Stock:WazhouB Code：200706 No.：2017-41 Wafangdian Bearing Company Limited Supplemental Related
Announcement of Transaction in Relation to Assets Disposal
The Company and all members of the Board of Directors guarantee that the contents of the announcement are true, accurate and complete, and there are no false records, misleading statements or material omissions.
Reference is made to the “Announcement of Related Transaction in Relation to Assets Disposal” by Wafangdian Bearing Company Limited (the “Company”) on 22 August 2017. Due to the requirement by SZSE, now make the further supplemental information.
1. Review procedure of the Transaction
Wafangdian Bearing Company Limited (the “Company”) recorded an audited net profit of RMB30.87 million for the year 2016, and the total income from land recall of Wazhou Liaoyang Bearing Manufacturing Company Limited (“Liaoyang Bearing”) was carried forward into non-operating income of the Company during the period after deduction of the costs incurred for reconstructing relevant assets of the new plant and relevant expenses. According to the review results issued by ShineWing Accountant Firm, the Company is not required to submit the Transaction to the general meeting for consideration since the aforesaid income does not reach50% of the net profit for 2016 and other indexdon’t touch the least level for general meeting either.
2. The reason of removal and sufficiency of information disclosure
Due to that the surrounding regions of the original plant of Liaoyang Bearing have been developed into commercial and residential properties in succession, disputes with the local citizens are increasing year by year with regard to noise and water pollution. In this case, Liaoyang government authorities acted as representative of the local citizens to console Liaoyang Bearing to relocate from the original plant and encourage Liaoyang Bearing to apply the preferential policy of “refund for two and relief for three” released by the government. Liaoyang Bearing is qualified for the relevant preferential policy since its products and development policy comply with such product positioning as set by Liaoyang Economic Development Zone. In order to solve the above operating difficulties and taking into account the insufficient working space in the original plant which impairs the further development, Liaoyang Bearing agreed to relocate from the original plant.
Though Liaoyang Bearing has made repeated negotiation with competent authorities of Liaoyang Government in respect of the land recall of the original plant, no relatively matured conclusion has been reached for this issue. Although the time period from 2011 to 2017 is not short, even a long period, no substantial conclusion and transaction is made and no material progress is recorded due to various objective reasons. Besides, the transaction amount caps expected at the time being did not reach such limits as required to be disclosed under the Listing Rules, so no information disclosure was made by the
Company. However, the Company started to perform its obligation of information disclosure and review
Stock:WazhouB Code：200706 No.：2017-41 procedures when it obtained the relatively matured plan of intention in June 2017, and further implemented the relevant review and information disclosure procedures upon execution of the agreement.
3.Reasonableness of the valuation on buildings erected on the land
For the whole content of the valuation report, please refer to attachment No.1.
1) In respect of the buildings in the original plant of Liaoyang Bearing, the original value and the net value of the buildings as of 31 July 2017 is RMB9,151,839.00 and RMB2,726,211.43, respectively. After deduction of the amount of RMB2,000,000.00 received from Liaoyang Baolin Real Estate Development Co., Ltd for disposal of the assets erected on the land, the Company recorded actual loss of RMB726,211.43.
2) Based on the accounting record of Liaoyang Bearing, the company has relocated a total of 45 sets of equipments which were regarded as useless due to the land acquisition as of 31 July 2017. The original value and the net value of the equipments is RMB3,023,964.85 and RMB409,936.86, respectively., so the Company recorded actual loss of RMB409,936.86.
3) The reconstruction costs incurred by Liaoyang Bearing for the relevant assets of the new plant as of 31 July 2017 totaled to RMB19,370,196.28, among which, the net value of the new office building which was put into operation in December 2011 is RMB3,898,002.18 after deduction of depreciation of RMB696,250.60 based on the construction cost of RMB4,594,252.78; the net value of the principal plant in the new plant which was put into operation in December 2011 is RMB14,128,792.53 after deduction of depreciation of RMB2,974,189.72 based on the construction cost of RMB17,102,982.25; the net value of the machine workshop in the new plant which was put into operation in December 2011 is RMB1,343,401.57 after deduction of depreciation of RMB288,535.50 based on the construction cost of RMB1,631,937.07.
Liaoyang Bearing was dismantled at the end of October 2013, prior to which, the appraisal institution had completed all the necessary evidential investigation. The appraisal institution believed that the valuation report was prepared under the compensation standards as set out in the relevant documents applicable in Liaoyang and the report was objective and fair.
4. Reasonableness of the assessed land value
As advised by Liaoning Tianyi Asset Appraisal Company that when it assessed the properties owned by Liaoyang Bearing in 2013, it adopted the benchmark land price as pricing references according to the compensation standards under the Circular No.65[LSKFB[2011]]. As at the execution date of the acquisition agreement, since Liaoyang Municipal Government has not issued new document in 2017 and land transactions in Liaoyang are still priced by reference to the Circular No.29[LSZF[2016]], Liaoyang Bearing considers that the market price of land transaction under this document is approximate to the price determined in the valuation report, which proves that the land recall price is fair, so Liaoyang Bearing and Liaoyang Municipal Government agree to conduct the land recall based on the valuation price.
Stock:WazhouB Code：200706 No.：2017-41 Liaoyang Bearing had entrusted Liaoning Tianyi Asset Appraisal Company in August 2013 to pre-assess the compensation value of the assets owned by Liaoyang Bearing prior to expropriation and collect complete information for assessment. The original plant was dismantled by the end of October 2013. However, the land recall was put on ice due to various factors, and no valuation report was issued accordingly (all the works were completed and the valuation date was 31 August 2013). When the land recall was recommenced in 2015 where the buildings erected on the land were dismantled leading to failure of reassessment, Liaoyang Municipal Government thus agreed to issue an official valuation report based on the valuation report drafted by reference to the valuation date of 31 August 2013. This valuation report served as references taken by Liaoyang Municipal Government to certain extent to determine the transaction price.
Prior to 1997, Liaoyang Bearing was owned by Wafangdian Bearing Group Corporation. While in 1997 when the organization was made, due to that the state-owned land was not allowed for transfer, the land remained to be owned by Wafangdian Bearing Group Corporation with no substantial transfer filed with the relevant authorities. Under this background, the land use certificate was registered under the name of Liaoyang Bearing which kept use of the land. In respect of this transaction, as discussed by Liaoyang Bearing and Wafangdian Bearing Group Corporation, it is agreed that Liaoyang Municipal Government pays Liaoyang Bearing the land compensation value and Liaoyang Bearing shall transfer such value to Wafangdian Bearing Group Corporation later. Based on the above, the relevant parties have no disagreement on ownership of the land use right.
5. Fairness of price determination for this transaction
As noted above, the transaction price is determined by Liaoyang Bearing (also under the trust of Wafangdian Bearing Group Corporation) and Liaoyang Municipal Government according to the valuation report and the relevant land market price guideline documents issued by Liaoyang Municipal Government, which is sufficient to prove the fairness of the land price. Transaction of the relevant buildings and equipments is priced at such level as generally accepted by Liaoyang Bearing and Liaoyang Municipal Government after various negotiation and communication. Wafangdian Bearing Group Corporation has also confirmed in written the transaction price of the land owned by it and considers that the price is fair. Therefore, there exists no interest propping among Liaoyang Bearing, the Company and Wafangdian Bearing Group Corporation.
Hereby notify
Board of Directors of
Wafangdian Bearing Company Limited
September 6, 2017