WafangdianBearingCompanyAnnouncementLimitedRelatedTransaction TheCompanyandwholemembersoftheBoardherebyensurethattheNoticeisfactual,accurateandcompletewithoutanyfalse record,misleadingstatementsorimportantomissions. I.Tradingoverview i.Summaryofthetransactionsapprovedinearlyboardsession (1)OnAugust25,2016andSeptember23,2016WBCrespectivelyholdtheseventhsessionofthe boardmeetingforthefirsttimeandthefirstinterimboardofdirectorsmeeting,Examinedandapproved aseriesofrelatedtransactionstobuyandsellassetsbill(seethelaptopcompanyonAugust27,2016, onSeptember24,publishedinthe"HongKongcommercialdaily","securitiestimesandthetideof informationnetworkonthedisclosureofthestatementonleasedassetsofrelatedtransactions,the connection transaction announcement about buying equipment and the related transaction announcementaboutthesaleofassets). (2)Aftertheboardmeeting,thecompanyhandtheseproposaltoDalianmunicipalSASACfro approval, and accept its designated with execution of securities and futures related business qualificationappraisalinstitutionforpartofthebillwereevaluated,andissuetheevaluationreport. ii.Detailsinformation 1.TheproposalofadjustingthebusinessofWBGCautomobilebearingbranch,precision cage company,precisionrollercompany, renting out relatedassets andinvolvingrelated transaction(Adjusted); Duetotheneedofcompanybusiness,tradingthroughwitheachotherfriendlyconsultation,to adjustscopeofasset,nochangeothercontent.Seethetablebelow: (1)leasedequipment No. Lessor Lessee 2016.9.1-12.31 PCS OriginalValue NetValue RentalFee 1 Cagecompany 119 2214.98 705.5 82.91 2 WBC Rollercompany 216 12719.02 8185.66 375.64 3 Autobranch 325 8840.61 5903.43 341.75 Total 660 23774.61 14794.59 800.3 (2)landandhousingrental Rentalunit Rentalunit Workshop Inlandrent Thetotalannual No. Lessor Lessee M2 price Area(m2) price inrent(ten (ten rent(ten (RMB/year) (RMB/year) thousand thousand thousandyuan） yuan|) yuan) Automotive1 WBC Bearing 30,020 120 360.24 0 360.24BranchCompany2 WBC Cage 12,733.72 60 17,543.22 15 76.4 26.31 102.72company3 WBC Rolling 10,754.31 60 13,712.49 15 64.53 20.57 85.1company 合计 53,508.03 31,255.71 501.17 46.88 548.06 2.aboutbuyingrentalequipmentandassociatedbusinessproposal(afteraudited): Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:costmethod (3)assessmentresultsummarytable OriginalValue（ten NetValue（ten Assessmentvalue Project Qty（pcs） thousandyuan） thousandyuan） (tenthousandyuan) Thecompanypurchases equipmentsfromEquipment 235 5,660.02 3,823.55 4,885.47 EngineeringCompany 3.Aboutthesaleofassetsandrelatedtransactions(afteraudited) 3.1TheproposalofsellingtheShenyangagenciesplanttoWBGC; Thecompanyin2016thirdextraordinarymeetingofboardofdirectors(heldinSeptember23, 2016) approvedin 2015to assessthe value of fall10%price to sell Shenyang ZWZ housing distributiondepartment.Therefore,partoftheassetsassessmentreporthaspassedthevalidityto ensureservicecontinuity,andassettradingfairandjustice,thecompanydecidedtoreevaluatethis partoftheassets,andtoassessthevalueofsale. Thecompanyinaccordancewiththerelevantprocedures,andacceptwhatisdalianmunicipal state-ownedassetssupervisionandadministrationinthedatabase toextractwithenforcementof securitiesandfuturesrelatedbusinessqualificationassessmentinstitutiontoevaluatethispartofthe assetsofthecompany,andissuetheevaluationreport. Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:marketing (3)assessmentresultsummarytable Units:tenthousandyuan OriginalValue NetValue 2016 AssetsName （Yuan） （Yuan） 2014assessmentvalue 2015assessmentvalue Assessment value Shenyangagenciessales 457.36 126.94 1,956.21 1,535.53 1,777.92company 3.2TheproposalofsellingthePulandianplanttoWBGC; Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:costmethod (3)assessmentresultsummarytable Units:tenthousandYuan AssetsName Area(m2) OriginalValue NetValue Assessment value (ten thousandYuan) PuLanDianhouses18,020.93 1,579.02 298.15 1072.53 3.3TheproposalofsellingthefullydepreciatedequipmenttoWBGCautomobilebearing branch,precisioncagecompany,precisionrollercompany. Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)assessmentmethods:costmethod(partoftheelectronicdeviceadoptsthemarketing) (3)assessmentresultsummarytable Units:tenthousandYuan NO. Buytheunit Qty（pcs） OriginalValue NetValue Assessmentvalue 1 AutomotiveBearing BranchCompany 255 3,134.48 87.40 393.57 2 Cagecompany 224 2,546.48 68.74 430.04 3 Rollingcompany 704 5,767.54 155.61 1,050.38 Total 1,183 11,448.50 311.75 1,873.99 3.4TheproposalofsellingidleequipmenttoWBGCequipmentmanufacturingCompany; Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:costmethod (3)assessmentresultsummarytable Units:tenthousandYuan NO. Project Qty（pcs） OriginalValue NetValue Provisionfor Assessmentvalue （Yuan） （Yuan） diminutioninvalue 1 Idleequipment 108 4092.73 409.81 22.02 667.19 3.5TheproposalofsellingrailwayprivatesidingsandrelatedassetstoWBGCprecision forgingCompany; Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:costmethod (3)assessmentresultsummarytable Units:tenthousandYuan NO. Devicename OriginalValue NetValue Assessmentvalue 1 Railwayprivatesidings 218.35 - 402.65 2 railcar 13.00 0.39 1.92 3 diesellocomotive 85.65 - 12.31 Total 317.00 0.39 416.88 II.Introductiontothenewproposal 1.Overviewoftransactions BecauseWBChastransfertheatuobearing,rollingandcagerelatedbusinesstransferredto WBGCandthenewlyestablishedcompany,accordingtotheneedsofproductionandoperation,low valueofthecompanywillbeassociatedwiththethreepartofthebusinessandthecosthasbeenfully amortizedconsumptionthetransferofgoodstoZWZandrelatedunits. Thecosthasbeenfullyamortizationofthelowvalueofperishableproductsincludingone-timecost oftooling,tooling,toolsandotherlowvalueconsumables,thespecificamountofthepurchaseto assessthevalueof. 2.Themainevaluationcontentisasfollows: (1)theevaluationbasedate:August31,2016 (2)evaluationmethod:costmethod (3)assessmentresultsummarytable Units:tenthousandyuan NO. company OriginalValue Assessmentvalue 1 AutomotiveBearingBranchCompany 670.67 113.65 2 Cagecompany 888.15 134.55 3 Rollingcompany 2,319.30 395.3 Total 3,878.12 643.5 3.Basicinformationofthebuyer ThebuyersareWBGC’snewlyestablishedbranchesandsubsidiaries,i.e.WafangdianBearing GroupPrecisionRollerCo.,Ltd.(subsidiary),WafangdianBearingGroupPrecisionCageCo.,Ltd. (subsidiary),andWafangdianBearingGroupPremierAutomotiveBearingCo.,Ltd.(BranchCompany). Becauseabovecompaniesarefoundedinlessthanayear,theinvestorsWBGCareintroducedas follow:CompanyName:WafangdianBearingGroupCorp.Registeredcapital:413,793,100yuanLegalrepresentative:MengWeiCompanyType:State-ownedenterpriseBusinessscope:manufacturingandmarketingofbearings,componentsandaccessoriesofbearings,specialtoolsofbearings,tooling,equipment,mechanicalequipments,abrasives,toolings,casting,autoparts,motor partsand relatedindustrialproducts; design,repair, maintenanceand technicalservicesofbearings;purchaseandmarketingofrawmaterialsandauxiliarymaterialsofbearing;plantrentalandequipmentrental.Financialsituationofthepastyear:TheauditedfinancialsituationofWBGCin2015:Totalassetsare3,547,637,492.19yuan,netassetsare1,241,838,726.01yuan,operatingincomesare714,658,810.29yuan,andnetprofitsattributabletoownersofparentcompanyare68,062,752.06Yuan.III.Approvalsituation1.Thebuyerarethecompany'slargestshareholderWBGCoritswhollyownedsubsidiary,thusthesaleofassetsconnectedtransaction.2.Thisrelatedtransactionhasbeen deliberatedand unanimouslyapproved bythe7thboardofdirector2ndmeeting,therelateddirectorsMengWei,ZhangXinghai,ChenJiajun,LiShi,SunMaolinandSunNajuanavoidedthedeliberationonthismatter,otherdirectorsallvotedyesforthismatter,therewasneithernegativevotenorabstentionvote.Thecompany’sindependentdirectorshaveissuedthe“Priorapprovalof independentdirectors" andmade"Independent directors’opinions" onthis matter;3.Above-mentionedbusinessdoesnotconstituteamajorassetrestructuring;4.Thistransactionstillneedstogettheapprovalofshareholdersmeeting,personaffiliatedwiththisrelatedtransactionwillgiveuptherightstovoteforthisproposalattheshareholdersmeeting.IVTheimpactofthetransactiononthecompanyTheassetsforsaleareneededtobeassessed,theimpacttotheprofitsandlossesofthecurrentabout48millionYuan.VIndependentdirectors’opinionsThecompany’sindependentdirectorshaveissuedthe“Priorapprovalofindependentdirectors"andmade"independentdirectors’opinions"onthismatter,theindependentdirectorsthinkiteffectivelycleanupthecompany'sidleassets,improveoperationalqualityofthecompany'sassets,soitwillneitherdamagethecompany’sinterestsnortherightsandinterestsofminorityshareholders.VIOtherexplanationsExcepttheproposalofsellingtheShenyangagenciesplanttoWBGCandtheproposalofsellinglow-valueconsumptiongoodswhosecosthavebeenamortizedtoWBGCautomobilebearingbranch,precisioncagecompany,precisionrollercompany,theotherproposalhavebeenapprovedbyDalianSASAC.VIIDocumentsavailableforreference1.Resolutionofthe7thboardofdirector2ndmeetingofWafangdianBearingCo.,Ltd.;2.Priorapprovalofindependentdirectors;3.IndependentOpinions;4.assessmentreportHerebynotify BoardofDirectorsof WafangdianBearingCo.,Ltd. October272016