WafangdianBearingCo.,Ltd. AssetssaleinvolvedinRelatedTransaction TheCompanyandwholemembersoftheBoardherebyensurethattheNoticeisfactual,accurateandcompletewithoutanyfalserecord,misleadingstatementsorimportantomissions. ISummaryofthetransactions 1.Companyintendstosaleidleequipment,housingandotherassets,inordertoincreasetheefficiencyofenterprises,enhancethelevelofenterprisemanagement. 2.Thebuyerarethecompany'slargestshareholderWBGCoritswhollyownedsubsidiary,thusthesaleofassetsconnectedtransaction. 3.Thisrelatedtransactionhasbeendeliberatedandunanimouslyapprovedbythe20163rdtemporaryboardofdirector,therelateddirectorsMengWei,ZhangXinghai,ChenJiajun,LiShi,SunMaolinandSunNajuanavoidedthedeliberationonthismatter,otherdirectorsallvotedyesforthismatter,therewasneithernegativevotenorabstentionvote.Thecompany’sindependentdirectorshaveissuedthe“Priorapprovalofindependentdirectors"andmade"Independentdirectors’opinions"onthismatter;4.Above-mentionedbusinessdoesnotconstituteamajorassetrestructuring; 5.Thistransactionstillneedstogettheapprovalofshareholdersmeeting,personaffiliatedwiththisrelatedtransactionwillgiveuptherightstovoteforthisproposalattheshareholdersmeeting. IIBasicinformationoftheobjectionandbuyer 1.objection:plantofPulandianplant 1）Basicinformationoftheobjection: Item area（M2） originalvalue（Yuan） netvalue（Yuan） plant 18,061.91 15,942,144.84 3,043,989.13 Thisplantisinvestedbythecompany'slargestshareholderwhentheWBCwaslisted.The st company’s1 meetingoftheseventhboardofdirectors(August25,2016) hasapproved rentthe productionequipment,landandhousingrelatedwiththerollingcageandautomobilebearingrelatedtothenewcompanyinvestedbyWBGC.Theplantsforsaleareplantswhichwereownedbyrollercompany. 2）Basicinformationofthebuyer CompanyName:WafangdianBearingGroupCorp. Registeredcapital:413,793,100yuan Legalrepresentative:MengWei CompanyType:State-ownedenterprise Businessscope:manufacturingandmarketingofbearings,componentsandaccessoriesofbearings,specialtoolsofbearings,tooling,equipment,mechanicalequipments,abrasives,toolings,casting,autoparts,motorpartsandrelatedindustrialproducts;design,repair,maintenanceandtechnicalservicesofbearings;purchaseandmarketingofrawmaterialsandauxiliarymaterialsofbearing;plantrentalandequipmentrental. Financialsituationofthepastyear: TheauditedfinancialsituationofWBGCin2015:Totalassetsare3,547,637,492.19yuan,netassetsare1,241,838,726.01yuan,operatingincomesare714,658,810.29yuan,andnetprofitsattributabletoownersofparentcompanyare68,062,752.06yuan. 2.objection: fullydepreciatedequipment 1）Basicinformationoftheobjection: st Thecompany’s1 meetingoftheseventhboardofdirectors(August25,2016)hasapprovedrent theproductionequipment,landandhousingrelatedwiththerollingcageandautomobilebearing relatedtothenewcompanyinvestedbyWBGC.Theassetsforsalearetheonesdepreciationhasbeenfullycalculatedandhavebeenapprovedbythe20163rdtemporaryboardofdirector,detailsasfollows: Original value net value No. Buyer amount （Yuan） （Yuan） 1 WBGCautomobilebearingbranch 290 3,295 92 2 WBGCprecisioncagecompany 226 2,596.5 70 3 WBGCprecision rollercompany 750 6,585.4 179.1 合计 1,266 12,476.9 341.1 2）Basicinformationofthebuyer ThebuyersareWBGC’snewlyestablishedbranchesandsubsidiaries,i.e.WafangdianBearingGroupPrecisionRollerCo.,Ltd.(subsidiary),WafangdianBearingGroupPrecisionHolderCo.,Ltd. (subsidiary),andWafangdianBearingGroupPremierAutomotiveBearingCo.,Ltd.(BranchCompany).Becauseabovecompaniesarefoundedinlessthanayear,theinvestorsWBGCareintroducedin13.objection:TheIdleequipment 1）Basicinformationoftheobjection: No. item amount Originalvalue（Yuan） netvalue（Yuan） 1 Inventoryidleequipment 40 23,638,929 2,614,433 2 IdleequipmentinFactorysite 68 19,084,315 1,892,081 Total 108 42,723,244 4,506,514 2）Basicinformationofthebuyer CompanyName:Dalianwazhougroupbearingequipmentmanufacturingco.,LTD Registeredcapital:16,376,000Yuan Legalrepresentative:ChenjiaJun CompanyType:LimitedLiabilityCompany Businessscope:Bearingequipmentandsparepartsmanufacturing,renovation,maintenance;automation engineering; all kinds of mechanical processing equipment manufacturing andmaintenance; bearingmold,measuringandcuttingtoolsandequipmentmanufacturingandmaintenance; all kinds ofCNCturntablebearingassemblyofvarioustypesofmanufacturing;manufacturing; electrical engineering construction, construction and maintenance of pipelineengineering,industrialbuildings,lightinginstallationofhydropowerprojecthousingmaintenanceandmaintenance (more involved with the qualification qualification, operating permit);mechanicalengineeringinstallationandmaintenance;allkindsofallkindsofweldingequipmentinstallation;***Financialsituationofthepastyear: Theauditedfinancialsituationofthecompanyin2015:Totalassetsare121,486,057.23yuan,netassets are78,199,388.03 yuan, operating incomes are 61,553,823.54 yuan, and net profits is1,187,600.96yuan. 4.objection:TheRailwayprivatesidingsandrelatedassets 1）Basicinformationoftheobjection: No. Item Originalvalue（Yuan） netvalue（Yuan） 1 Railwayprivatesidings 2,183,474.36 - 2 railcar 130,000.00 3,900.00 3 diesellocomotive 856,532.72 - Total 3,170,007.08 3,900.00 2）Basicinformationofthebuyer CompanyName:Wafangdianbearingprecisionforgingco.,LTD Registeredcapital:24,450,000Yuan Legalrepresentative:MengWei CompanyType:LimitedLiabilityCompany Businessscope:Forgingproductsprocessing;mechanicalpartsprocessing;forgingequipment maintenance;forgingannealing;forgingprocessdesign;salesofmetalmaterials Financialsituationofthepastyear: Theauditedfinancialsituationofthecompanyin2015:Totalassetsare321,601,825.34yuan,netassets are190,736,863.20yuan,operatingincomesare554,074,363.49yuan,andnetprofitsis431,864.52yuan. 5.objection:plantofShengyangAgency 1）Basicinformationoftheobjection: unit：0000’Yuan Evaluation Evaluation item Original Purchaseprice valuein2014 valuein2015 value netvalue plantof Shengyang 457.36 142.18 1,956.21 1,535.53 1381.98 Agency OnNovember3andNovember20,2015,WBCholdthe20141stextraordinary boardmeetingandthe20142ndshareholders’meeting,discussandnormallypasstheproposalofplanningtosaleShenYangandHaerbinaccommodationagencybyopentender,anddisclosureinSecuritiesTimes,HongKongCommercialDailyandhttp//www.cninfo.com.cnonNovember5andNovember21,2015. Butaffectedbythemarketpricechange,thetwoplantdidnotsaleout,in2015thecompanyre-evaluate and sale by open tender after approved by the6rdmeetingofthesixthboardofdirectors.thenewevaluationvalueare15,355,300Yuanand4,867,900Yuan,intotal202,23,200.Accordingtotherelevantprovisionsofthe"ShenzhenStockExchangeListingRules",for publiclytradedcompanies,nolongerperformtransactions,therelevantapprovalprocedures, accordingtotheSASACoftheStateCouncilDecreeNo.thirty-secondoftheMinistryoffinance "businesstransactionsofstate-ownedassetssupervisionandmanagementmeasures"oftherelevantprovisions,thecompanypostponedandreducethepriceby10%transferredtothelargestshareholderofthecompanyWBGCgroupcompany. plantofHarbinAgencyhasbeensoldoutbyevaluationvalue 2）Basicinformationofthebuyer CompanyName:WafangdianBearingGroupCorp. Registeredcapital:413,793,100yuan Legalrepresentative:MengWei CompanyType:State-ownedenterprise Businessscope:manufacturingandmarketingofbearings,componentsandaccessoriesofbearings,specialtoolsofbearings,tooling,equipment,mechanicalequipments,abrasives,toolings,casting,autoparts,motorpartsandrelatedindustrialproducts;design,repair,maintenanceandtechnicalservicesofbearings;purchaseandmarketingofrawmaterialsandauxiliarymaterialsofbearing;plantrentalandequipmentrental. Financialsituationofthepastyear: TheauditedfinancialsituationofWBGCin2015:Totalassetsare3,547,637,492.19yuan,netassetsare1,241,838,726.01yuan,operatingincomesare714,658,810.29yuan,andnetprofitsattributabletoownersofparentcompanyare68,062,752.06yuan. IIIMaincontentsofthetransactionprotocoldraft 1.Price,paymentmethodsanddeadlines (1)ThesaleofPulandianplant,fullydepreciatedequipment,thetransferpriceofidleequipmentandadedicatedrailwaylineandrelatedassetsinordertoassessthebasedateoftheassessedvalue,whichever,counterpartyshall"afterassetsalecontract"betweenthetwosidesenteredintoforcetheappointedtimeorinmoneytransferpaidtothecompany. (2)HousingDistributionDepartmentShenyangtradedpriceof1,535.53million(September16,2015theassessedvalue),WafangdianBearingGroupCorporationintendstoopenthewaytransfereefollowingthefloatingof10%oftheprice,namely1,381.98millionyuanacquisitioninmonetarytermscompletepaymentbyDalianequityExchange. 2.Thedeliveryofthetransferofassets (1)ExceptforShenyangHousing,WBCCompanyshallatallbeforethedeliverycontract,thetransferofassetsunderthecontracttodelivertheothertwopartiesfortherelevanttransferprocedures. (2)DistributionDepartmentShenyangplants,WBGCaftercompletepaymentbywayofcurrency DalianAssetsandEquityExchange,accordingtoitsbusinessprocessestodeliverassets 3.Othermatters (1)Thesoldassetsthistimeistheidleequipment,mortgage,pledgeorotherthirdpartyrightsdon’texistintherelatedassets,nosignificantdispute,litigationorarbitrationinvolvesintherelatedassets,andneitherjudicialmeasuressuchasclosedownandfreezeexist;detailsareasfollows: (2)TheCompanywilinvitetheassessmentagencieswithprofessionalqualificationforsecurityandfutures-related businesses to assess the related objects in accordance with relevant laws andregulations, departmental rules and regulations, and provisions of "Stock ListingRules"oftheShenzhenStockExchange. (3)Bothsidessigntherelatedtransactionprotocolfortherelatedtransactionsgeneratedbythepurchaseofequipments,andproceednormatively. IVTheimpactofthetransactiononthecompany 1.PulandiansaleHousingconducivetofurtherrationalizetheownershipofassets,solvePulandianplantrooms,todifferentpropertyownershipissues,butcanalsoreducethesharesofthecompanyandWafangdianBearingGroupofrelatedpartytransactions. 2.Thispackagedealcaneffectivelycleanupthecompany'sidleassets,improveoperationalqualityofthecompany'sassets,increaseenterpriseefficiency. 3.Theassetsforsaleareneededtobeassessed,theimpacttotheprofitsandlossesofthecurrentshallbedecidedaftertheassessfinished. VIndependentdirectors’opinions Thecompany’sindependentdirectorshaveissuedthe“Priorapprovalofindependentdirectors"andmade"independentdirectors’opinions"onthismatter,theindependentdirectorsthinkiteffectivelycleanupthecompany'sidleassets,improveoperationalqualityofthecompany'sassets,soitwilneitherdamagethecompany’sinterestsnortherightsandinterestsofminorityshareholders. VIOtherexplanations 1.BesidestheplantofShengyangAgency,othertradefinalpriceoftransactionissubjecttotheassessmentdata,theCompanywillreporttheassessmentresultstothemembersoftheboardofdirectorsandmakesupplementaryannouncementafterauditingandassessingandbeforeholdingtheshareholdersmeeting. 2.ThisassetssaleshallbeapprovedbyDalianSASAC. VIIDocumentsavailableforreference 1.Resolutionofthe20163rdtemporaryboardofdirectorofWafangdianBearingCo.,Ltd.; 2.Priorapprovalofindependentdirectors; 3.IndependentOpinions; 4.assessmentreport Herebynotify BoardofDirectorsof WafangdianBearingCo.,Ltd. 23September2016