase II                                                                                                                               cn/
construct


                                                                                                                                                  21
                                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


   ion
 project
    of
Hangzho
 u Smart
Manufac
  turing
  Base

                                                                                                                                       Juchao
  Xi’an
                              Video                                                                                                    Informati
  R&D
             Self-c           surveil                                      Self-ra                                                     on
 Center                                                                                                                    August
             onstru Yes       lance         5,042,764.00     40,702,970.46 ised        3.48%                     N/A                   Website
Construc                                                                                                                   17, 2019
             ction            industr                                       funds                                                      http://cni
   tion
                              y                                                                                                        nfo.com.
 Project
                                                                                                                                       cn/

  Smart                                                                                                                                Juchao
   IoT                        Video                                                                                                    Informati
solutions Self-c              surveil                                      Self-ra                                                     on
                                                                                                                           August
  R&D        onstru Yes       lance        22,894,574.74 133,077,812.18 ised           8.20%                     N/A                   Website
                                                                                                                           17, 2019
   and       ction            industr                                       funds                                                      http://cni
industria                     y                                                                                                        nfo.com.
l projects                                                                                                                             cn/

Total          --        --        --     119,818,408.63 395,283,512.30       --        --      0.00      0.00     --          --            --


4. Financial assets at fair value

√ Applicable □ Not applicable
                                                                                                                                       Unit: RMB

                                                                                       Amount
                                        Changes in Fair                  Amount
                                                          Cumulative                    Sold
                         Initial         Value Gains                    Purchased                   Cumulative         Amount at the
                                                           Fair Value                  During                                           Capital
 Asset Class          Investment         and Losses in                  During the                  Investment          End of the
                                                          Changes in                     the                                            Source
                         Cost             the Current                   Reporting                      Income             Period
                                                            Equity                     Reportin
                                            Period                        Period
                                                                                       g Period

Financial                                                                                                                                Equity
derivative                               45,449,188.16                                              -26,055,180.12 343,735,000.00 Fund
instruments                                                                                                                             Capital

Other
                                                                                                                                         Equity
non-current
                      82,970,227.00                                     1,000,000.00                                    83,970,227.00 Fund
financial
                                                                                                                                        Capital
assets

Total                 82,970,227.00      45,449,188.16            0.00 1,000,000.00          0.00   -26,055,180.12 427,705,227.00            --


                                                                                                                                                  22
                                                                                 2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


5. Securities investments

□ Applicable √ Not applicable
No such case as securities investment during the reporting period.


6. Derivatives investments

√ Applicable □ Not applicable
                                                                                                                       Unit: ten thousand RMB

                                                                                                                           Ratio of
                                                                                                                            Closing
                                                                                                                           Investme
 Name of
                                                  Initial                                                                      nt       Actual
    the                                                                                             Provision
                                      Type of    Amount                                                                    Amount       Amount
 Operator                                                                                Opening       for      Closing
                         Affiliated Derivativ       of                                                                     over the     of Gain
    of       Associati                                           Starting    Expiry      Investme Impairme Investme
                         Transacti       e      Derivativ                                                                  Company' or Loss
Derivativ       on                                                Date        Date         nt          nt         nt
                         on or Not Investmen          e                                                                    s Closing during the
     e                                                                                   Amount     Accrued     Amount
                                         t      Investme                                                                   Net Asset Reporting
Investme                                                                                            (If Any)
                                                    nt                                                                     at the End   Period
    nt
                                                                                                                             of the
                                                                                                                           Reporting
                                                                                                                            Period

             Non-asso                Exchange                   May 29,     Septembe
Bank                     No                                 0                            72,063.6               34,373.5      2.54%      1,939.4
             ciated                  contract                   2018        r 16, 2019

Total                                                       0       --          --       72,063.6               34,373.5      2.54%      1,939.4

Source of derivative investment fund            Equity Fund

Legal Actions (If Applicable)                   N/A

Disclosure Date of Derivative Investment        May 9, 2018
Approval Announcement by Board of
                                                March 19, 2019
Directors (If Any)

Disclosure Date of Derivative Investment        May 29, 2018
Approval Announcement by Board of
                                                April 10, 2019
Shareholders (If Any)

Analysis of Derivatives Position Risk and
Control Measure Explanation during the          Please see Announcement on Adjusting Foreign Exchange Hedging Transactions
Reporting Period (Including but Not             (announcement No.: 2018-040) disclosed on May 9, 2018, and Announcement on
Limited to Market Risk, Liquidity Risk,         Carrying Out Foreign Exchange Hedging Transactions (announcement No.: 2019-010)
Credit Risk, Operation Risk, Legal Risk         disclosed on March 19, 2019 for details of risk analysis and control measures
and so on)

As for Variations in Market Prices or Fair      The Company’s accounting of derivatives’ fair value is mainly based on the unexpired
Values of the Invested Derivatives during       future foreign exchange settlement contract between the Company and the bank during



                                                                                                                                                  23
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


the Reporting Period, Detailed Method        the reporting period and the transactional financial assets or Transactional Financial
Used and Related Presumptions and            Liabilities are confirmed by the difference between the closing contract price and
Indicator Settings Should Be Disclosed in future foreign exchange rate.
the Analysis of Fair Value of Derivatives

Is There Any Material Change in
Accounting Polices and Specific Principles
of Accounting Policies for the Company's
                                             N/A
Derivatives during the Reporting Period
Compared with the Previous Reporting
Period

Independent Director’s Opinion of the
Company's Derivative Investment and Risk N/A
Control


7. Use of raised funds

□ Applicable √ Not applicable
No use of funds in the reporting period of the Company


8. Significant non-fundraising investment during the reporting period

□ Applicable √ Not applicable
There are no significant non-fundraising investment projects during the reporting period


VI. Major Assets and Equity Sales

1. Major assets sales

□ Applicable √ Not applicable
No major assets sales in the reporting period of the Company


2. Major equity sales

□ Applicable √ Not applicable


VII. Analysis of Major Subsidiaries and Investees

√ Applicable □ Not applicable
Major subsidiaries and joint-stock companies with a net profit impact of over 10%.
                                                                                                                            Unit: RMB

            Com
Company                             Registered                                             Operating        Operating
            pany Main Business                        Total Assets       Net Assets                                       Net Profit
  Name                                Capital                                               Revenue           Profit
            Type


                                                                                                                                       24
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                    The
                    development,
                    production,
                    installation
                    and sales of
                    electronic and
Zhejiang            communicatio
            Subs
Dahua               n products; the
            idiar
System              design,                            3,731,768,176.2 1,211,740,026.9                    39,617,163.9 25,241,167.9
            y                         500,000,000.00                                     597,695,831.42
Engineeri           construction                                    3               5                               7            8
            Com
ng Co.,             and
            pany
Ltd.                installation of
                    computer
                    system
                    integration
                    and automated
                    control
                    engineering

                    The
                    development,
                    sales, and
                    technical
                    services
                    related to
                    computer
Zhejiang
            Subs software, as
Dahua
            idiar well as the
Vision                                                 17,092,368,395. 1,027,834,040.3 8,002,043,279.7 21,717,612.7 17,785,796.2
            y       design,           646,810,000.00
Technolog                                                          54               3                3              2            0
            Com development,
y Co.,
            pany production
Ltd.
                    and sales of
                    security
                    equipment,
                    electronic
                    products and
                    communicatio
                    ns products

                    Production
            Subs
Zhejiang            and sales of
            idiar
Dahua               electronic        1,110,000,000.0 4,973,473,917.2 1,051,985,336.7 1,851,529,943.8 56,203,379.9 42,284,567.3
            y
Zhilian             products and                   0                3               2                9              1            0
            Com
Co., Ltd.           auxiliary
            pany
                    equipment;



                                                                                                                                 25
                                                                        2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                  technological
                  development,
                  technical
                  consultation
                  and services,
                  achievement
                  transference of
                  computer
                  software,
                  electronic
                  products,
                  communicatio
                  ns products,
                  and digital
                  security
                  products;
                  self-owned
                  house lease;
                  catering
                  service;
                  import and
                  export of
                  goods.

Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ Not applicable

                                               Method of Acquisition and Disposal of     Impact on Overall Production Management
              Company Name
                                              Subsidiaries during the Reporting Period                and Performance

Wuxi Dahua Ruide Electronic Technology                                                   No significant impact on overall
                                                           Deregistration
Co., Ltd.                                                                                production, operation and performance

Hunan Dahua System Technology Co.,                                                       No significant impact on overall
                                                           Deregistration
Ltd.                                                                                     production, operation and performance

Dahua Zhongcheng (Beijing) Technology                                                    No significant impact on overall
                                                           Deregistration
Co., Ltd.                                                                                production, operation and performance

                                                                                         No significant impact on overall
Dahua Italy S.R.L.                                         Deregistration
                                                                                         production, operation and performance

Zhejiang Zhoushan Digital Development                                                    No significant impact on overall
                                                    Established with investment
Operation Co., Ltd.                                                                      production, operation and performance

China Standard Intelligent Security                                                      No significant impact on overall
                                                           Equity transfer
Technology Co., Ltd.                                                                     production, operation and performance

Major holding companies and joint stock companies




                                                                                                                                 26
                                                                           2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


VIII. The structured entity controlled by the Company

□ Applicable √ Not applicable


IX. Estimation of the Company’s Business Performance from January 1st 2019 to September
30th 2019

Estimation of Company’s Business Performance from January 1st 2019 to September 30th 2019: net profits attributable to
shareholders of the listed company are positive and they are not returning to profitability.

Variation in Net Profits Attributable to Shareholders of the
                                                                                                  10.00%        to                25.00%
Company from January 1st 2019 to September 30th 2019

Variation Scope in Net Profits Attributable to Shareholders of the
Company (Ten Thousand RMB) from January 1st 2019 to                                            172,004.95       to            195,460.17
              th
September 30 2019

Net Profits Attributable to Shareholders of the Company (Ten
                                                                                                                              156,368.14
Thousand RMB) from January 1st 2018 to September 30th 2018

                                                                        With the Company's sales and operation revenue growing, it is
                                                                        forecasted that the net profits attributable to the owner of the
Reasons for Changes in Performance
                                                                        parent company increase by 10%-25% compared with the
                                                                        corresponding period of last year.


X. Risks of the Company and Risk Response Solutions

     In the reporting period, there are no major changes in the risks faced by the Company, and the Company has always been
striving to identify all the risks, and actively taking the countermeasures to avoid and lower the risks:
     1. Risk of technology upgrade: The video surveillance industry is a typical technology-intensive industry, which is changing
extremely fast. If the Company is unable to keep up with development trends in the industry's technology, to pay full attention to
customers' diversified individual needs, and to be followed by sufficient R&D investments, it will still face the risk of los ing market
competitiveness due to discontinuous innovation. The Company continuously enhances researches on core technologies in AI, video
cloud, chip design and other fields by enhancing R&D investment, reserves product, technology, management and talent resources to
gear to the broader market in the future, thus realizing sustained and steady development of the Company's businesses.
     2. Risk of business model transformation: With the development of network communications, cloud computing, and big data, as
well as the popularity of smart phones, the business model in the IoT era may have an impact on the traditional industry development
model. If an enterprise cannot timely grasp opportunities brought about by the business model transformation, it may face the risk
that the original market structure becomes broken. The Company pays constant attention to and studies the significant changes in the
global economy, industry and technological fields, analyzes the development logics of the industry, continuously integrates the
evolution and video technologies in the global security industry and IoT industry with the information communication technologies
and digital technologies, pre-judges diversification and uncertainty of customers' demands, consolidates the original advantage
markets, actively explores and conducts experiments on new businesses and new business models, and makes layouts in businesses
and technologies.
     3. Risk of product information security: The Company attaches great importance to and continuously strengthens resource
investment to ensure safe and reliable operations of the security system so as to respond to the product information security risks on
the Internet. However, there may still exist hackers, computer viruses, physical security vulnerabilities, natural disasters, accidents,


                                                                                                                                           27
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


power interruptions, telecommunications failures, and other terrorism or warfare events, which exert influences such as security
vulnerabilities, system failures, or service interruptions. The Company has set up a network security committee and a professional
network security team as well as developed product security programs at the company level, ensuring safety across the whole process
including demand, design, coding and testing. At the same time, actively carry out technical exchanges and cooperation with external
mainstream security manufacturers, security evaluation institutions and corresponding industry security associations to ensure the
provision of security products and solutions for customers.
     4. Risk of intellectual property rights: The acceleration of the Company's globalization and self-owned brand strategy will likely
bring intellectual property risks such as IP rights protection and patent infringement, and may bring risks of business relationship or
public opinion environment fluctuations, increase of legal proceedings, rise of expenses and costs etc. The Company attaches great
importance to technical innovation and has established the mechanisms for protection and management of innovation achievements,
private brands, trade secrets and other intangible assets to constantly concentrate advantageous intellectual property right assets;
established the system for compliance and risk control of the intellectual property rights to constantly enhance the Company's ability
in understanding and grasping the intellectual property right laws and regulations and administrative judicial environments in the
region where the Company's businesses are located.
     5. Risk of exchange rate: The Company's export transactions are mostly settled in United States Dollars ("USD"), while
overseas sales have increased continuously. Therefore, fluctuations in the foreign exchange rate have the potential to affect the profits
of the Company. As export transactions are mostly settled in United States Dollars ("USD"), the company hedges against and avoids
exchange rate risks through centralized management of foreign exchange funds, procurement payment hedging and other approaches.
     6. Risk of decline in local fiscal spending power: At present, local fiscal earnings are declining, while debt is relatively high. If
the local fiscal spending power falls, it may lead to a slowdown in the growth of industry demand, extensions to project time, long
periods needed for companies to withdraw capital, and delays in customer' payments. The Company continuously improves internal
control system, optimizes project review methods, and reduces the risks of delay in payment by prudently selecting local engi neering
projects, systematically evaluating the project risks and reasonably conducting risk management and control.
     7. Risk of international operation: The Company's products and solutions cover over one hundred overseas countries and regions.
International business operation may face risks of trade protection in the countries and regions where they operate, which may bring
negative impact on the Company's local business development. The Company actively prevents and deals with international
operation risks, establishes overseas compliance and risk control system and continuously advances understanding and adaptability of
laws and regulations as well as political and economic environment in the regions where the Company’s business is involved.




                                                                                                                                       28
                                                                               2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




                                           Section V Significant Events

I. Annual General Meetings and Extraordinary General Meetings Convened during the
Reporting Period

1. The shareholders' meetings for this reporting period


                                                Proportion
                                                    of
        Meeting                   Nature                        Convened Date         Date of Disclosure          Disclosure Index
                                               Participating
                                                 Investors

2018 Annual General       Annual General                                                                   Juchao Information Website
                                                    48.60% April 09, 2019            April 10, 2019
Meeting                   Meeting                                                                          http://www.cninfo.com.cn/

First Extraordinary
                          Extraordinary                                                                    Juchao Information Website
General Meeting in                                  48.29% June 05, 2019             June 06, 2019
                          General Meeting                                                                  http://www.cninfo.com.cn/
2019


2. Convening of the interim shareholders' general meetings upon request of the preferred stockholders
whose voting rights are restored

□ Applicable √ Not applicable


II. Conditions of Profit Distribution or Capitalization of Capital Reserves during the
Reporting Period

□ Applicable √ Not applicable
The Company plans not to distribute cash dividends, send bonus shares, and not to convert capital reserves to share capital.


III. Complete and Incomplete Commitments of the Company and Its Actual Controller,
Shareholders, Related parties, Acquirers, and Other Related Parties by the End of the
Reporting Period

√ Applicable □ Not applicable

                                    Com
                       Giver of      mit
   Commitments        Commitm ment                                   Details                               Time     Term Performance
                         ents         s
                                    Type

Commitments           Fu Liquan, Com The number of shares transferred each year during his/her July 15,            Long- As of the
Made during Initial Zhu             mit    term of service shall not exceed 25 percent of the total    2007        term   disclosure


                                                                                                                                        29
                                                                            2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Public Offerings or Jiangming ment number of shares he/she holds in the Company; he/she                                     date of this
Refinancing           , Chen       on    shall not transfer his/her shares in the Company within                            announcemen
                      Ailing,      restr half a year after he/she leaves the Company; within the                            t, the
                      Wu Jun       icted next twelve months, the number of shares sold through                              aforemention
                                   shar the stock exchange listing transactions shall not exceed                            ed
                                   es    50% of the total shares he/she holds.                                              commitments
                                                                                                                            are still in
                                                                                                                            strict
                                                                                                                            execution.

                                                                                                                            As of the
                                   Com (1) He/she will not directly engage in operational
                                                                                                                            disclosure
                                   mit   activities that constitute horizontal competition with the
                                                                                                                            date of this
                                   ment stock company's business; (2) for companies he/she held
Other                                                                                                                       announcemen
                                   on    or indirectly held, he/she will fulfill the obligations under
Commitments to        Fu Liquan,                                                                                            t, the
                                   hori this commitment through agencies and personnel                   June 30,   Long-
Minority              Chen                                                                                                  aforemention
                                   zont (including but not limited to directors and managers); (3) 2007             term
Shareholders of the Ailing                                                                                                  ed
                                   al    if the stock company further expands its range of products
Company                                                                                                                     commitments
                                   com and business scope, he/she and the company held by
                                                                                                                            are still in
                                   petit him/her will not compete with the expanded range of
                                                                                                                            strict
                                   ion   products or businesses of the stock company.
                                                                                                                            execution.

Whether the
Commitment Is         Yes
Fulfilled on Time


IV. Engagement and Dismissal of the CPA Firm

Whether the interim report has been audited
□ Yes √ No
The interim report of the Company has not been audited.


V. Explanation Given by the Board of Directors and Supervisory Committee Regarding the
“Non-standard Auditor’s Report” Issued by the CPA Firm for the Reporting Period

□ Applicable √ Not applicable


VI. Explanation Given by the Board of Directors Regarding the “Non-standard Auditor’s
Report” Issued by the CPA Firm for the Prior Year

□ Applicable √ Not applicable


VII. Bankruptcy and Restructuring

□ Applicable √ Not applicable
No such case as bankruptcy and reorganization related event during the reporting period.

                                                                                                                                           30
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


VIII. Material Litigation and Arbitration

Major lawsuits and arbitrations
□ Applicable √ Not applicable
     During this reporting period, the Company has no major lawsuits or arbitrations. Other lawsuits that do not meet the criteria of
disclosure for major lawsuits are as follows:
     Zhejiang Dahua Technology Co., Ltd. signed a sales contract with Hangzhou Sailidi Import & Export Co., Ltd. (hereinafter
referred to as "Sailidi"), where Sailidi purchased products from Dahua Technology. As at June 30, 2019, the remaining amount was
not paid. In August 2018, Dahua Technology filed a lawsuit to the People's Court of Binjiang District in Hangzhou, requesting Sailidi
Company to pay the remaining amount and the liquidated damages for overdue payment and interests. In September 2018, Dahua
Technology applied to the People's Court of Binjiang District for property preservation, requesting to freeze the bank deposit of
RMB50 millions of Sailidi Company's legal representative Zhu Yuequan, or to seal up or seize property of corresponding value and
provide guarantee. The People's Court of Binjiang District granted the application for property preservation. The Binjiang District
People's Court of Hangzhou conducted a public trial on January 11, 2019, and issued (2018) Zhejiang 0108 Min Chu No.4451
judgment on January 17, 2019, requiring Sailidi to pay Dahua Technology the overdue amount RMB 27,878,975.60 and interest loss
RMB1,021,088.16 (temporarily calculated until December 31, 2018) upon the judgment took effect. Zhu Yuequan assumed the joint
and several liabilities. Until the financial reporting date, this case was still in the execution stage. According to the inventory of
seized property, the Company's estimated recoverable amount is RMB10 million. The net realizable value of other seized proper ty is
of significant uncertainty, thus the Company makes provision for bad debts correspondingly based on the difference between the
present value of estimated future cash flow and its book value.
     In July 2019, Salidi and Zhu Yuequan applied for a retrial to the Hangzhou Intermediate People’s Court ( Intermediate People’s
Court). The Company received the Notice of Acceptance of Civil Application for Retrial from the Intermediate Peoples’ Court on
August 2, 2019, and the Intermediate People’s Court decided to file a case for review. The Company has submitted the answer brief
for retrial.


IX. Media Queries

□ Applicable √ Not applicable
No such case as common challenge from media during the reporting period.


X. Punishments and Rectifications

□ Applicable √ Not applicable
No such case as penalty and rectification during the reporting period.


XI. Integrity of the Company and Its Controlling Shareholder and Actual Controllers

□ Applicable √ Not applicable


XII. Implementation of the Company’s Equity Incentive Plan, Employee Stock Incentive Plan
or Other Incentive Plans

√ Applicable □ Not applicable
     1. On May 16, 2017, the Company's 2016 Annual General Meeting of Shareholders reviewed and approved the Zhejiang Dahua


                                                                                                                                    31
                                                                           2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Technology Co., Ltd. Phase III Employee Stock Ownership Plan (Draft) and its summary, and decided to implement the Phase III
Employee Stock Ownership Plan. On June 1, 2017, the Company's Phase III employee stock ownership plan completed the stock
purchase through the "DAHUA No. 3 Directional Asset Management Plan of Caitong Securities Asset Management", with an
average purchase price of RMB16.83 per share and total purchase amount of 47,000,000 shares.
      On November 12, 2018, the Company's 18th meeting of the 6th Board of Directors reviewed and approved the Suggestive
Proposal on Extension of the Impending Expiration of the Company's Phase III Employee Stock Ownership Plan Duration. The
Board of Directors agreed to extend the Company's Phase III employee stock ownership plan for one year according to the voting
results of the shareholders' meeting. That is, the duration was extended for one additional year on the basis of the original termination
date, until May 15, 2020.
     2. On December 27, 2018, the Company’s 5th extraordinary shareholders meeting in 2018 reviewed and approved the Proposal
on Repurchase and Cancellation of Some Granted but Unlocked Restricted Stocks and agreed to buy back and cancel the 44,200
restricted shares which are granted but not unlocked and held by the incentive targets who have left the Company and one deceased
personnel. The repurchase price was RMB 8.17 per share, and the registered capital was reduced accordingly. The above repurchase
and cancellation was completed on March 4, 2019 and the change of industrial and commercial registration was completed on April
15, 2019.


XIII. Significant Related-Party Transactions

1. Related transactions relevant to daily operations

□ Applicable √ Not applicable
No such case as significant related-party transactions connected with daily operations.


2. Related transactions in acquisition or sale of assets or equities

□ Applicable √ Not applicable
No such case as related-party transactions arising from the acquisition or sale of assets or equity.


3. Significant related-party transactions arising from joint investments on external parties

□ Applicable √ Not applicable
No such case as significant related-party transactions arising form joint investments on external parties.


4. Related-party creditor's rights and debts

□ Applicable √ Not applicable
No such case as significant related credits and debts during the reporting period.


5. Other major related transactions

□ Applicable √ Not applicable
No other major related transactions during the reporting period.




                                                                                                                                      32
                                                                        2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


XIV. Significant Contracts and Their Execution

1. Matters on trusteeship, contracting, and leasehold

(1) Matters on trusteeship

□ Applicable √ Not applicable
No such case as custody during the reporting period.


(2) Contracting

□ Applicable √ Not applicable
No such case as contracting during the reporting period.


(3) Leasing

√ Applicable □ Not applicable
Explanations on leases
     During the reporting period, some of the Company's own real estate properties were used for rental, and the leased real estate
property was used for office, warehouse and production workshops. There were no other major real estate leasing.
Cases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reporting period
□ Applicable √ Not applicable
     No such leases that brought the profit and loss accounted for more than 10% of the Company's total profit during the reporting
period.


2. Significant guarantees

√ Applicable □ Not applicable


(1) Guarantees

                                                                                                              Unit: ten thousand RMB

                         External Guarantees from the Company (Excluding Guarantees to the Subsidiaries)

                                                                           Actu
                     Announcem
                                                                             al                                            Guarantee
                      ent Date of
                                                 Actual Occurrence Date Guar                                                   for
                      Disclosure    Guarantee                                        Type of        Term of      Due or
 Guaranteed Party                                  (Date of Agreement       ante                                            Related
                         of the     Amount                                          Guarantee     Guarantee        Not
                                                           Signing)          e                                             Parties or
                      Guarantee
                                                                           Amo                                                 Not
                          Cap
                                                                            unt



Total Amount of External                                                   Total Amount of
Guarantees Approved during the                                             External guarantees

                                                                                                                                      33
                                                                           2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Reporting Period (A1)                                                         Actually Occurred
                                                                              during the
                                                                              Reporting Period
                                                                              (A2)

                                                                              Total Balance of
Total Amount of External                                                      External Guarantees
Guarantees Approved by the                                                    Actually Paid at the
End of the Reporting Period                                                   End of the
(A3)                                                                          Reporting Period
                                                                              (A4)

                                                 Company's Guarantees to Subsidiaries

                         Announcem                       Actual
                                                                                                                                      Guarant
                         ent Date of                   Occurrence
                                                                                                                                      ee for
                         Disclosure       Guarantee       Date        Actual Guarantee     Type of                           Due or
  Guaranteed Party                                                                                     Term of Guarantee              Related
                           of the          Amount        (Date of         Amount         Guarantee                            Not
                                                                                                                                      Parties
                          Guarantee                    Agreement
                                                                                                                                      or Not
                            Cap                         Signing)

                                                                                                        Two years after
                                                                                             Joint
                                                       January 15,                                     the maturity of the
                                                                         11,000.00         liability                          Yes      Yes
                                                          2018                                         debts in the master
                                                                                           guarantee
                                                                                                            contract

                                                                                             Joint
                                                                                                         May 4, 2018 -
                                                       May 4, 2018       30,000.00         liability                          Yes      Yes
                                                                                                         April 16, 2019
                                                                                           guarantee

                                                                                                        Three years after
                                                                                             Joint
                                                        August 2,                                      the maturity of the
                                                                          2,000.00         liability                          Yes      Yes
                                                          2018                                         debts in the master
                                                                                           guarantee
                                                                                                            contract
Zhejiang        Dahua
                         May        18,                                                      Joint          June 6,
Vision      Technology                    750,000.00
                         2019                          June 6, 2016      29,000.00         liability     2016-January         No       Yes
Co., Ltd.
                                                                                           guarantee         1, 2020

                                                                                                        Two years after
                                                                                             Joint
                                                       August 10,                                      the maturity of the
                                                                         60,000.00         liability                          No       Yes
                                                          2017                                         debts in the master
                                                                                           guarantee
                                                                                                            contract

                                                                                                        Two years after
                                                                                             Joint
                                                       October 13,                                    the maturity of the
                                                                         22,000.00         liability                          No       Yes
                                                          2017                                         debts in the master
                                                                                           guarantee
                                                                                                            contract

                                                        March 27,                            Joint     March 20, 2018 -
                                                                         50,000.00                                            No       Yes
                                                          2018                             liability    March 19,2021


                                                                                                                                               34
                  2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                               guarantee

                                 Joint
 April 13,                                  April 13, 2018 -
                24,000.00      liability                         No   Yes
   2018                                      April 12, 2021
                               guarantee

                                            Three years after
                                 Joint
 July 25,                                  the maturity of the
                10,000.00      liability                         No   Yes
   2018                                    debts in the master
                               guarantee
                                                contract

                                            Three years after
                                 Joint
August 1,                                  the maturity of the
                20,000.00      liability                         No   Yes
   2018                                    debts in the master
                               guarantee
                                                contract

                                            Three years after
                                 Joint
August 21,                                 the maturity of the
                10,000.00      liability                         No   Yes
   2018                                    debts in the master
                               guarantee
                                                contract

                                            Three years after
                                 Joint
September                                  the maturity of the
                10,000.00      liability                         No   Yes
 3, 2018                                   debts in the master
                               guarantee
                                                contract

                                            Two years after
                27,498.80        Joint
September                                  the maturity of the
              (40 million US   liability                         No   Yes
 21, 2018                                  debts in the master
                 dollars)      guarantee
                                                contract

                                 Joint       November 26,
November
                22,000.00      liability   2018 - November       No   Yes
 26,2018
                               guarantee        26, 2020

                                            Three years after
                                 Joint
January 3,                                 the maturity of the
                20,000.00      liability                         No   Yes
   2019                                    debts in the master
                               guarantee
                                                contract

                                            Three years after
                                 Joint
January 17,                                the maturity of the
                30,000.00      liability                         No   Yes
   2019                                    debts in the master
                               guarantee
                                                contract

                                            Two years after
                10,312.05        Joint
March 20,                                  the maturity of the
              (15 million US   liability                         No   Yes
   2019                                    debts in the master
                 dollars)      guarantee
                                                contract

March 21,                        Joint      Three years after
                20,000.00                                        No   Yes
   2019                        liability   the maturity of the


                                                                            35
                                                                2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                                                            guarantee debts in the master
                                                                                              contract

                                                                                          Three years after
                                                                              Joint
                                                April 18,                                the maturity of the
                                                              20,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                                          Three years after
                                                                              Joint
                                                April 28,                                the maturity of the
                                                              10,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                                          Two years after
                                                                              Joint
                                                 May 10,                                 the maturity of the
                                                              65,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                                          Three years after
                                                                              Joint
                                                 May 13,                                 the maturity of the
                                                              23,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                              Joint
                                                 June 26,                                 June 26, 2019 -
                                                              18,000.00      liability                         No   Yes
                                                  2019                                     June 25, 2022
                                                                            guarantee

                                                                              Joint
                                                                                           June 6, 2016 -
                                               June 6, 2016   20,000.00      liability                         No   Yes
                                                                                           June 30, 2020
                                                                            guarantee

                                                                              Joint      September 1, 2018
                                               September
                                                              50,000.00      liability     - September 1,      No   Yes
                                                 1, 2018
                                                                            guarantee           2020

                                                                              Joint
                                                 October                                 October 12, 2018 -
                                                              30,000.00      liability                         No   Yes
                                                 12,2018                                 October 12, 2020
                                                                            guarantee
Zhejiang        Dahua May   18,                                                          One year after the
                                  600,000.00                                  Joint
Zhilian Co., Ltd.    2019                        April 9,                                  maturity of the
                                                              10,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                                         One year after the
                                                                              Joint
                                                April 25,                                  maturity of the
                                                              10,000.00      liability                         No   Yes
                                                  2019                                   debts in the master
                                                                            guarantee
                                                                                              contract

                                                                              Joint       Three years after
                                                 May 13,
                                                              6,000.00       liability   the maturity of the   No   Yes
                                                  2019
                                                                            guarantee debts in the master


                                                                                                                          36
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                                                                                        contract

                                                                                         Joint
                                                                                                     June 6, 2016 -
                                                     June 6, 2016      10,000.00       liability                         No    Yes
                                                                                                    March 30, 2020
                                                                                       guarantee

                                                                                                    Two years after
                                                                                         Joint
                                                       October                                     the maturity of the
                                                                        6,000.00       liability                         No    Yes
                                                       10,2017                                     debts in the master
                                                                                       guarantee
Zhejiang         Dahua                                                                                  contract
                          May    18,
System      Engineering                50,000.00                                                    Two years after
                          2019                                                           Joint
Co., Ltd.                                              May 10,                                     the maturity of the
                                                                       10,000.00       liability                         No    Yes
                                                        2019                                       debts in the master
                                                                                       guarantee
                                                                                                        contract

                                                                                                    Three years after
                                                                                         Joint
                                                       May 13,                                     the maturity of the
                                                                        4,000.00       liability                         No    Yes
                                                        2019                                       debts in the master
                                                                                       guarantee
                                                                                                        contract

                                                                                                    Two years after
                                                                                         Joint
                                                       April 9,                                    the maturity of the
                                                                       20,000.00       liability                         Yes   Yes
                                                        2018                                       debts in the master
                                                                                       guarantee
Dahua       Technology May       18,                                                                    contract
                                       200,000.00
(HK) Limited              2019                                                                       December 15,
                                                                       34,373.50         Joint
                                                      December                                           2017 -
                                                                     (50 million US    liability                         No    Yes
                                                      15, 2017                                       December 15,
                                                                        dollars)       guarantee
                                                                                                          2020

                                                                        206.24           Joint
Dahua       Technology May       18,                  March 4,                                      March 9, 2019 -
                                        1,000.00                    (300 thousand US   liability                         No    Yes
USA Inc.                  2019                          2019                                         March 9, 2020
                                                                        dollars)       guarantee

                                                                        2,150.34         Joint
                                                      March 26,                                    March 26, 2019 -
DAHUA                                                                (MXN 59.9731      liability                         No    Yes
                                                        2019                                        March 26, 2020
TECHNOLOGY                May    18,                                    million)       guarantee
                                       10,000.00
MEXICO S.A. DE 2019                                                     6,451.01         Joint
C.V                                                    April 9,                                      April 9, 2019 -
                                                                    (MXN 179.9794      liability                         No    Yes
                                                        2019                                         April 9, 2020
                                                                        million)       guarantee

Guangxi          Dahua
                          May    18,
Information                              10,000.00                       No such case during the reporting period
                          2019
Technology Co., Ltd.

Zhejiang         Dahua
                          May    18,
Jinzhi      Technology                  100,000.00                       No such case during the reporting period
                          2019
Co., Ltd.

Xi'an Dahua Zhilian May          18,    100,000.00                       No such case during the reporting period


                                                                                                                                     37
                                                    2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Technology Co., Ltd. 2019

Zhejiang          Huafei
Intelligent                May    18,
                                         5,000.00   No such case during the reporting period
Technology         CO., 2019
LTD.

Zhejiang Huachuang
                           May    18,
Vision        Technology                 5,000.00   No such case during the reporting period
                           2019
Co., Ltd.

Zhejiang         HuaRay May       18,
                                         5,000.00   No such case during the reporting period
Technology Co., Ltd. 2019

Zhejiang          Dahua
Security        Network May       18,
                                         5,000.00   No such case during the reporting period
Operation        Service 2019
Co., Ltd.

Hangzhou        Xiaohua
                           May    18,
Technology         CO.,                  5,000.00   No such case during the reporting period
                           2019
LTD.

Zhejiang          Dahua
                           May    18,
Security Service Co.,                    5,000.00   No such case during the reporting period
                           2019
Ltd.

Hangzhou Tecomore May             18,
                                         5,000.00   No such case during the reporting period
Technology Co., Ltd. 2019

Hangzhou Huacheng
                           May    18,
Network Technology                       5,000.00   No such case during the reporting period
                           2019
Co., Ltd.

Wuxi Dahua Ruipin May             18,
                                         5,000.00   No such case during the reporting period
Technology Co., Ltd. 2019

Zhejiang        Huaxiao May       18,
                                         5,000.00   No such case during the reporting period
Technology Co., Ltd. 2019

Zhejiang          Dahua
Investment                 May    18,
                                         5,000.00   No such case during the reporting period
Management          Co., 2019
Ltd.

Zhejiang          Dahua
                           May    18,
Robot         Technology                 5,000.00   No such case during the reporting period
                           2019
Co., Ltd.

DAHUA          EUROPE May         18,
                                        10,000.00   No such case during the reporting period
B.V.                       2019

Dahua Technology           May    18,
                                          500.00    No such case during the reporting period
Singapore Pte.Ltd.         2019


                                                                                                           38
                                               2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Dahua     Technology May      18,
                                    2,000.00   No such case during the reporting period
UK Limited             2019

Dahua Technology       May    18,
                                    1,600.00   No such case during the reporting period
Poland sp.zo.o.        2019

Dahua     Technology May      18,
                                    1,600.00   No such case during the reporting period
Hungary Kft            2019

DAHUA
                       May    18,
TECHNOLOGY IND                      3,500.00   No such case during the reporting period
                       2019
PVT LTD

DAHUA
TECHNOLOGY
BRASIL
                       May    18,
COMERCIO SERV                       1,000.00   No such case during the reporting period
                       2019
EM SEGURANCA
ELETRONICA
LTDA

DAHUA             ITALY May   18,
                                     350.00    No such case during the reporting period
S.R.L.                 2019

DAHUA
                       May    18,
TECHNOLOGY                           350.00    No such case during the reporting period
                       2019
MIDDLE EAST FZE

DAHUA
                       May    18,
TECHNOLOGY                           500.00    No such case during the reporting period
                       2019
PER S.A.C

DAHUA
TECHNOLOGY
                       May    18,
RUS LIMITED                         1,000.00   No such case during the reporting period
                       2019
LIABILITY
COMPANY

DAHUA
TECHNOLOGY             May    18,
                                               No such case during the reporting period
AUSTRALIA PTY          2019          500.00
LTD

Dahua Technology
                       May    18,
South Africa                         500.00    No such case during the reporting period
                       2019
Proprietary Limited

DAHUA
                       May    18,
TECHNOLOGY                           100.00    No such case during the reporting period
                       2019
CANADA INC.

DAHUA
                       May    18,    600.00    No such case during the reporting period
GUVENLIK

                                                                                                      39
                                            2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


TEKNOLOJILERI         2019
SANAYI VE
TICARET ANONIM
SIRKETI

Dahua Technology      May    18,
                                   300.00   No such case during the reporting period
SRB d.o.o.            2019

Dahua Technology      May    18,
                                   100.00   No such case during the reporting period
Bulgaria EOOD         2019

DAHUA IBERIA,         May    18,
                                   200.00   No such case during the reporting period
S.L.                  2019

DAHUA SECURITY
                      May    18,
MALAYSIA SDN.                      200.00   No such case during the reporting period
                      2019
BHD.

Dahua Technology      May    18,
                                   200.00   No such case during the reporting period
Kazakhstan LLP        2019

PT DAHUA VISION
                      May    18,
TECHNOLOGY                         300.00   No such case during the reporting period
                      2019
INDONESIA

Dahua Technology
                      May    18,
Korea Company                      100.00   No such case during the reporting period
                      2019
Limited

Dahua Technology      May    18,
                                   200.00   No such case during the reporting period
S.R.L.                2019

Dahua technology      May    18,
                                   200.00   No such case during the reporting period
France SAS            2019

                      May    18,
Dahua vision LLc                   200.00   No such case during the reporting period
                      2019

Dahua       Technology May   18,
                                   200.00   No such case during the reporting period
New Zealand Limited 2019

Dahua Technology      May    18,
                                   300.00   No such case during the reporting period
GmbH i.Gr.            2019

DAHUA
                      May    18,
TECHNOLOGY                         100.00   No such case during the reporting period
                      2019
COLOMBIA SAS

DAHUA
                      May    18,
TECHNOLOGY                         100.00   No such case during the reporting period
                      2019
PANAMA,S.A.

Dahua Technology      May    18,
                                   100.00   No such case during the reporting period
Chile SpA             2019




                                                                                                   40
                                                                 2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Dahua technology
                        May     18,
tunisia limited                        200.00                   No such case during the reporting period
                        2019
liability company

DAHUA
                        May     18,
TECHNOLOGY                             100.00                   No such case during the reporting period
                        2019
KENYA LIMITED

DAHUA
                        May     18,
TECHNOLOGY                             200.00                   No such case during the reporting period
                        2019
CHINA(PVT) LTD

DAHUA
TECHNOLOGY
                        May     18,
PAKISTAN                               200.00                   No such case during the reporting period
                        2019
(PRIVATE)
LIMITED

DAHUA
                        May     18,
TECHNOLOGY                             100.00                   No such case during the reporting period
                        2019
MOROCCO SARL

DAHUA                   May     18,
                                       200.00                   No such case during the reporting period
ARGENTINA S.A.          2019

Dahua Technology        May     18,
                                       200.00                   No such case during the reporting period
Czech s.r.o.            2019

Dahua Technology        May     18,
                                       200.00                   No such case during the reporting period
Denmark ApS             2019

Dahua Technology        May     18,
                                       300.00                   No such case during the reporting period
Netherlands B.V.        2019

DAHUA
TECHNOLOGY              May     18,
                                       100.00                   No such case during the reporting period
(THAILAND) CO           2019
LTD

DAHUA
                        May     18,
TECHNOLOGY                             600.00                   No such case during the reporting period
                        2019
ITALY S.R.L.

LOREX
                        May     18,
TECHNOLOGY                            1,000.00                  No such case during the reporting period
                        2019
INC.

LOREX                   May     18,
                                      1,000.00                  No such case during the reporting period
CORPORATION             2019

Total Amount of Guarantees to                          Total Amount of Guarantees to
Subsidiaries Approved during the        1,912,300.00   Subsidiaries Actually Occurred                          265,119.64
Reporting Period (B1)                                  during the Reporting Period (B2)



                                                                                                                        41
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                                               Total Balance of Guarantees
Total Amount of Guarantees to
                                                               Actually Paid to Subsidiaries at
Subsidiaries Approved by the End           1,912,300.00                                                                  699,991.94
                                                               the End of the Reporting Period
of the Reporting Period (B3)
                                                               (B4)

                                               Subsidiaries' Guarantees to Subsidiaries

                    Announcem                       Actual
                                                                                                                         Guarantee
                     ent Date of                  Occurrence
                                                                       Actual                                                for
                     Disclosure    Guarantee         Date                             Type of       Term of     Due or
 Guaranteed Party                                                     Guarantee                                            Related
                       of the      Amount           (Date of                         Guarantee      Guarantee    Not
                                                                      Amount                                              Parties or
                     Guarantee                    Agreement
                                                                                                                             Not
                        Cap                        Signing)



                                                                  Total Amount of Guarantees to
Total Amount of Guarantees to
                                                                  Subsidiaries Actually Occurred
Subsidiaries Approved during
                                                                  during the Reporting Period
the Reporting Period (C1)
                                                                  (C2)

Total Amount of Guarantees to                                     Total Balance of Guarantees
Subsidiaries Approved by the                                      Actually Paid toSubsidiaries at
End of the Reporting Period                                       the End of the Reporting
(C3)                                                              Period (C4)

The total amount of the Company's guarantees (the total of the above three items)

Total Amount of Guarantees                                        Total Amount of Guarantees
Approved during the Reporting                      1,912,300.00 Actually Occurred during the                             265,119.64
Period (A1+B1+C1)                                                 Reporting Period (A2+B2+C2)

Total Amount of Guarantees                                        Total Balance of Guarantees
Approved by the End of the                         1,912,300.00 Actually Paid at the End of the                          699,991.94
Reporting Period (A3+B3+C3)                                       Reporting Period (A4+B4+C4)

Total Amount of Actual Guarantees (A4+B4+C4) as a
                                                                                                                            51.63%
Percentage of the Company's Net Assets

Including:

Balance of Guarantees to the Shareholders, Actual Controllers
and Their Related Parties (D)

Balance of Debt Guarantees Directly or Indirectly Offered to
Guaranteed Objects with Asset-liability Ratio Exceeding 70%                                                              669,991.94
(E)

Amount of the Guarantees with the Total Volume Exceeding
                                                                                                                          22,109.80
50% of the Net Assets (F)

Total Amount of the Above Three Guarantees (D+E+F)                                                                       669,991.94

Notes on Possible Joint and Several Repayment Liability for



                                                                                                                                     42
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Unexpired Guarantees (If Any)

Notes on Providing External Guarantees in Violation of
Specified Procedures (If Any)


(2) Illegal external guarantees

□ Applicable √ Not applicable
No illegal external guarantees during the reporting period.


3. Other significant contracts

□ Applicable √ Not applicable
No such case as other significant contract during the reporting period.


XV. Social Responsibility

1. Significant environmental problems

   The listed company and its subsidiaries do not belong to the key pollutant discharging units announced by the environmental
protection department.


2. Social responsibility fulfillment regarding targeted poverty alleviation

   In the reporting half-year of the Company, there has been no targeted poverty alleviation activity, or follow-up targeted poverty
alleviation plan.


XVI. Explanation of Other Significant Events

√ Applicable □ Not applicable
     1. On January 24, 2017, the Company's holding sub-subsidiary, Nanbei United Information Technology Co., Ltd. and its
wholly-owned subsidiary, Zhejiang Dahua System Engineering Co., Ltd. signed a Cooperation Agreement on PPP Investment in Safe
City Project of Shache County with the People's Government of Shache County in Kashgar, Xinjiang, which is just a framework
agreement on the PPP project. The agreement stipulates that the service content is the pre-feasibility study of the project and the
design of the project, etc. For the implementation of the specific project, it still needs to fulfill related decision-making and approval
procedures, such as government procurement.s
      On July 21, 2017, the Company received the Notification of Award issued by the project purchasing unit, which confirmed that
the wholly-owned subsidiary Zhejiang Dahua System Engineering Co., Ltd. (the consortium leader), with the holding sub-subsidiary
Nanbei United Information Technology Co., Ltd. (member of the consortium) is the winning bidder for the Safe City Construction
Project (PPP) in Shache County. The winning bid amount of the project is RMB 4.31479 billion (the final amount is based on the
signed contract), which is the total amount for construction and operation within 10-year project cooperation period.
      On August 4, 2017, the Company's 34th session of the 5th Board of Directors' meeting reviewed and approved the Proposal on
Investing to Establish a PPP Project Company in Shache County, Xinjiang, and the Company submitted a bid based on the
requirements for the Shache County City Construction Project (PPP). The winning consortium jointly funded the establishment of the
project company, with a registered capital of RMB 335,567,200. Among them, Zhejiang Dahua System Engineering Co., Ltd.


                                                                                                                                       43
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


contributed RMB 234,897,040, accounted for 70% of the total contribution; Nanbei United Information Technology Co., Ltd.
contributed RMB 100,670,160, accounted for 30%. In August 2017, the project company was established and the name of the
company approved by the industrial and commercial bureau was Xinjiang Dahua Xinzhi Information Technology Co., Ltd.
      On April 18, 2018, the project winning bidder received the request from the Public Security Bureau of Shache County to stop
the implementation of the "Safe City Construction (PPP) Project in Shache County". Near a half of the construction progress in the
project construction period has been completed, but no expenses for subsequent equipment replacement, operation and maintenance
have been incurred. The actual investment in the construction period will be further accounted and confirmed with the government.
     The various activities and construction of this project engaged in by the winning bidder are in compliance with the requirements
in PPP-related laws and regulations, but the risk exists that the project will not be furthered and the identifiable income of the
Company in the future may be reduced. The Company will actively cooperate with relevant government departments in their work,
and timely perform the obligation of information disclosure in accordance with the subsequent progress of the project and the
provisions in relevant laws and regulations and the Articles of Association.
     2. The Company intends to repurchase the company's share with self-raised funds by centralized bidding, with the total amount
of repurchase funds not less than RMB 200 million (inclusive) and not more than RMB 400 million (inclusive). The repurchase price
shall not exceed RMB 25.37 per share (inclusive). Based on the calculation of upper limit of repurchase price and amount, the
estimated total number of repurchase shares are 15,766,653 shares, accounting for about 0.53% of the current capital shares of the
Company. The detailed number of repurchase shares and its ratio of the capital shares of the Company shall be subject to the actual
repurchase number of shares and the ratio upon expiration of the repurchase period. The implementation term of this repurchase
shares shall be within 12 months since the date when the Board of Directors agreed the repurchase program. As of June 30, 2019, the
Company has repurchased 6,149,480 company shares through the specialized security account for share repurchase by centralized
bidding, which accounts for 0.2051% of the total current capital shares of the Company. The highest transaction price is RMB14.03
per share and the lowest RMB12.90 per share with total amount of RMB 80,733,758.44 (excluding transaction costs). The
Announcement on the Program of Company’s Shares Repurchase (Announcement No.: 2019-025) and the Announcement on
Progress on Company’s Shares Repurchase (Announcement No.: 2019-041) have been published on April 26,2019 and July 3,2019
respectively on the Securities Times and the website www. cninfocom.cn.
     3. On June 5, 2019, the Company’s first extraordinary shareholders meeting in 2019 approved the "Proposal on the Company's
Public Issuance of Convertible Corporate Bonds" and the "Feasibility Analysis on the Use of Funds Raised by the Company's Public
Issuance of Convertible Corporate Bonds" and others. (See the No. 2019-030 and No. 2019-038 announcements on the Securities
Times and www.cninfocom.cn for details)


XVII. Significant Events of the Company’s Subsidiaries

□ Applicable √ Not applicable




                                                                                                                                    44
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




   Section VI Changes in Shares and Information about Shareholders

I. Changes in Shares

1. Changes in shares

                                                                                                                            Unit: share

                             Before the Change                  Changes in the Period (+, -)                  After the Change

                                                     New              Shares
                                                     Share           Transfer
                                                             Bonus
                              Shares       Ratio       s             red from    Others        Sub-total      Shares         Ratio
                                                             Share
                                                     Issue           Capital
                                                      d              Reserves

I. Shares Subject to
Conditional               1,169,462,780    39.01%                               14,474,431 14,474,431       1,183,937,211    39.50%
Restrictions

3. Other Domestic
                          1,169,410,780    39.01%                               14,474,431 14,474,431       1,183,885,211    39.50%
Shares

Shares Held by
Domestic Matural          1,169,410,780    39.01%                               14,474,431 14,474,431       1,183,885,211    39.50%
Persons

4. Foreign Shares                 52,000     0.00%                                                                52,000       0.00%

Shares Held by Foreign
                                  52,000     0.00%                                                                52,000       0.00%
Natural Persons

II. Shares without
                          1,828,159,150    60.99%                               -14,518,631 -14,518,631     1,813,640,519    60.50%
Restrictions

1. RMB Ordinary
                          1,828,159,150    60.99%                               -14,518,631 -14,518,631     1,813,640,519    60.50%
Shares

III. Total                2,997,621,930 100.00%                                    -44,200        -44,200   2,997,577,730 100.00%

Reasons for changes in shares
√ Applicable □ Not applicable
     1. At the beginning of each year, the number of shares locked by executives of the Company shall be revivified according to 75%
of the total number of shares held by executives.
     2. On March 4, 2019, the company has completed the repurchase and cancellation of total 44,200 restricted shares that have
been granted but not unlocked from the resigned incentive targets and the deceased persons listed in the restricted share incentive
plan in 2018, reducing the total capital shares of the Company from 2,997,621,930 shares to 2,997,577,730 shares.


Approval for changes in shares



                                                                                                                                     45
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


√ Applicable □ Not applicable
     On December 27, 2018, the Company's 5th extraordinary shareholders meeting in 2018 reviewed and approved the Proposal on
Repurchase and Cancellation of Some Granted but Unlocked Restricted Stocks, and decided to repurchase and cancel a total of
44,200 restricted shares that have been granted but not unlocked from the resigned incentive targets and the deceased persons.


Transfer for changes in shares
√ Applicable □ Not applicable
     After the repurchase and cancellation, the total capital shares of the Company reduced from 2,997,621,930 shares to
2,997,577,730 shares. The above repurchase and cancellation has been completed on March 4, 2019 through verification and
confirmation by the Shenzhen Office of China Securities Depository and Clearing Corporation Limited.
The progress on share buy-back
√ Applicable □ Not applicable
     1. The 21st meeting of the 6th Board of Directors held on April 25, 2019 reviewed and approved the Proposal on the Program of
Repurchasing Company’s Shares, which intends to repurchase the Company’s partial issued public shares with self-raised funds by
centralized bidding; the total amount of repurchase funds are not less than RMB 200 million (inclusive) and not more than RMB 400
million (inclusive), which is to be used for subsequent implementation of stock ownership incentive plan or employee stock option
plan; the repurchase unit price shall not exceed RMB25.37 per share (inclusive) and detailed repurchase number of shares shall
subject to that actual repurchase shares upon the expiration of repurchase period; implementation term of the repurchase shares shall
be within 12 months since the date when the Board of Directors agreed the repurchase program. For details, please refer to the Report
on Repurchasing Shares (No.: 2019-027) disclosed by the Company on May 11, 2019.
     2. As of June 30, 2019, the Company has repurchased 6,149,480 company shares through the specialized security account for
share repurchase by centralized bidding, which accounts for 0.2051% of the total current capital shares of the Company. The highest
transaction price is RMB14.03 per share and the lowest RMB12.90 per share with total amount of RMB 80,733,758.44 (excluding
transaction costs). The repurchase of shares conforms to the requirements of relevant laws and regulations and is in line with the
repurchase program. For details, please refer to the Announcement on the Progress of Repurchasing Shares (No.: 2019-041) disclosed
by the Company on July 3, 2019.
The progress on reduction of re-purchase shares by means of centralized bidding
□ Applicable √ Not applicable
Effects of changes in shares on the basic earnings per share ("EPS"), diluted EPS, net assets per share, attributable to common
shareholders of the Company, and other financial indexes over the last year and last period
□ Applicable √ Not applicable
Other contents that the Company considers necessary or are required by the securities regulatory authorities to disclose
□ Applicable √ Not applicable


2. Changes in restricted stocks

√ Applicable □ Not applicable
                                                                                                                           Unit: share

 Name of        Opening                               Increased in    Closing
                                  Vested in Current
Sharehold      Restricted                               Current      Restricted    Note on Restricted Shares      Date of Unlocking
                                       Period
    er           Shares                                 Period        Shares

Fu Liquan       841,961,985               7,225,575                  834,736,410 According to the relevant       According to the


                                                                                                                                    46
                                                     2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


                                                               provisions of executives    relevant provisions
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                                                               regulations of equity       regulations of
Wu Jun      52,003,164     65,000                 51,938,164
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                                                               managers' shares            and senior
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Zhu                                                                                        relevant provisions
            116,671,117             23,175,000   139,846,117 provisions of executives
Jiangming                                                                                  of executives shares
                                                               shares management
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Li Ke         2,015,000   200,000                  1,815,000
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Chen                                                                                       relevant provisions
             53,447,110        0                  53,447,110 provisions of executives
Ailing                                                                                     of executives shares
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Chen                                                           regulations of equity       regulations of
              1,441,963    65,000                  1,376,963
Yuqing                                                         incentives and senior       equity incentives
                                                               managers' shares            and senior
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Wu Jian       1,279,501   132,500                  1,147,001
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                                                               managers' shares            and senior
                                                                                           managers' shares

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                                                               Per relevant management     management
Wei                                                            regulations of equity       regulations of
              1,235,000   102,500                  1,132,500
Meizhong                                                       incentives and senior       equity incentives
                                                               managers' shares            and senior
                                                                                           managers' shares

Wu             636,710     65,000                    571,710 Per relevant management       Per relevant


                                                                                                                 47
                                     2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Yunlong                                        regulations of equity      management
                                               incentives and senior      regulations of
                                               managers' shares           equity incentives
                                                                          and senior
                                                                          managers' shares

                                                                          Per relevant
                                               Per relevant management
Xu                                                                        management
             530,000         0      530,000 regulations of equity
Zhicheng                                                                  regulations of
                                               incentives
                                                                          equity incentives

                                                                          Per relevant
                                               Per relevant management    management
                                               regulations of equity      regulations of
Yan Gang     537,262     82,500     454,762
                                               incentives and senior      equity incentives
                                               managers' shares           and senior
                                                                          managers' shares

                                                                          Per relevant
                                               Per relevant management    management
Ying                                           regulations of equity      regulations of
            1,419,437   167,500    1,251,937
Yong                                           incentives and senior      equity incentives
                                               managers' shares           and senior
                                                                          managers' shares

                                                                          Per relevant
                                               Per relevant management
Zhu                                                                       management
             715,169     45,169     670,000 regulations of equity
Jiantang                                                                  regulations of
                                               incentives
                                                                          equity incentives

                                                                          Per relevant
                                               Per relevant management
Zhang                                                                     management
             880,625    140,625     740,000 regulations of equity
Wei                                                                       regulations of
                                               incentives
                                                                          equity incentives

                                                                          Per relevant
                                               Per relevant management    management
Zhang                                          regulations of equity      regulations of
            1,588,560   327,500    1,261,060
Xingming                                       incentives and senior      equity incentives
                                               managers' shares           and senior
                                                                          managers' shares

                                                                          Per relevant
                                                                          management
                                               Per relevant management
Zhao                                                                      regulations of
             740,000         0      740,000 regulations of equity
Yuning                                                                    equity incentives
                                               incentives
                                                                          and senior
                                                                          managers' shares

Other      92,075,800    44,200   92,031,600 Per relevant management      Per relevant


                                                                                              48
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


equity                                                                            regulations of equity                management
incentive                                                                         incentives                           regulations of
targets                                                                                                                equity incentives
                                                                                                                       and senior
                                                                                                                       managers' shares

Total         1,169,178,403            8,663,069 23,175,000 1,183,690,334                          --                           --


II. Total Number of Shareholders and Their Shareholdings

                                                                                                                                    Unit: share

                                                                   Total Number of Preferred Shareholders (If
Total Number of Common
                                                                   Any) (Refer to Note 8) Whose Voting
Shareholders at the End of the                          127,017                                                                             0
                                                                   Rights Have Been Recovered at the End of
Reporting Period
                                                                   the Reporting Period

    Particulars about Shares Held by Shareholders with a Shareholding Percentage over 5% or Top Ten Common Shareholders

                                                                                                    Number of          Pledged or Frozen
                                                    Total Shares    Increase/De Number of
                                       Shareholdi                                                       Common
                                                    Held at the        crease      Common
        Name of          Nature of        ng                                                       Shares Held
                                                    End of the       during the   Shares Held
    Shareholder         Shareholder    Percentag                                                         without      Status     Status
                                                     Reporting       Reporting with Trading
                                           e                                                            Trading
                                                      Period           Period     Restrictions
                                                                                                   Restrictions

                      Domestic
Fu Liquan                                36.10% 1,082,081,880 -30900000           834,736,410           247,345,470 Pledge     178,652,000
                      Natural Person

                      Domestic
Zhu Jiangming                              6.22%     186,461,490 30900000         139,846,117            46,615,373 Pledge      36,504,000
                      Natural Person

                      Domestic
Chen Ailing                                2.38%      71,262,813 0                 53,447,110            17,815,703
                      Natural Person

                      Domestic
Wu Jun                                     2.31%      69,250,886 0                 51,938,164            17,312,722
                      Natural Person

Hong Kong
                      Overseas Legal
Securities Clearing                        2.21%      66,113,777 -17922294                     0         66,113,777
                      Person
Co. Ltd.

One Zero Two
Combination of
                      Others               1.47%      44,039,310 44039310                      0         44,039,310
National Social
Security Fund

                      Domestic
China Securities
                      Non-state-owne       1.32%      39,611,241 0                             0         39,611,241
Finance Co., Ltd.
                      d Legal Person

Central Huijin Asset State-owned           1.05%      31,448,750 0                             0         31,448,750


                                                                                                                                            49
                                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Management Co.,      Legal Person
Ltd.

Shanghai
Greenwoods Asset
Management Ltd.      Others                     0.89%      26,719,579 26719579                  0      26,719,579
- Greenwoods
Global Funds

Zhejiang Dahua
Technology Co.,
Ltd. - Phase III     Others                     0.88%      26,247,928 0                         0      26,247,928
Employee Stock
Ownership Plan

Information about Strategic Investors’
or General Legal Persons’ Becoming
Top Ten Common Shareholders for           N/A
Placement of New Shares (If Any)
(Refer to Note 3)

Explanation on Associated
                                          Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of
Relationship or Concerted Actions
                                          Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In
among the Above-Mentioned
                                          Concert.
Shareholders

  Particulars about Shares Held by Top Ten Common Shareholders Holding Shares That Are Not Subject to Trading Restrictions

                                             Number of Common Shares Held                               Type of shares
        Name of Shareholder                without Restrictions at the End of the
                                                                                                    Type                  Number
                                                        Reporting Period

Fu Liquan                                                              247,345,470              RMB common stock           247,345,470

Hong Kong Securities Clearing Co.
                                                                           66,113,777           RMB common stock            66,113,777
Ltd.

Zhu Jiangming                                                              46,615,373           RMB common stock            46,615,373

One Zero Two Combination of
                                                                           44,039,310           RMB common stock            44,039,310
National Social Security Fund

China Securities Finance Co., Ltd.                                         39,611,241           RMB common stock            39,611,241

Central Huijin Asset Management
                                                                           31,448,750           RMB common stock            31,448,750
Co., Ltd.

Shanghai Greenwoods Asset
Management Ltd. - Greenwoods                                              26,719,579           RMB common stock            26,719,579
Global Funds

Zhejiang Dahua Technology Co., Ltd.
- Phase III Employee Stock                                                 26,247,928           RMB common stock            26,247,928
Ownership Plan


                                                                                                                                     50
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Industrial and Commercial Bank of
China - Guangfa Jufeng mixed                                       21,702,684              RMB common stock            21,702,684
securities investment funds

Four One Eight Combination of
                                                                    18,373,500              RMB common stock            18,373,500
National Social Security Fund

Explanation of Associated
Relationship or Concerted Actions
among Top Ten Common
                                        Mr. Fu Liquan And Ms. Chen Ailing Are Husband And Wife. The Company Is Unaware Of
Shareholders without Trading
                                        Whether Other Shareholders Have Associated Relationship Or Are Persons Acting In
Restrictions, and among Top Ten
                                        Concert.
Common Shareholders without
Trading Restrictions and Top Ten
Common Shareholders

Explanation of Top Ten Common
Shareholders’ Participation in
                                        N/A
Securities Margin Trading (If Any)
(Refer to Note 4)

Whether the Company's top ten common shareholders or top ten common shareholders without limited shares agree on any
repurchase transaction in the reporting period
□ Yes √ No
None of the Company's top ten common shareholders or top ten common shareholders without limited shares agreed on repurchase in
the reporting period.


III. Changes in Controlling Shareholders and Actual Controllers

Change of the controlling shareholders in the reporting period
□ Applicable √ Not applicable
No change has happened to the controlling shareholder in the reporting period of the Company
Change of the actual controller in the reporting period
□ Applicable √ Not applicable
No change has happened to the actual controller in the reporting period




                                                                                                                                 51
                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




                         Section VII Information of Preferred Shares

□ Applicable √ Not applicable
There are no preferred shares in the reporting period.




                                                                                                                52
                                                                            2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




      Section VIII Information about Directors, Supervisors and Senior

                                                       Management

I. Shareholding Changes of Directors, Supervisors and Senior Management

√ Applicable □ Not applicable

                                                                                                                                            Number
                                                                                                        Number of
                                                                                                                          Number of             of
                                                     Shares           Shares                            Restricted
                                   Shares Held at                                     Shares Held at                       Restricted       Restricted
                                                    Increased        Decreased                         Shares Held
                           Tenure the Beginning                                       the End of the                      Shares Held        Shares
 Name            Title                              during the       during the                           at the
                           Status of the Period                                          Period                            during the        Held at
                                                     Period           Period                            Beginning
                                     (Shares)                                           (Shares)                         Current Period the End of
                                                    (Shares)         (Shares)                          of the Period
                                                                                                                            (Shares)        the Period
                                                                                                         (Shares)
                                                                                                                                            (Shares)

Fu                         Incum
          Chairman                 1,112,981,880                 0 -30,900,000 1,082,081,880                         0                  0              0
Liquan                     bent
          Vice
                           Incum
Wu Jun Chairman,                      69,250,886                 0                0      69,250,886                  0                  0              0
                           bent
          Vice President
          Director,        Incum
Li Ke                                  2,420,000                 0                0       2,420,000                  0                  0              0
          President        bent
Zhu       Director,
                           Incum
Jiangmi Executive                    155,561,490 30,900,000                       0     186,461,490                  0                  0              0
                           bent
ng        Vice President

Chen                       Incum
          Director                    71,262,813                 0                0      71,262,813                  0                  0              0
Ailing                     bent

He        Independent      Incum
                                                0                0                0                0                 0                  0              0
Chao      Director         bent

Wang      Independent      Incum
                                                0                0                0                0                 0                  0              0
Zexia     Director         bent

Huang     Independent      Incum
                                                0                0                0                0                 0                  0              0
Siying    Director         bent

Song
                           Incum
Maoyua Supervisor                               0                0                0                0                 0                  0              0
                           bent
n

Song                       Incum
          Supervisor                            0                0                0                0                 0                  0              0
Ke                         bent

Zuo       Supervisor       Incum                0                0                0                0                 0                  0              0


                                                                                                                                                       53
                                                                        2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Pengfei                     bent

Chen                        Incum
           Vice President              1,835,951             0            0      1,835,951              0               0             0
Yuqing                      bent
           Secretary of
                            Incum
Wu Jian the Board,                     1,529,335             0            0      1,529,335              0               0             0
                            bent
           Vice President
Wei
           CFO, Vice        Incum
Meizho                                 1,510,000             0            0      1,510,000              0               0             0
           President        bent
ng

Wu                          Incum
           Vice President                762,280             0            0        762,280              0               0             0
Yunlong                     bent

Xu
                            Incum
Zhichen Vice President                   530,000             0            0        530,000              0               0             0
                            bent
g

Yan                         Incum
           Vice President                606,349             0            0        606,349              0               0             0
Gang                        bent

Ying                        Incum
           Vice President              1,669,250             0            0      1,669,250              0               0             0
Yong                        bent

Zhu                         Incum
           Vice President                730,225             0            0        730,225              0               0             0
Jiantang                    bent

Zhang                       Incum
           Vice President                927,500             0            0        927,500              0               0             0
Wei                         bent

Zhang
                            Incum
Xingmi Vice President                  1,681,413             0            0      1,681,413              0               0             0
                            bent
ng

Zhao                        Incum
           Vice President                740,000             0            0        740,000              0               0             0
Yuning                      bent

Total            --           --    1,423,999,372 30,900,000 -30,900,000 1,423,999,372                  0               0             0


II. Changes of Directors, Supervisors and Senior Management

□ Applicable √ Not applicable
There are no changes in the directors, supervisors and senior management in the reporting period. For details, refer to 2018 Annual
Report.




                                                                                                                                      54
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




                                        Section IX Corporate Bonds

Whether the Company has corporate bonds which have been publicly issued and listed on the stock exchange, and are unexpired or
expired but not honored in full on the date approved for issuance of the interim report
No




                                                                                                                                 55
                                                                    2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.




                                         Section X Financial Reports

I. Audit Reports

Whether the interim report has been audited
□ Yes √ No
The interim financial report of the Company has not been audited.


II. Financial Statements

Units of financial reports in the notes: RMB


1. Consolidated Balance Sheet

Prepared by: Zhejiang Dahua Technology Co., Ltd.
                                                                                                                   Unit: RMB

                          Item Name                                  June 30, 2019                  December 31, 2018

Current Assets:

     Cash and Bank Balances                                                  4,201,568,114.35               4,160,153,847.06

     Deposit Reservation for Balance

     Loans to Banks and Other Financial Institutions

     Transactional Financial Assets                                              7,056,942.13

     Financial Liabilities at Fair Value through Profit or Loss

     Derivative Financial Assets

     Notes Receivable                                                        1,221,653,902.14               2,385,693,417.06

     Accounts Receivable                                                    11,134,944,437.85              10,191,372,777.38

     Accounts Receivable Financing

     Prepayments                                                               153,805,389.06                 126,891,259.00

     Premium Receivable

     Reinsurance Accounts Receivable

     Reinsurance Contract Reserves Receivable

     Other Receivables                                                         361,774,470.14                 398,170,769.40

        Including: interest receivable                                           6,425,860.24                   6,754,941.00

                 Dividends Receivable

     Buying Back the Sale of Financial Assets

     Inventory                                                               3,358,049,330.64               3,035,579,709.14


                                                                                                                           56
                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Contract Assets

     Assets Held for Sale

     Non-current Assets Due within 1 Year                                612,839,528.91                 578,733,057.27

     Other Current Assets                                                475,479,384.01                 402,255,078.05

Subtotal of Current Assets                                            21,527,171,499.23              21,278,849,914.36

Non-current Assets:

     Granting of loans and advances

     Debt Investment

     Financial Assets Available for Sale                                                                 82,970,227.00

     Other Debt Investment

     Held-to-maturity Investments

     Long-term Receivables                                             2,641,057,749.78               1,861,485,568.28

     Long-term Equity Investment                                         165,358,482.24                 185,872,021.58

     Investments in Other Equity Instruments

     Other Non-current Financial Assets                                   83,970,227.00

     Investment Property                                                 344,460,740.53                 346,831,376.55

     Fixed Assets                                                      1,386,805,962.53               1,407,471,330.83

     Projects under Construction                                         313,934,611.81                 226,191,587.11

     Productive Biological Assets

     Oil and Gas Assets

     Right-of-use Assets

     Intangible Assets                                                   414,190,037.34                 372,467,409.09

     Development Expenditure

     Goodwill                                                             42,685,490.30                 109,745,412.21

     Long-term Prepaid Expenses                                           40,067,888.66                  37,117,918.55

     Deferred Income Tax Assets                                          455,446,742.43                 425,319,406.98

     Other Non-current Assets                                             12,376,518.59                  16,277,605.61

Subtotal of Non-current Assets                                         5,900,354,451.21               5,071,749,863.79

Total Assets                                                          27,427,525,950.44              26,350,599,778.15

Current Liabilities:

     Short-term Loan                                                   3,084,859,034.59               1,851,709,561.83

     Borrowings from the Central Bank

     Borrowings from Banks and Other Financial Institutions

     Transactional Financial Liabilities



                                                                                                                     57
                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Financial Liabilities Measured in Fair Value with
                                                                                                    38,602,602.30
Changes Recorded into Current Profit and Loss

     Derivative Financial Liabilities

     Notes Payable                                                3,483,458,773.48               3,671,586,104.79

     Accounts Payable                                             3,194,442,877.42               3,789,729,594.20

     Received Prepayments                                           349,666,289.12                 343,297,891.20

     Financial Assets Sold for Repurchase

     Deposit Taking and Interbank Deposit

     Receiving from Vicariously Traded Securities

     Receiving from Vicariously Sold Securities

     Payroll Payable                                                825,786,554.13               1,124,358,611.94

     Tax Payable                                                    452,778,426.22                 599,478,049.81

     Other Payables                                               1,095,464,506.44               1,051,537,094.97

       Including: Interest Payable                                   11,000,751.65                   4,745,203.31

               Dividends Payable                                      9,882,284.31

     Service Charge and Commission Payable

     Reinsurance Accounts Payable

     Contract Liabilities

     Holding for-sale Liabilities

     Non-current Liabilities Due within 1 Year                       25,500,000.00                  25,500,000.00

     Other Current Liabilities                                       69,464,435.03                  70,845,639.51

Subtotal of Current Liabilities                                  12,581,420,896.43              12,566,645,150.55

Non-current Liabilities:

     Insurance Contract Reserves

     Long-term Loan                                                 154,000,000.00                 179,000,000.00

     Bonds Payable

       Including: Preferred Stocks

               Perpetual Bonds

     Lease Liabilities

     Long-term Payables

     Long-term payroll payable

     Expected Liabilities                                           263,357,330.71                 193,761,170.12

     Deferred Income                                                 84,562,221.66                  58,693,533.40

     Deferred Income Tax Liabilities                                 54,222,930.63                  50,137,969.76




                                                                                                                58
                                                                   2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Other Non-current Liabilities                                            436,460,214.81                 399,096,280.89

Subtotal of Non-current Liabilities                                           992,602,697.81                 880,688,954.17

Total Liabilities                                                          13,574,023,594.24              13,447,334,104.72

Shareholders' Equity:

     Share Capital                                                          2,997,577,730.00               2,997,621,930.00

     Other Equity Instruments

        Including: Preferred Stocks

                Perpetual Bonds

     Capital Reserves                                                       1,572,198,377.82               1,501,180,862.83

     Less: Treasury Share                                                     878,223,946.13                 807,733,586.00

     Other Comprehensive Incomes                                                9,618,908.81                  10,337,164.41

     Special Reserves

     Surplus Reserves                                                       1,246,369,430.91               1,246,369,430.91

     General Risk Reserves

     Undistributed Profits                                                  8,610,102,395.08               7,670,983,116.33

Total Shareholders' Equity Attributable to the Parent
                                                                           13,557,642,896.49              12,618,758,918.48
Company

     Minority Shareholders' Equity                                            295,859,459.71                 284,506,754.95

Total Shareholders' Equity                                                 13,853,502,356.20              12,903,265,673.43

Total Liabilities and Shareholders' Equity                                 27,427,525,950.44              26,350,599,778.15


Legal representative: Fu Liquan        Person in charge of accounting: Wei Meizhong      Person in charge of the accounting
institution: Xu Qiaofen


2. Balance Sheet of the Parent Company

                                                                                                                  Unit: RMB

                          Item Name                                  June 30, 2019                 December 31, 2018

Current Assets:

     Cash and Bank Balances                                                   245,073,466.45                 611,190,236.01

     Transactional Financial Assets

     Financial Liabilities at Fair Value through Profit or Loss

     Derivative Financial Assets

     Notes Receivable                                                       1,275,996,301.42                 952,572,702.92

     Accounts Receivable                                                    5,668,093,889.72               4,598,575,923.04

     Accounts Receivable Financing


                                                                                                                          59
                                               2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Prepayments                                           25,023,339.08                  26,772,044.53

     Other Receivables                                  6,573,741,249.72               6,954,655,863.03

       Including: Interest Receivable                                                         42,500.00

                 Dividends Receivable

     Inventory                                            128,043,339.19                 120,181,267.85

     Contract Assets

     Holding for-sale Assets

     Non-current Assets Due within 1 Year                  52,447,313.43                  50,793,137.80

     Other Current Assets                                  18,513,295.06                  24,858,982.78

Subtotal of Current Assets                             13,986,932,194.07              13,339,600,157.96

Non-current Assets:

     Debt Investment

     Financial Assets Available for Sale                                                  80,496,000.00

     Other Debt Investment

     Held-to-maturity Investments

     Long-term Receivables                                150,094,217.59                 160,299,143.83

     Long-term Equity Investment                        3,096,995,988.50               3,001,639,428.55

     Investments in Other Equity Instruments

     Other Non-current Financial Assets                    81,496,000.00

     Investment Property                                  179,541,537.43                 183,321,198.72

     Fixed Assets                                         465,918,980.05                 496,363,638.38

     Projects under Construction                          193,304,354.49                 151,072,585.67

     Productive Biological Assets

     Oil and Gas Assets

     Right-of-use Assets

     Intangible Assets                                    166,222,752.00                 170,879,747.04

     Development Expenditure

     Goodwill

     Long-term Prepaid Expenses                            29,875,429.30                  28,927,258.54

     Deferred Income Tax Assets                            69,820,670.32                  40,821,902.57

     Other Non-current Assets                               7,322,417.84                     929,380.00

Subtotal of Non-current Assets                          4,440,592,347.52               4,314,750,283.30

Total Assets                                           18,427,524,541.59              17,654,350,441.26

Current Liabilities:



                                                                                                      60
                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Short-term loan                                              2,277,018,356.11               1,380,000,000.00

     Transactional Financial Liabilities

     Financial Liabilities Measured in Fair Value with
Changes Recorded into Current Profit and Loss

     Derivative Financial Liabilities

     Notes Payable                                                  156,583,971.97                 175,647,414.85

     Accounts Payable                                               310,480,128.01                 889,881,485.16

     Received Prepayments                                            33,135,369.79                  80,361,211.04

     Contract Liabilities

     Payroll Payable                                                577,017,944.06                 817,723,936.19

     Tax Payable                                                    309,129,580.10                 351,294,836.50

     Other Payables                                               1,048,214,399.46               1,060,909,330.56

        Including: interest payable                                   6,472,441.27                   2,416,340.30

                Dividends Payable                                     9,882,284.31

     Holding for-sale liabilities

     Non-current Liabilities Due within 1 Year

     Other Current Liabilities                                        5,959,914.87                   6,464,333.12

Subtotal of Current Liabilities                                   4,717,539,664.37               4,762,282,547.42

Non-current Liabilities:

     Long-term Loan

     Bonds Payable

        Including: Preferred Stocks

                Perpetual Bonds

     Lease Liabilities

     Long-term Payables

     Long-term payroll payable

     Expected Liabilities                                             2,435,103.64                   3,396,100.00

     Deferred Income

     Deferred Income Tax Liabilities

     Other Non-current Liabilities                                   17,802,512.51                  23,684,423.74

Subtotal of Non-current Liabilities                                  20,237,616.15                  27,080,523.74

Total Liabilities                                                 4,737,777,280.52               4,789,363,071.16

Shareholders' Equity:

     Share Capital                                                2,997,577,730.00               2,997,621,930.00




                                                                                                                61
                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


     Other Equity Instruments

       Including: Preferred Stocks

               Perpetual Bonds

     Capital Reserves                                              1,566,261,837.67               1,497,801,068.88

     Less: Treasury Share                                            878,223,946.13                 807,733,586.00

     Other Comprehensive Incomes

     Special Reserves

     Surplus Reserves                                              1,246,369,430.91               1,246,369,430.91

     Undistributed Profits                                         8,757,762,208.62               7,930,928,526.31

Total Shareholders' Equity                                        13,689,747,261.07              12,864,987,370.10

Total Liabilities and Shareholders' Equity                        18,427,524,541.59              17,654,350,441.26


3. Consolidated Income Statement

                                                                                                         Unit: RMB

                           Item Name                        2019 Interim                     2018 Interim

I. Total Operating Revenue                                        10,806,566,370.89               9,814,041,352.48

     Including: Operating Revenue                                 10,806,566,370.89               9,814,041,352.48

            Interest Income

            Earned Premiums

            Service Charge and Commission Income

II. Total Operating Cost                                           9,650,560,173.11               8,657,002,668.63

     Including: Operating Cost                                     6,443,429,151.03               6,230,120,445.06

            Interest Expenditures

            Service Charge and Commission Expenses

            Surrender Value

            Net Claims Paid

            Net Amount Withdrawn for Insurance Contract
Reserves

            Policyholder Dividend Expense

            Reinsurance Cost

            Taxes and Surcharges                                      64,190,849.22                  62,692,261.97

            Sales Expenses                                         1,539,714,255.33               1,252,741,900.83

            Administration expenses                                  346,919,167.36                 269,199,404.53

            Research and development expense                       1,245,261,201.77                 865,129,052.09



                                                                                                                 62
                                                                2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


              Financial Expenses                                            11,045,548.40                 -22,880,395.85

                 Including: interest expenses                               76,337,321.42                  48,561,403.94

                        Interest Income                                     81,150,189.81                  50,792,338.79

     Add: Other income                                                     426,921,517.08                 284,916,998.93

            Investment Income (Mark "-" for Loss)                           -5,691,002.29                 -20,867,876.31

            Including: Investment Income from Affiliates and
                                                                              -548,623.93                 -25,567,280.91
Joint Ventures

                 Income of Financial Assets Recognition
Termination Measured at Amortized Cost (Mark "-" for Loss)

            Exchange Gains (Mark "-" for Losses)

            Net Exposure Hedging Income (Mark "-" for Loss)

            Incomes from changes in fair value (losses marked
                                                                            45,449,188.16                 -41,332,765.27
with "-")

            Credit Impairment Loss (Mark "-" for Loss)                    -163,681,506.49

            Asset Impairment Loss (Mark "-" for Loss)                      -98,774,186.62                -128,296,022.40

            Asset Disposal Income (Mark "-" for Loss)                          448,615.83                     -13,024.74

III. Operating Profit (Mark "-" for Loss)                                1,360,678,823.45               1,251,445,994.06

     Add: Non-operating Revenues                                             8,513,835.06                   5,234,299.09

     Less: Non-operating Expenses                                            1,357,098.55                   2,194,887.35

IV. Total Profit (Mark "-" for Total Loss)                               1,367,835,559.96               1,254,485,405.80

     Less: Income Tax Expense                                              163,173,365.97                 165,721,533.63

V. Net Profit (Mark "-" for Net Loss)                                    1,204,662,193.99               1,088,763,872.17

  (I) Classified by Business Continuity

     1. Net Profit as a Going Concern (Mark "-" for Net
                                                                         1,204,662,193.99               1,088,763,872.17
Loss)

     2. Net Profit of Discontinued Operation (Mark "-" for
Net Loss)

  (II) Classified by Ownership

     1. Net Profit Attributable to the Parent Company's
                                                                         1,238,880,948.74               1,081,916,886.52
Owner

     2. Minority Shareholders' Profit and Loss                             -34,218,754.75                   6,846,985.65

VI. Net Amount of Other Comprehensive Incomes after Tax                       -718,205.48                   8,393,760.02

  Net Amount of Other Comprehensive Incomes after Tax
                                                                              -718,255.60                   8,393,760.02
Attributable to the Parent Company's Owner

     (1) Other comprehensive income that cannot be
reclassified as P/L



                                                                                                                       63
                                                                          2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


               1. Re-measure the variation of the defined
benefit plan

               2. Other comprehensive income that cannot be
transferred to P/L under the equity method

               3. Changes in Fair Value of Investments in Other
Equity Instruments

               4. Changes in Fair Value of the Company's Own
Credit Risk

               5. Others

     (2) Other comprehensive income that will be
                                                                                         -718,255.60                      8,393,760.02
reclassified as P/L

               1. Other comprehensive income that can be
transferred to P/L under the equity method

               2. Changes in Fair Value of Other Debt
Investment

               3. Profit or Loss Arising from Changes in the
Fair Value of Financial Assets Available for Sale

               4. The Amount of Financial Assets Reclassified
into Other Comprehensive Income

               5. Profit or Loss Arising from Reclassifying
Investments Held to Maturity as Financial Assets Available
for Sale

               6. Provision for Credit Impairment of Other
Debt Investment

               7. Cash Flow Hedge Reserves

               8. Currency Conversion Difference                                         -718,255.60                      8,393,760.02

               9. Others

   Net Amount of Other Comprehensive Incomes After Tax
                                                                                                50.12
Attributable to Minority Shareholders

VII. Total Comprehensive Income                                                     1,203,943,988.51                 1,097,157,632.19

     Total Comprehensive Income Attributable to the Parent
                                                                                    1,238,162,693.14                 1,090,310,646.54
Company's Owner

     Total Comprehensive Income Attributable to Minority
                                                                                      -34,218,704.63                      6,846,985.65
Shareholders

VIII. Earnings per Share:

     (I) Basic Earnings per Share                                                                0.42                              0.37

     (II) Diluted Earnings per Share                                                             0.42                              0.37

In the case of enterprise consolidation under the same control during this period, the net profit realized by consolidated party before


                                                                                                                                      64
                                                                       2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


consolidation is: RMB. The net profit realized by the consolidated party during previous period is: RMB.


Legal representative: Fu Liquan          Person in charge of accounting: Wei Meizhong          Person in charge of the accounting
institution: Xu Qiaofen


4. Income Statement of the Parent Company

                                                                                                                      Unit: RMB

                          Item Name                                       2019 Interim                     2018 Interim

I. Operating Revenue                                                             3,281,203,959.86               3,784,147,825.87

     Less: Operating Cost                                                          369,348,403.98               1,167,353,125.94

            Taxes and Surcharges                                                    43,805,303.56                  44,911,616.72

            Sales Expenses                                                         774,697,601.25                684,873,752.77

            Administration expenses                                                194,508,500.94                124,907,951.12

            Research and development expense                                     1,047,272,163.00                758,110,009.97

            Financial Expenses                                                      32,399,789.08                 -10,918,444.75

              Including: interest expenses                                          51,929,211.84                 16,615,717.39

                     Interest Income                                                21,971,107.71                 27,789,833.90

     Add: Other income                                                             388,225,543.16                272,484,387.90

            Investment Income (Mark "-" for Loss)                                    9,740,090.32                 -23,467,410.68

            Including: Investment Income from Affiliates and
                                                                                          -7,096.54               -24,852,586.71
Joint Ventures

                 Income of Financial Assets Recognition
Termination Measured at Amortized Cost (Mark "-" for Loss)

            Net Exposure Hedging Income (Mark "-" for Loss)

            Incomes from changes in fair value (losses marked
with "-")

            Credit Impairment Loss (Mark "-" for Loss)                             -10,600,820.35

            Asset Impairment Loss (Mark "-" for Loss)                                                             -11,200,169.56

            Asset Disposal Income (Mark "-" for Loss)                                    230,024.34                   -13,523.79

II. Operating Profit (Mark "-" for Loss)                                         1,206,767,035.52               1,252,713,097.97

     Add: Non-operating Revenues                                                     2,476,092.90                   2,920,994.67

     Less: Non-operating Expenses                                                        700,678.88                  328,747.03

III. Total Profit (Mark "-" for Total Loss)                                      1,208,542,449.54               1,255,305,345.61

     Less: Income Tax Expense                                                       81,947,097.24                148,829,495.03

IV. Net Profit (Mark "-" for Net Loss)                                           1,126,595,352.30               1,106,475,850.58

     (I) Net Profit as a Going Concern (Mark "-" for Net                         1,126,595,352.30               1,106,475,850.58


                                                                                                                              65
                                                                  2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Loss)

     (II) Net Profit of Discontinued Operation (Mark "-" for
Net Loss)

V. Net Amount of Other Comprehensive Incomes After Tax

     (1) Other comprehensive income that cannot be
reclassified as P/L

               1. Re-measure the variation of the defined
benefit plan

               2. Other comprehensive income that cannot be
transferred to P/L under the equity method

               3. Changes in Fair Value of Investments in Other
Equity Instruments

               4. Changes in Fair Value of the Company's Own
Credit Risk

               5. Others

     (2) Other comprehensive income that will be
reclassified as P/L

               1. Other comprehensive income that can be
transferred to P/L under the equity method

               2. Changes in Fair Value of Other Debt
Investment

               3. Profit or Loss Arising from Changes in the
Fair Value of Financial Assets Available for Sale

               4. The Amount of Financial Assets Reclassified
into Other Comprehensive Income

               5. Profit or Loss Arising from Reclassifying
Investments Held to Maturity as Financial Assets Available
for Sale

               6. Provision for Credit Impairment of Other
Debt Investment

               7. Cash Flow Hedge Reserves

               8. Currency Conversion Difference

               9. Others

VI. Total Comprehensive Income                                             1,126,595,352.30               1,106,475,850.58

VII. Earnings per Share:

     (I) Basic Earnings per Share                                                      0.39                           0.38

     (II) Diluted Earnings per Share                                                   0.39                           0.38




                                                                                                                         66
                                                                       2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


5. Consolidated Cash Flow Statement

                                                                                                                      Unit: RMB

                              Item Name                                        2019 Interim                 2018 Interim

I. Cash Flow Generated by Operational Activities:

     Cash from Sales of Merchandise and Provision of Services                     10,826,094,759.86            9,194,169,425.67

     Net Increase in Customer's Bank Deposits and Interbank Deposits

     Net Increase in Borrowings from the Central Bank

     Net Increase in Borrowings from Other Financial Institutions

     Cash Arising from Receiving Premiums for the Original Insurance
Contract

     Net Amount Arising from Reinsurance Business

     Net Increase in Deposits and Investments from Policyholders

     Cash Arising from Interests, Service Charges and Commissions

     Net Increase in Borrowings from Banks and Other Financial
Institutions

     Net Increase in Repurchase Business Funds

     Net Amount Received from Vicariously Traded Securities

     Tax Refund                                                                      824,424,362.86              721,443,953.84

     Other Received Cashes Related to Operational Activities                         182,265,336.17               69,273,319.56

Subtotal of cash inflow from operational activities                               11,832,784,458.89            9,984,886,699.07

     Cash Paid for Merchandise and Services                                        8,183,055,955.85            7,190,765,894.34

     Net Increase in Loans and Advances to Customers

     Net Increase in Deposits with Central Bank and Other Financial
Institutions

     Cash Paid for Original Insurance Contract Claims

     Net Increase in Financial Assets Held for Trading Purposes

     Net Increase in Loans to Banks and Other Financial Institutions

     Cash Paid for Interests, Service Charges and Commissions

     Cash Paid for Policy Dividends

     Cash Paid to and for Employees                                                2,506,637,462.82            2,120,130,137.36

     Cash Paid for Taxes and Surcharges                                              851,257,957.46              722,939,607.07

     Other Paid Cashes Related to Operational Activities                           1,162,300,175.64            1,047,407,897.30

Subtotal of cash outflow from operational activities                              12,703,251,551.77           11,081,243,536.07

Net cash flow generated by operating activities                                     -870,467,092.88           -1,096,356,837.00




                                                                                                                              67
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


II. Cash Flow from Investment Activities:

     Cash Arising from Disposal of Investments                                                                     140,950,000.00

     Cash Arising from Investment Incomes                                                 9,387,186.86               1,604,974.66

     Net Cash Arising from Disposal of Fixed Assets, Intangible Assets
                                                                                          4,361,781.86                 330,762.69
and Other Long-term Assets

     Net Cash Arising from Disposal of Subsidiaries and Other
Business Units

     Other Received Cashes Related to Investment Activities                               4,052,392.39               2,404,123.87

Subtotal of cash inflow from investment activities                                       17,801,361.11             145,289,861.22

     Cash Paid for Purchase and Construction of Fixed Assets,
                                                                                       260,697,897.67              223,433,215.10
Intangible Assets and Other Long-term Assets

     Cash Paid for Investments                                                          13,200,000.00              139,300,000.00

     Net Increase in Pledge Loans

     Net Cash Paid for Acquisition of Subsidiaries and Other Business
                                                                                                                    56,408,605.39
Units

     Other Paid Cashes Related to Investment Activities                                 26,458,528.22               75,796,952.33

Subtotal of cash outflow from investment activities                                    300,356,425.89              494,938,772.82

Net amount of cash flow generated by investment activities                            -282,555,064.78             -349,648,911.60

III. Cash Flow from Financing Activities:

     Cash Arising from Absorbing Investments                                             43,114,250.00              28,410,000.00

     Including: Cash Arising from Subsidiaries Absorbing Investments
                                                                                         43,114,250.00              28,410,000.00
by Minority Shareholders

     Cash Arising from Borrowings                                                    3,995,334,621.50            2,967,492,895.90

     Cash Arising from Bonds Issue

     Other Received Cashes Related to Financing Activities                             805,382,000.00              619,391,279.99

Subtotal of cash inflow from financing activities                                    4,843,830,871.50            3,615,294,175.89

     Cash Paid for Debts Repayment                                                   2,690,153,276.12            2,210,534,089.02

     Cash Paid for Distribution of Dividends and Profits or Payment of
                                                                                       348,633,662.77              624,264,590.19
Interests

     Including: Dividends and Profits Paid to Minority Shareholders
by Subsidiaries

     Other Paid Cashes Related to Financing Activities                                 816,654,575.69              547,215,000.00

Subtotal of cash outflow from financing activities                                   3,855,441,514.58            3,382,013,679.21

Net cash flow generated by financing activities                                        988,389,356.92              233,280,496.68

IV. Impact of Fluctuation in Exchange Rate on Cash and Cash
                                                                                          7,299,167.67              15,101,534.67
Equivalents



                                                                                                                                68
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


V. Net Increase in Cash and Cash Equivalents                                          -157,333,633.07           -1,197,623,717.25

     Add: Cash and Cash Equivalents at the Commencement of the
                                                                                     3,702,283,803.54            3,062,678,993.88
Period

VI. Cash and Cash Equivalents at the End of the Period                               3,544,950,170.47            1,865,055,276.63


6. Cash Flow Statement of the Parent Company

                                                                                                                        Unit: RMB

                              Item Name                                          2019 Interim                 2018 Interim

I. Cash Flow Generated by Operational Activities:

     Cash from Sales of Merchandise and Provision of Services                        1,594,454,492.04            5,620,171,988.98

     Tax Refund                                                                        327,192,023.88              271,139,112.45

     Other Received Cashes Related to Operational Activities                            98,858,726.98                5,648,274.89

Subtotal of cash inflow from operational activities                                  2,020,505,242.90            5,896,959,376.32

     Cash Paid for Merchandise and Services                                            391,253,745.70              974,190,280.44

     Cash Paid to and for Employees                                                   1,597,070,311.21           1,369,457,901.39

     Cash Paid for Taxes and Surcharges                                                534,095,073.85              538,414,539.67

     Other Paid Cashes Related to Operational Activities                               550,587,545.42              544,751,757.29

Subtotal of cash outflow from operational activities                                 3,073,006,676.18            3,426,814,478.79

Net cash flow generated by operating activities                                      -1,052,501,433.28           2,470,144,897.53

II. Cash Flow from Investment Activities:

     Cash Arising from Disposal of Investments                                                                     107,950,000.00

     Cash Arising from Investment Incomes                                                 9,387,186.86               1,385,176.03

     Net Cash Arising from Disposal of Fixed Assets, Intangible Assets
                                                                                        12,303,962.73               65,609,157.24
and Other Long-term Assets

     Net Cash Arising from Disposal of Subsidiaries and Other
Business Units

     Other Received Cashes Related to Investment Activities                               9,227,698.52              28,221,407.92

Subtotal of cash inflow from investment activities                                       30,918,848.11             203,165,741.19

     Cash Paid for Purchase and Construction of Fixed Assets,
                                                                                       102,347,243.84               35,814,739.74
Intangible Assets and Other Long-term Assets

     Cash Paid for Investments                                                         111,885,750.00              389,982,000.00

     Net Cash Paid for Acquisition of Subsidiaries and Other Business
Units

     Other Paid Cashes Related to Investment Activities

Subtotal of cash outflow from investment activities                                    214,232,993.84              425,796,739.74



                                                                                                                                69
                                                                         2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


Net amount of cash flow generated by investment activities                            -183,314,145.73             -222,630,998.55

III. Cash Flow from Financing Activities:

     Cash Arising from Absorbing Investments

     Cash Arising from Borrowings                                                    1,963,462,853.53              850,000,000.00

     Cash Arising from Bonds Issue

     Other Received Cashes Related to Financing Activities                           2,541,785,779.17              110,534,201.15

Subtotal of cash inflow from financing activities                                    4,505,248,632.70              960,534,201.15

     Cash Paid for Debts Repayment                                                   1,066,444,497.42              300,000,000.00

     Cash Paid for Distribution of Dividends and Profits or Payment of
                                                                                       329,177,945.46              592,580,560.69
Interests

     Other Paid Cashes Related to Financing Activities                               2,258,109,917.86            2,768,689,582.54

Subtotal of cash outflow from financing activities                                   3,653,732,360.74            3,661,270,143.23

Net cash flow generated by financing activities                                        851,516,271.96           -2,700,735,942.08

IV. Impact of Fluctuation in Exchange Rate on Cash and Cash
                                                                                           -251,558.05                -130,404.43
Equivalents

V. Net Increase in Cash and Cash Equivalents                                          -384,550,865.10             -453,352,447.53

     Add: Cash and Cash Equivalents at the Commencement of the
                                                                                       603,430,209.42              524,670,812.68
Period

VI. Cash and Cash Equivalents at the End of the Period                                 218,879,344.32               71,318,365.15




                                                                                                                                70
                                                                                                                                                 2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

  7. Consolidated Statement of Changes in Owners' Equity

  Amount of this period
                                                                                                                                                                                                      Unit: RMB

                                                                                                           2019 Interim

                                                              Shareholders' Equity Attributable to the Parent Company's Owner
                                          Other Equity                                           Other     Spec                     Gener                                               Minority        Total
  Item Name                                                                       Less:                                                                        Ot
                                          Instruments            Capital                        Comprehe ial        Surplus         al Risk Undistributed                              Shareholder   Shareholders'
                     Share Capital                                               Treasury                                                                      he      Subtotal
                                     Preferre Perpetua Othe     Reserves                         nsive     Rese     Reserves        Reserv      Profits                                 s' Equity       Equity
                                                                                  Share                                                                        rs
                                     d Stocks l Bonds    rs                                     Incomes    rves                       es


I. Balance at the 2,997,621,930                               1,501,180,862 807,733,586 10,337,16                 1,246,369,430              7,670,983,116.         12,618,758,918. 284,506,754 12,903,265,673.
End of Last Year               .00                                         .83            .00       4.41                      .91                         33                      48           .95                43


     Add:
Changes in
Accounting
Policies


Correction of
Errors in the
Previous Period


Consolidated
under the Same
Control
            Others




                                                                                                                                                                                                                 71
                                                                                                   2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


II. Balance at
                    2,997,621,930   1,501,180,862 807,733,586 10,337,16        1,246,369,430   7,670,983,116.    12,618,758,918. 284,506,754 12,903,265,673.
the Start of This
                              .00             .83           .00        4.41              .91              33                  48            .95              43
Year

III. Increases or
Decreases in
                                                    70,490,360. -718,255.6                     939,119,278.7                        11,352,704.
This Period            -44,200.00   71,017,514.99                                                                 938,883,978.01                  950,236,682.77
                                                            13            0                                5                                76
(Mark "-" for
Decreases)

(I) Total
                                                                  -718,255.6                   1,238,880,948     1,238,162,693.1 -34,218,704. 1,203,943,988.5
Comprehensive
                                                                          0                               .74                   4           63                  1
Income

(II)
Shareholders'
                                    103,583,714.0 80,372,644.                                                                       43,114,250.
Contribution           -44,200.00                                                                                  23,166,869.60                   66,281,119.60
                                               4            44                                                                              00
and Reduction
in Capital

1. Common
                                                    80,372,644.                                                                     43,114,250.
stock invested         -44,200.00     -326,617.25                                                                 -80,743,461.69                  -37,629,211.69
                                                            44                                                                              00
by the owner

2. Capital
Invested by
Holders of
Other Equity
Instruments




                                                                                                                                                           72
                                                     2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

3. Amount of
Share-based
Payments           103,910,331.2
                                                                    103,910,331.29                103,910,331.29
Recorded into                 9
Shareholders'
Equity
4. Others


(III) Profit                       -9,882,284.3   -299,761,669.
                                                                   -289,879,385.68               -289,879,385.68
Distribution                                 1              99


1. Appropriati
on of Surplus
Reserves
2. Appropriati
on of General
Risk Reserves

3. Distribution
                                                  -299,761,669.
to Owners (or                                                      -299,761,669.99               -299,761,669.99
                                                            99
Shareholders)


                                   -9,882,284.3
4. Others                                                            9,882,284.31                  9,882,284.31
                                             1

(IV) Internal
Carry-forward
of Shareholders'
Equity



                                                                                                            73
                   2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

1. Capital
Reserves
Transferred into
Capital (or
Share Capital)
2. Surplus
Reserves
Transferred into
Capital (or
Share Capital)
3. Surplus
Reserves
Covering Losses
4. Carry-forw
ard retained
earnings of the
variation of the
defined benefit
plan
5. Carry-forw
ard Retained
Earnings of
Other
Comprehensive
Incomes
6. Others

(V) Special
Reserves

1. Withdrawal

                                                                          74
                                                                                                                                             2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

  in this period

  2. Used in This
  Period


                                                              -32,566,199.0                                                                                                    2,457,159.3
  (VI) Others                                                                                                                                                 -32,566,199.05                  -30,109,039.66
                                                                         5                                                                                                               9



  IV. Balance at
                     2,997,577,730                           1,572,198,377 878,223,946 9,618,908.              1,246,369,430            8,610,102,395         13,557,642,896. 295,859,459 13,853,502,356.
  the End of This
                                .00                                     .82          .13          81                        .91                     .08                   49            .71                20
  Period

    Amount of Previous Period
                                                                                                                                                                                                  Unit: RMB

                                                                                                           2018 Interim
                                                                                                                                                                                      Minority        Total
                                                                Shareholders' Equity Attributable to the Parent Company's Owner                                                      Shareholder Shareholder
                                                                                                                                                                                      s' Equity      s' Equity
    Item Name
                                         Other Equity Instruments                             Other
                                                                                  Less:                                              General
                                         Preferre Perpetu            Capital                Comprehe        Special       Surplus               Undistribut
                       Share Capital                                             Treasury                                             Risk                     Others    Subtotal
                                            d       al      Others   Reserves                 nsive        Reserves   Reserves                   ed Profits
                                                                                  Share                                              Reserves
                                         Stocks   Bonds                                     Incomes


I. Balance at the                                                    593,340,7              6,660,189.                971,547,2                  5,996,130,              10,466,43 126,795,637 10,593,230,
                      2,898,756,130.00
End of Last Year                                                         51.52                        04                     68.36                  036.27                4,375.19            .30       012.49


     Add:
Changes in
Accounting

                                                                                                                                                                                                         75
                                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

Policies




Correction of
Errors in the
Previous Period


Consolidated
under the Same
Control
            Others


II. Balance at the                      593,340,7    6,660,189.   971,547,2       5,996,130,            10,466,43 126,795,637 10,593,230,
                     2,898,756,130.00
Start of This Year                          51.52           04       68.36           036.27              4,375.19          .30      012.49


III. Increases or
Decreases in This                       -704,848.3   8,393,760.                  502,165,66             509,854,5 34,324,328. 544,178,901
Period (Mark "-"                                9           02                         0.52                 72.15           94             .09
for Decreases)

(I) Total
                                                     8,393,760.                   1,081,916,            1,090,310, 6,846,985.6 1,097,157,6
Comprehensive
                                                            02                       886.52                646.54            5        32.19
Income
(II) Shareholders'
Contribution and                                                                                                    27,410,000. 27,410,000.
Reduction in                                                                                                                00             00
Capital
1. Common
                                                                                                                    27,410,000. 27,410,000.
stock invested by
                                                                                                                            00             00
the owner
                                                                                                                                     76
                      2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

2. Capital
Invested by
Holders of Other
Equity
Instruments
3. Amount of
Share-based
Payments
Recorded into
Shareholders'
Equity
4. Others


(III) Profit             -579,751,2            -579,751,2              -579,751,22
Distribution                  26.00                 26.00                      6.00


1. Appropriation
of Surplus
Reserves
2. Appropriation
of General Risk
Reserves

3. Distribution to
                         -579,751,2            -579,751,2              -579,751,22
Owners (or
                              26.00                 26.00                      6.00
Shareholders)

4. Others




                                                                             77
                      2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

(IV) Internal
Carry-forward of
Shareholders'
Equity
1. Capital
Reserves
Transferred into
Capital (or Share
Capital)
2. Surplus
Reserves
Transferred into
Capital (or Share
Capital)
3. Surplus
Reserves
Covering Losses
4. Carry-forward
retained earnings
of the variation of
the defined benefit
plan
5. Carry-forward
Retained Earnings
of Other
Comprehensive
Incomes
6. Others



                                                                             78
                                                                                                                                            2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

  (V) Special
  Reserves
  1. Withdrawal in
  this period
  2. Used in This
  Period
                                                                       -704,848.3                                                                                      -704,848.3
  (VI) Others                                                                                                                                                                       67,343.29 -637,505.10
                                                                                9                                                                                               9


  IV. Balance at the                                                   592,635,9                 15,053,94              971,547,2               6,498,295,             10,976,28 161,119,966 11,137,408,
                         2,898,756,130.00
  End of This Period                                                         03.13                    9.06                     68.36               696.79                8,947.34         .24         913.58




       8. Statement of Changes in Owners' Equity of the Parent Company

       Amount of this period
                                                                                                                                                                                            Unit: RMB

                                                                                                              2019 Interim

                                                  Other Equity Instruments                           Less:           Other                                                                Total
           Item Name                Share                                              Capital                                    Special    Surplus
                                               Preferred   Perpetual                               Treasury       Comprehensi                            Undistributed Profits Others Shareholders'
                                   Capital                             Others         Reserves                                   Reserves   Reserves
                                                Stocks      Bonds                                    Share        ve Incomes                                                             Equity

I. Balance at the End of Last     2,997,621,                                         1,497,801,06 807,733,586.                              1,246,369,                               12,864,987,370.
                                                                                                                                                             7,930,928,526.31
Year                                 930.00                                                 8.88             00                                430.91                                             10

       Add: Changes in
Accounting Policies
           Correction of Errors
in the Previous Period

                                                                                                                                                                                                      79
                                                                              2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

            Others

II. Balance at the Start of This   2,997,621,   1,497,801,06 807,733,586.     1,246,369,                              12,864,987,370.
                                                                                             7,930,928,526.31
Year                                  930.00           8.88             00       430.91                                            10

III. Increases or Decreases in
                                                68,460,768.7 70,490,360.1
This Period (Mark "-" for          -44,200.00                                                  826,833,682.31         824,759,890.97
                                                          9              3
Decreases)

(I) Total Comprehensive                                                                                               1,126,595,352.3
                                                                                             1,126,595,352.30
Income                                                                                                                              0


(II) Shareholders' Contribution                 101,026,967. 80,372,644.4
                                   -44,200.00                                                                           20,610,123.40
and Reduction in Capital                                 84              4


1. Common stock invested by                                   80,372,644.4
                                   -44,200.00   -326,617.25                                                            -80,743,461.69
the owner                                                                4


2.Capital Invested by Holders
of Other Equity Instruments

3. Amount of Share-based
                                                101,353,585.
Payments Recorded into                                                                                                101,353,585.09
                                                         09
Shareholders' Equity
4. Others


                                                               -9,882,284.3
(III) Profit Distribution                                                                     -299,761,669.99         -289,879,385.68
                                                                         1


1. Appropriation of Surplus
Reserves
                                                                                                                                     80
                                                  2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


2. Distribution to Owners (or
                                                                  -299,761,669.99         -299,761,669.99
Shareholders)


                                   -9,882,284.3
3. Others                                                                                   9,882,284.31
                                             1

(IV) Internal Carry-forward of
Shareholders' Equity
1. Capital Reserves
Transferred into Capital (or
Share Capital)
2. Surplus Reserves
Transferred into Capital (or
Share Capital)
3. Surplus Reserves Covering
Losses
4. Carry-forward retained
earnings of the variation of the
defined benefit plan
5. Carry-forward Retained
Earnings of Other
Comprehensive Incomes
6. Others

(V) Special Reserves

1. Withdrawal in this period

2. Used in This Period



                                                                                                         81
                                                                                                                                                   2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

                                                                                        -32,566,199.
(VI) Others                                                                                                                                                                                 -32,566,199.05
                                                                                                      05

IV. Balance at the End of This       2,997,577,                                         1,566,261,83 878,223,946.                                  1,246,369,                              13,689,747,261.
                                                                                                                                                                    8,757,762,208.62
Period                                  730.00                                                    7.67             13                                 430.91                                              07

     Amount of Previous Period
                                                                                                                                                                                                  Unit: RMB

                                                                                                                        2018 Interim

                                                          Other Equity Instruments                         Less:     Other                                                                        Total
              Item Name                                                                Capital                                         Special     Surplus      Undistributed
                                      Share Capital       Preferre Perpetua Other                      Treasury    Comprehens                                                     Others      Shareholders'
                                                                                      Reserves                                     Reserves       Reserves         Profits
                                                          d Stocks l Bonds    s                            Share   ive Incomes                                                                   Equity

 I. Balance at the End of Last       2,898,756,130.0                                 589,895,836.                                                971,547,268 6,037,280,289.                 10,497,479,524.2
 Year                                                 0                                          49                                                      .36                 37                                2

         Add: Changes in
 Accounting Policies

              Correction of Errors
 in the Previous Period

              Others

 II. Balance at the Start of This 2,898,756,130.0                                    589,895,836.                                                971,547,268 6,037,280,289.                 10,497,479,524.2
 Year                                                 0                                          49                                                      .36                 37                                2

 III. Increases or Decreases in
                                                                                                                                                                526,724,624.5
 This Period (Mark "-" for                                                           -637,505.10                                                                                              526,087,119.48
                                                                                                                                                                             8
 Decreases)

 (I) Total Comprehensive                                                                                                                                        1,106,475,850.
                                                                                                                                                                                            1,106,475,850.58
 Income                                                                                                                                                                      58

 (II) Shareholders'

                                                                                                                                                                                                           82
                                 2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.

Contribution and Reduction in
Capital

1. Common stock invested
by the owner

2. Capital Invested by
Holders of Other Equity
Instruments

3. Amount of Share-based
Payments Recorded into
Shareholders' Equity

4. Others

                                           -579,751,226.0
(III) Profit Distribution                                                  -579,751,226.00
                                                        0

1. Appropriation of Surplus
Reserves

2. Distribution to Owners (or             -579,751,226.0
                                                                           -579,751,226.00
Shareholders)                                           0

3. Others

(IV) Internal Carry-forward of
Shareholders' Equity

1. Capital Reserves
Transferred into Capital (or
Share Capital)

2. Surplus Reserves
Transferred into Capital (or
Share Capital)


                                                                                        83
                                                                  2019 Interim Report of Zhejiang Dahua Technology Co., Ltd.


3. Surplus Reserves
Covering Losses

4. Carry-forward retained
earnings of the variation of
the defined benefit plan

5. Carry-forward Retained
Earnings of Other
Comprehensive Incomes

6. Others

(V) Special Reserves

1. Withdrawal in this period

2. Used in This Period

(VI) Others                                      -637,505.10                                                    -637,505.10

IV. Balance at the End of This 2,898,756,130.0   589,258,331.   971,547,268 6,564,004,913.                 11,023,566,643.7
Period                                      0             39            .36             95                                0




                                                                                                                         84
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III. Basic Information about the Company

     Zhejiang Dahua Technology Co., Ltd. (hereinafter referred to as "Company" or "the Company") was incorporated under the
official approval document No. 18 [2002] Zhejiang Enterprise Listing by Zhejiang Provincial People's Government Work Leading
Group for Enterprise Listing in June 2002, and on the basis of overall change of the previous Hangzhou Dahua Information
Technology Co., Ltd. It was an incorporated company initiated and established jointly by five natural persons, Fu Liquan, Chen
Ailing, Zhu Jiangming, Liu Yunzhen and Chen Jianfeng as initiators.
     On April 22, 2008, the Company issued 16.8 million shares of common stock in RMB to the general public for the first time
under the approval document No. 573 [2008] Securities Regulatory Issuance, issued by China Securities Regulatory Commission
("CSRC"). It was listed on Shenzhen Stock Exchange on May 20, 2008 with a registered capital of RMB 66.8 million and the change
registration filed with Administration for Industry and Commerce was completed on May 23, 2008. The Company's unified social
credit code is 91330000727215176K. The Company falls within the security video surveillance industry.
     As of June 30, 2019, the Company has issued a total of 2,997,577,730 shares, with a registered capital of RMB 2,997,577,730.
The registered address is No. 1187, Bin'an Road, Binjiang District, Hangzhou, and the headquarters address is No. 1199, Bin'an Road,
Binjiang District, Hangzhou.
     The Company's main operational activities include the development, services & sales of computer software, the design,
development, production, installation & sales of electronic products and communication products, the development, system
integration & sales of network products, the design & installation of electronic engineering products, information technology
consultation service, import & export businesses, etc. The actual controllers of the Company are Fu Liquan and Chen Ailing.
     This financial statement has been approved by Board of Directors on August 16, 2019.
     For details of the scope of the consolidated financial statement for the current period, refer to Note IX "Equities in Other
Entities"; for details of the changes in the scope of the consolidated financial statement for the current period, refer to Note VIII
"Changes in the Scope of Consolidation".


IV. Basis for Preparing the Financial Statement

1. Basis for the preparation

The Company prepares the financial statement, as a going concern, based on transactions and matters that have actually occurred, in
accordance with Accounting Standards for Business Enterprises - Basic Standards issued by the Ministry of Finance and all specific
accounting standards, application guidelines for accounting standards for business enterprises, explanations on the accounting
standards for business enterprises and other related regulations (hereinafter referred to as "Accounting Standards for Business
Enterprises" collectively), and the disclosure provisions in the Preparation Rules for Information Disclosures by Companies Offering
Securities to the Public No. 15 - General Provisions on Financial Reports issued by CSRC.


2. Going concern

     The Company has the capability to continue as a going concern for at least 12 months as of the end of current reporting period,
without any significant item affecting the capability for continuing as a going concern.


V. Significant Accounting Polices and Accounting Estimates

Notes to specific accounting policies and accounting estimates:
     The following disclosures cover the specific accounting policies and accounting estimates formulated by the Company
according to the characteristics of its production and operation.

                                                                                                                                        85
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1. Statement on compliance with Accounting Standards for Business Enterprises

     The financial statements have been prepared by the Company in conformity with Chinese Accounting Standards for Business
Enterprises, and present truly and completely the Company's financial position, operating results and cash flow, and other related
information in the reporting period.


2. Accounting period

The accounting period of the Company is from 1 January to 31 December of each calendar year.


3. Operating cycle

The Company’s operating cycle is 12 months.


4. Functional currency

     For the domestic operating entities of the Company and its overseas operating entity Dahua Technology (HK) Limited, the
reporting currency is Renminbi ("RMB"). The remaining offshore operating entities use the local currency as the reporting currency.


5. The accounting treatment of business combinations involving enterprises under common control and
business combinations not involving enterprises under common control

     Business combinations involving entities under common control: The assets and liabilities acquired by the Company in business
combination shall be measured at the carrying value of the assets, liabilities of the acquiree (including goodwill incurred in the
acquisition of the acquiree by ultimate controlling party) in the consolidated financial statements of the ultimate controlling party on
the date of combination. The difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination (or total nominal value of the issued shares) is adjusted to capital premium in capital reserve.
Adjustments shall be made to retained earnings in the event that the share premiums in the capital reserves are not suffi cient for
write-down.
     Business combinations involving entities not under common control: The assets paid and liabilities incurred or committed as a
consideration of business combination by the Company were measured at fair value on the date of acquisition and the difference
between the fair value and its carrying value shall be charged to the profit or loss for the period. Where the cost of combination is
higher than the fair value of the identifiable net assets acquired from the acquire in business combination, the Company shall
recognize such difference as goodwill; where the cost of combination is less than the fair value of the identifiable net assets acquired
from the acquiree in business combination, such difference shall be charged to the profit or loss for the current period.
     The agency fee such as audit, legal service and evaluation consultation and other fees which are directly related to the above
matters shall be recognized as the profit or loss in the period when the costs are incurred; the transaction costs for the equity
securities issued for corporate combination shall be written-off against equity.


6. Preparation method of consolidated financial statements

     The scope of consolidation of the consolidated financial statements of the Company is based on controlling interests, and all the
subsidiaries (including separate entities of the investee controlled by the Company) are included in the consolidated financial
statements.
     The consolidated financial statements are prepared by the Company based on the financial statements of the Company and its

                                                                                                                                     86
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subsidiaries and in accordance with the other relevant information. In preparation of the Company's consolidated financial statements,
the Company will treat the enterprise group as a single accounting entity. The Group's overall financial position, operating results and
cash flow are reflected based on the relevant accounting standards, measurement and presentation requirements and in accordance
with the unified accounting policy.
     The subsidiaries that are within the scope of the consolidation shall have the same accounting policies and the accounting
periods with those of the Company. In preparing the consolidated financial statements, where the accounting policies and the
accounting periods are inconsistent between the Company and subsidiaries, the financial statements of subsidiaries are adjusted in
accordance with the accounting policies and accounting period of the Company. For subsidiaries acquired from a business
combination involving entities not under common control, the individual financial statements of the subsidiaries are adjusted based
on the fair value of the identifiable net assets on the date of acquisition. For subsidiaries acquired from a business combination
involving entities under common control, the individual financial statements of the subsidiaries are adjusted based on the carrying
value of the assets, liabilities of the acquiree (including goodwill incurred in the acquisition of the acquiree by ultimate controlling
party) in the financial statements of the ultimate controlling party.
     The owner's equity, the net profit or loss and the comprehensive income attributable to minority shareholders of a subsidiary of
the current period are presented separately under the owners' equity in the consolidated balance sheet, the net profit and the total
comprehensive income in the consolidated income statement respectively. Where losses attributable to the minority shareholder s of a
subsidiary of the current period exceed the minority shareholders' interest entitled in the shareholders' equity of the subsidiary at the
beginning of the period, the excess is allocated against the minority shareholders interest.
     (1) Acquisition of subsidiaries or business
     For acquisition of subsidiaries or business due to business combination involving entities under common control during the
reporting period, the opening balance of the consolidated balance sheet shall be adjusted; the revenue, expense and profit of such
subsidiaries or business from the beginning to the end of the reporting period when the merger occurs are included in the
consolidated income statement; the cash flows of such subsidiaries or business from the beginning to the end of the reporting period
when the merger occurs are included in the consolidated cash flow statement, and the comparative figures of the financial statements
should be adjusted simultaneously as if the consolidated reporting entity has been in existence since the beginning of the control by
the ultimate controlling party.
     An investor that may impose control over the investee under joint control due to additional investment shall be deemed a party
participating in the combination, and shall be adjusted at current status when the ultimate controlling party begins the control. The
equity investment held before gaining the control of the combined party is recognized as relevant profit or loss, other comprehensive
income and changes in other net assets at the later of the date of acquisition of the original equity and the date when the combining
and the combined parties are under joint control, and shall be written down to the opening balance retained earnings or current profit
or loss in the comparative reporting period.
     For acquisition of subsidiaries due to business combination involving entities not under common control during the reporting
period, the opening balance of consolidated balance sheet needs not be adjusted; the revenue, expense and profit of such subsidiaries
or business from the date of acquisition to the end of the reporting period are included in the consolidated income statement; the cash
flows of such subsidiaries or business from the date of acquisition to the end of the reporting period are included in the consolidated
cash flow statement.
     In connection with imposing control over the investee not under joint control due to additional investment and other reasons, the
equity of acquiree held before acquisition date shall be remeasured by the Company at the fair value of such equity on the acquisition
date and the difference between fair value and carrying amount shall be recognized as investment income in current period. If the
acquiree's equity held before the acquiring date contains other comprehensive income and the other changes of owner's equity except
for net profits and losses, other comprehensive income and profit distributions under the equity method, the related other
comprehensive income and changes in other owner's equity shall be transferred to investment gains or losses on the date of
acquisition, excluding the other comprehensive income derived from changes of net liabilities or net assets due to re-measurement on


                                                                                                                                      87
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defined benefit plan by the investee.
     (2) Disposal of subsidiaries or business
     ① General treatment
     For disposal of subsidiaries or business during the reporting period, the revenue, expense and profit of such subsidiaries or
business from the beginning of the period to the date of disposal are included in the consolidated income statement; the cash flows of
such subsidiaries or business from the beginning of the period to the date of disposal are included in the consolidated cash flow
statement.
     When losing control of the investee due to partial disposal of the equity investment, or any other reasons, the remaining equity
investment is remeasured at fair value at the date in which control is lost. The sum of consideration received from disposal of equity
investment and the fair value of the remaining equity investment, net of the difference between the sum of the Company's previous
share of the subsidiary's net assets recorded from the acquisition date or combination date and the sum of goodwill, is recognized in
investment income in the period in which control is lost. Other comprehensive income or net profit and loss related to the previous
equity investment in the subsidiary, changes in equity except the other comprehensive income and profit distribution, are transferred
to investment income of the current period when losing control, except the other comprehensive income as a result of the changes
arising from the remeasurement of the net assets and net liabilities of the investee's defined benefit plan.
     In the event of losing control due to a decrease in the proportion of shares held by the Company as the capital increase in
subsidiaries by other investors, the accounting treatment shall be conducted in accordance with the above principles.
     ② Disposal of subsidiary achieved by stages
     When disposal of equity interests of subsidiaries through multiple transactions until the control is lost, generally transactions in
stages are treatment as a package deal in accounting if the transaction terms, conditions, and economic impact of disposal of the
subsidiary's equity interests comply with one or more of the following:
     ⅰ. These transactions are achieved at the same time or the mutual effects on each other are considered;
     ⅱ. A complete set of commercial results can be achieved with reference to the series of transactions as a whole;
     ⅲ. Achieving a transaction depends on at least achieving of one of the other transaction;
     ⅳ. One transaction recognized separately is not economical, but it is economical when considered together with other
transactions.
     When losing control of a subsidiary in disposal of equity interests through multiple transactions is recognized as a package deals,
these transactions shall be in accounting treated as loss control of a subsidiary in disposal of equity interests achieved. However, the
differences between price on each disposal and disposal of investment on the subsidiary's net assets shall be recognized in other
comprehensive income in the consolidated financial statements, and included in profit or loss for the period when the control is lost.
     If all transactions in disposal of equity interests of subsidiaries until losing control are not a package deals, accounting treatment
for partial disposal of equity investments of subsidiary without losing control shall be applied before control is lost. When the control
is lost, general accounting treatment for disposal of a subsidiary shall be used.
     (3) Acquisition of minority interest of subsidiaries
     The Company shall adjust the share premium in the capital reserve of the consolidated balance sheet with respect to any
difference between the long-term equity investment arising from the purchase of minority interest and the net assets attributing to the
parent company continuously calculated on the basis of the newly increased share proportion as of the acquisition date (or date of
combination) or, adjust the retained earnings if the share premium in the capital reserve is insufficient for write-down.
     (4) Partial disposal of equity investment in subsidiaries without losing control
     The difference between disposal consideration of long-term equity investment in subsidiaries partially disposed without losing
control and the share of net assets calculated from the date of acquisition or combination date shall be adjusted to share premium in
the capital reserve in the consolidated balance sheet. Adjustments shall be made to retained earnings in the event that the share
premiums in the capital reserves are not sufficient for write-down.




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7. Recognition criteria of cash and cash equivalents

     In preparing the cash flow statement, the cash on hand and deposits that are available for payment at any time of the Company
are recognized as cash. The short-term (due within 3 months of the date of purchase) and highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of value change are recognized as cash
equivalents.


8. Conversion of transactions and financial statements denominated in foreign currencies

(1) Foreign currency transactions
     Foreign currency transactions shall be translated into RMB at the spot exchange rate on the day when the transactions occurred.
     Balance sheet date foreign currency monetary items shall be translated using the spot exchange rate at the balance sheet date.
The resulting exchange differences are recognized in profit or loss for the current period, except for those differences related to the
principal and interest on a specific-purpose borrowing denominated in foreign currency for acquisitions, construction or production
of the qualified assets, which should be capitalized as cost of the assets.
     (2) Translation of foreign currency financial statements
     All assets and liabilities items in balance sheet are translated based on spot exchange rate on the balance sheet date; owner s'
equity items other than "undistributed profit" are translated at a spot exchange rate when accrued. Revenue and expense items in the
income statement are translated at a spot exchange rate at the transaction occurrence date.
     For disposal of overseas operation, the translation difference as stated in the foreign currency financial statements relating to
overseas operation, is accounted for in the profit and loss account in the current period from owners' equity items.


9. Financial instruments

     Financial instruments include financial assets, financial liabilities and equity instruments.
     (1) Classification of the financial instruments
     According to the business model of financial assets management of the Company and the contractual cash flow characteristics
of financial assets, the financial assets are classified at the initial recognition into: financial assets measured at amortized cost,
financial assets at fair value through other comprehensive income (debt instruments) and financial assets at fair value through profit
or loss.
     Those classified into financial assets measured at amortized cost have the business model whose target is the collection of
contractual cash flow and where the contractual cash flow is only the payment of the principal and the interest based on the
outstanding principal amount; those classified into financial assets at fair value through other comprehensive income (debt
instruments) have the business model whose target is the collection of contractual cash flow as well as selling such financial assets
and where the contractual cash flow is only the payment of the principal and the interest based on the outstanding principal amount;
other financial assets other than the above are classified as financial assets at fair value through profit or loss.
     For investments in non-transactional equity instruments, the Company defines it as financial assets at fair value through profit or
loss at the initial recognition; Those due later than one year since the balance sheet date and expected to be held for more than one
year are listed as other non-current financial assets. At the initial recognition, in order to eliminate or significantly reduce accounting
mismatches, financial assets can be designated as financial assets at fair value through profit or loss. For such financial assets, the
Group uses fair value for subsequent measurement, with changes in fair value recorded in profit or loss for the period.
     Financial liabilities are classified at the initial recognition into: financial liabilities at fair value through profit and loss and
financial liabilities measured at amortized cost.
     The financial liabilities meeting any of the following conditions can be designated as the financial liabilities at fair value
through profit and loss:

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     1) Such designation can eliminate or significantly reduce accounting mismatches.
     2) According to corporate risk management or investment strategies as stated in formal written documents, the management and
performance evaluation of financial liability portfolios or combinations of financial assets and financial liabilities are based on fair
value , and reported to key management personnel on this basis within the enterprise.
     3) Such financial liabilities include embedded derivatives that need to be split separately.
     (2) Recognition and measurement of financial instruments
     ① Financial assets measured at amortized cost
     Financial assets measured at amortized cost include notes receivable, accounts receivable, other receivables, long-term
receivables, and debt investment, etc., which are initially measured at fair value, with related transaction costs included in the initial
recognition amount; The accounts receivable excluding major financing components and the accounts receivable where the company
decided not to consider the financing component of not more than one year are initially measured at the contract transaction price.
     Interest calculated according to the effective interest rate during the period is recorded into profit and loss for the period.
     Upon recovery or disposal of financial assets, the difference between the consideration obtained and the carrying amount is
charged to profit or loss for the period.
     ② Financial