WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Wa Fang Dian Bearing Company Limited
For the year ended December 31, 2015
Auditor’s Report
Reference Page
Auditor’s report
Financial statements
— Consolidated balance sheet 1-2
— Balance sheet of parent company 3-4
— Consolidated income statement 5
— Income statement of parent company 6
— Consolidated cash flow statement 7
— Cash flow statement of parent company 8
— Consolidated statements of changes in equity 9-10
— Statements of changes in equity of parent company 11-12
— Notes to financial statement 13-94
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Auditors’ Report
(English Translation for Reference Only)
XYZH/2016DLA10283
To the Shareholders of Wa Fang Dian Bearing Company Limited
We have audited the accompanying financial statements of Wa Fang Dian Bearing Company Limited
(“the Company”), which comprises the consolidated and parent company balance sheet as at 31
December. 2015, the consolidated and parent company income statement for the year of 2015, the
consolidated and parent company cash flow statement for the year 2015, and the statement of
changes in shareholders’ equity and parent company for the year then ended, as well as notes to the
financial statements.
Management's Responsibility for the Financial Statements
The Company’s management is responsible for the preparation and fair presentation of these
financial statements. This responsibility includes: (1) preparing these financial statements in
accordance with Accounting Standards for Business Enterprises issued by the Ministry of Finance of the
People‘s Republic of China, and fairly presenting them; (2) designing, implementing and maintaining
internal control which is necessary to enable that the financial statements are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with China Standards on Auditing for Certified Public
Accountants. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial statements in order to design
audit procedures that are appropriate in the circumstances. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the financial statements comply with the requirements of the Accounting Standards
for Business Enterprises issued by the Ministry of Finance of the People’s Republic of China and
present fairly, in all material respects, the financial position of the consolidated and parent company
of the Company as at 31 December 2015, and financial performance and cash flows of the
consolidated and parent company of the Company for the year then ended.
ShineWing Certified Public Accountants
Chinese CPA: Wang Yang
Chinese CPA: Wang Dong
Beijing. China
22 April 2016
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Financial Statement
1. Consolidated Balance Sheet.
Unit: RMB Yuan
Item Opening Balance Closing Balance
Current assets ：
Monetary fund 116,316,020.57 180,569,164.66
Financial assets held-for-trading
Bills receivable 100,506,003.70 188,117,975.71
Account receivable 993,933,326.37 1,098,566,178.20
Account paid in advance 32,673,623.77 44,031,201.66
Interest receivable
Dividend reciivable 240,000.00 240,000.00
Other receivables 21,462,837.65 19,211,927.22
Inventory 1,075,275,456.02 1,166,347,866.35
Non-current assets due within 1 year
Other current assets 8,973,032.78 24,534,185.32
Total current assets 2,349,380,300.86 2,721,618,499.12
Non-current assets
Financial assets available-for-sale 2,000,000.00 2,000,000.00
Investments held-to-maturity
Long-term receivable
Long-term equity investment
Investment property
Fixed assets 695,125,451.81 695,819,839.43
Construction in progress 329,632,219.42 363,404,435.51
Construction materials
Fixed assets disposal
Biological assets
Gas and petrol assets
Intangible assets 135,366,608.09 140,355,336.13
Development expenditure
Goodwill
Long-term prepaid expense 611,356.03 767,854.39
Deferred tax assets 11,853,267.27 11,853,267.27
Other non-current assets
Total non-current assets 1,174,588,902.62 1,214,200,732.73
Total assets 3,523,969,203.48 3,935,819,231.85
Current liabilities
Short-term loan 385,000,000.00 498,000,000.00
Note payable 327,466,550.20 206,867,023.86
Accounts payable 973,485,937.22 1,388,424,650.70
Accounts received in advance 44,835,510.10 48,558,339.92
Commission charge payable
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Accrued payroll 19,440,701.80 20,275,364.44
Tax payable 6,074,347.23 3,676,987.88
Interest payable 1,400,000.00 5,942,500.00
Dividends payable
Other payables 133,832,447.67 183,285,758.81
Non-current liabilities due within I year 50,000,000.00 90,000,000.00
Other current liabilities 4,411,103.83 4,761,103.83
Total current liabilities 1,945,946,598.05 2,449,791,729.44
Non-current liabilities
Long-term loan 180,000,000.00 50,000,000.00
Debenture payable
Long-term payables 1,597,305.72 1,597,305.72
Special payables 321,698.98 321,698.98
Contingent liabilities
Deferred income 46,650,196.82 51,122,513.64
Deferred tax liabilities 988,428.58 1,140,995.35
Other non-current liabilities
Total non-current liabilities 229,557,630.10 104,182,513.69
Total liabilities 2,175,504,228.15 2,553,974,243.13
Owner’s equity (shareholders’ equity)
Capital stock 402,600,000.00 402,600,000.00
Capital public reserves 485,691,050.47 485,691,050.47
Less: treasury share
Surplus reserve 131,442,909.11 131,442,909.11
Undistributed profit 328,731,015.75 362,111,029.14
Difference of foreign currency translation
Equity attributable to parent company 1,348,464,975.33 1,381,844,988.72
Minority interest
Total owner’s equity 1,348,464,975.33 1,381,844,988.72
Total owner’s equity and liabilities 3,523,969,203.48 3,935,819,231.85
Chairman: Meng Wei General Accountant : Sun Najuan Accounting charger: Yao Chunjuan
2. Balance Sheet Of Parent Company
Unit: RMB Yuan
Item Opening Balance Closing Balance
Current assets ：
Monetary fund 108,582,231.28 172,688,792.14
Financial assets held-for-trading
Bills receivable 89,099,697.82 181,824,053.86
Account receivable 1,020,633,783.54 1,106,322,532.09
Account paid in advance 23,489,543.17 40,549,347.10
Interest receivable
Dividend receivable 240,000.00 240,000.00
Other receivables 19,679,695.34 15,661,424.30
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Inventory 998,035,803.15 1,079,876,029.63
Non-current assets due within 1 year
Other current assets 4,828,826.85 15,143,422.57
Total current assets 2,264,589,581.15 2,612,305,601.69
Non-current assets
Financial assets available-for-sale 2,000,000.00 2,000,000.00
Investments held-to-maturity
Long-term receivable
Long-term equity investment 211,583,897.67 211,583,897.67
Investment property
Fixed assets 577,635,433.51 565,949,871.82
Construction in progress 204,617,819.76 243,881,508.42
Construction materials
Fixed assets disposal
Biological assets 115,105,064.38 119,333,165.54
Gas and petrol assets
Intangible assets
Development expenditure
Goodwill
Long-term prepaid expense 611,356.03 767,854.39
Deferred tax assets 10,580,100.02 10,580,100.02
Other non-current assets
Total non-current assets 1,122,133,671.37 1,154,096,397.86
Total assets 3,386,723,252.52 3,766,401,999.55
Current liabilities
Short-term loan 385,000,000.00 498,000,000.00
Note payable 327,466,550.20 206,867,023.86
Accounts payable 882,281,596.61 1,296,111,095.77
Accounts received in advance 44,003,546.25 48,868,818.23
Commission charge payable
Accrued payroll 11,902,749.05 12,247,600.92
Tax payable 3,381,449.54 1,092,872.50
Interest payable 1,400,000.00 5,942,500.00
Dividends payable
Other payables 94,547,419.88 135,496,360.01
Non-current liabilities due within I year 50,000,000.00 90,000,000.00
Other current liabilities 4,313,555.83 4,313,555.83
Total current liabilities 1,804,296,867.36 2,298,939,827.12
Non-current liabilities
Long-term loan 180,000,000.00 50,000,000.00
Debenture payable
Long-term payables
Special payables 321,698.98 321,698.98
Contingent liabilities
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Deferred income 42,260,536.82 46,635,305.64
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities 222,582,235.80 96,957,004.62
Total liabilities 2,026,879,103.16 2,395,896,831.74
Owner’s equity (shareholders’ equity)
Capital stock 402,600,000.00 402,600,000.00
Capital public reserves 485,678,443.26 485,678,443.26
Less: treasury share
Surplus reserve 131,442,909.11 131,442,909.11
Undistributed profit 340,122,796.99 350,783,815.44
Minority interest
Total owner’s equity 1,359,844,149.36 1,370,505,167.81
Total owner’s equity and liabilities 3,386,723,252.52 3,766,401,999.55
3. Consolidated Income Sheet.
Unit: RMB Yuan
Account for the current
Item Account for the prior period
period
1.Total operating income 2,300,161,296.48 3,007,578,581.96
Including: Operating revenue 2,300,161,296.48 3,007,578,581.96
Interest income
Handling charge and commission income
2.Total operating cost 2,373,202,699.87 3,217,206,301.07
Including: Operating cost 2,079,477,107.20 2,767,677,749.55
Interest expenses
Handling charge and commission income
Tax & surcharges for main operations 11,714,812.14 10,940,274.47
Selling expenses 190,816,461.26 265,596,410.65
Administrative expense 78,658,955.34 74,513,227.16
Financial expense 30,608,445.51 38,439,180.50
Loss of impairment of assets -18,073,081.58 60,039,458.74
Add: Gains of change of fair value of assets(loss
with"-")
Investment income(loss with "-") 240,000.00 18,000,875.28
Including: Income form investment on associated
4,033,452.23
enterprise and jointly enterprise
3.Operating profit (loss with"-") -72,801,403.39 -191,626,843.83
Add: Non-operating revenue 41,178,270.67 91,358,055.61
Including:income on disposal of non-current assets 1,883,903.96 6,010,809.66
Less: Non-operating cost 1,177,612.68 2,392,930.13
Including: loss on disposal of non-current assets 584,454.86 567,566.60
4.Total profit(loss with"-") -32,800,745.40 -102,661,718.35
Less: Income tax expenses 579,267.99 1,241,230.54
5. Net profit(Loss with"-") -33,380,013.39 -103,902,948.89
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Net profit attributable to shareholders of parent
-33,380,013.39 -103,902,948.89
company
Minority interests
6. Other comprehensive income net off tax
Total comprehensive income net off tax attributable
to parent Company
(Ⅰ)Items that may not be reclassified
subsequently to the income statement
1.Change in net asset/liability from
remeasurment on defined benefit plan
2.Under equity method, proportionate share
of other comprehensive income in invested
company that may not be reclassified
subsequently to the income statement
(Ⅱ)Items that may be reclassified
subsequently to the income statement
1.Under equity method, proportionate share
of other comprehensive income invested company
that may be reclassified subsequently to the
income statement
2.Avaliable-for-sale financial assets fair value
movements
3.Profit/loss on reclassification from held to
maturities to avaliable-for-sale financial assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6. Others
Total comprehensive income net off tax
attributable to minority shareholders of the
Company
7. Total comprehensive returns -33,380,013.39 -103,902,948.89
Total comprehensive returns available for parent
-33,380,013.39 -103,902,948.89
company
Total comprehensive returns available for minority
shareholders
8.Earnings per share
(1) Basic earnings per share -0.08 -0.26
(2) Diluted earnings per share -0.08 -0.26
Chairman: Meng Wei General Accountant : Sun Najuan Accounting charger: Yao Chunjuan
4. Income Sheet of Parent Company.
Unit: RMB Yuan
Account for the current
Item Account for the prior period
period
1.Total operating income 2,383,441,306.57 3,016,213,397.36
Less:Total operating cost 2,172,269,169.48 2,782,355,510.47
Tax & surcharges for main operations 10,611,641.46 9,602,213.99
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Selling expenses 189,042,638.80 264,096,907.08
Administrative expense 51,821,775.82 54,324,825.53
Financial expense 30,675,083.33 38,393,084.36
Loss of impairment of assets -24,584,079.09 58,109,808.03
Add: Gains of change of fair value of assets(loss
with"-")
Investment income(loss with "-") 240,000.00 4,273,452.23
Including: Income form investment on
4,033,452.23
associated enterprise and jointly enterprise
2Operating profit (loss with"-") -46,154,923.23 -186,395,499.87
Add: Non-operating revenue 36,264,354.83 13,473,027.32
Including: income on disposal of non-current
1,242,069.04 5,960,935.77
assets
Less: Non-operating cost 770,450.05 2,381,555.82
Including: loss on disposal of non-current assets 330,571.58 566,441.54
3Total profit(loss with"-") -10,661,018.45 -175,304,028.37
Less: Income tax expenses 182,783.63
4 Net profit(Loss with"-") -10,661,018.45 -175,486,812.00
Minority interests
5 Other comprehensive income net off tax
(Ⅰ)Items that may not be reclassified
subsequently to the income statement
1.Change in net asset/liability from
remeasurment on defined benefit plan
2.Under equity method, proportionate
share of other comprehensive income in
invested company that may not be reclassified
subsequently to the income statement
(Ⅱ)Items that may be reclassified
subsequently to the income statement
1.Under equity method, proportionate
share of other comprehensive income
invested company that may be reclassified
subsequently to the income statement
2.Avaliable-for-sale financial assets fair
value movements
3.Profit/loss on reclassification from held
to maturities to avaliable-for-sale financial
assets
4.Cash flow hedges effective portion
5.Foreign currency translation difference
6. Others
6 Total comprehensive returns -10,661,018.45 -175,486,812.00
7Earnings per share
(1) Basic earnings per share -0.03 -0.44
(2) Diluted earnings per share -0.03 -0.44
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
5. Consolidated Cash Flow Statement.
Unit: RMB yuan
Account for the current
Item Account for the prior period
period
1.Cash from operating activities
Cash received from sale of goods or rendering of
1,146,160,118.07 2,071,363,724.80
services
Refund of taxes and fares 225.32
Other cash received relating to operating
3,792,571.59 14,344,213.64
activities
Sub-total of cash inflows 1,149,952,689.66 2,085,708,163.76
Cash paid for goods and services 664,895,080.25 1,444,735,484.94
Cash paid to or on behalf of the employees 331,301,935.25 323,276,555.48
Tax payments 49,499,024.78 67,826,519.88
Other cash paid relating to operating activities 155,784,677.59 179,397,436.60
Sub-total of cash outflows 1,201,480,717.87 2,015,235,996.90
Net cash flows from operating activities -51,528,028.21 70,472,166.86
2.Cash flows from investing activities
Cash received from return of investment
Cash received from investment incomes 240,000.00 240,000.00
Net cash received from disposal of fixed assets,
64,000.00 33,571.20
intangible assets and other long-term assets
Proceeds from sale of subsidiaries and other
operating units
Other cash received relating to investing
322,269.90
activities
Sub-total of cash inflows 304,000.00 595,841.10
Cash paid to acquire fixed assets, intangible
13,513,544.26 45,877,148.24
assets and other long-term assets
Cash paid to acquire investment 11,250,000.00 33,750,000.00
Net cash used in acquiring subsidiaries and
other operating units
Other cash paid relating to investing activities
Sub-total of cash outflows 24,763,544.26 79,627,148.24
Net cash flows from investment activities -24,459,544.26 -79,031,307.14
3.Cash flows from financing activities
Cash received from absorbing investment
Including: Cash received from increase in
minority interest
Proceeds from borrowings 635,000,000.00 646,000,000.00
Other proceeds relating to financing activities 609,225,082.23 302,053,500.00
Sub-total of cash inflows 1,244,225,082.23 948,053,500.00
Repayment of borrowings 658,000,000.00 666,000,000.00
Distribution of dividends or profits & interest
40,811,195.94 42,288,245.08
expenses
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Including: dividends or profit paid to minority
interest
Cash paid for other financing activities 536,567,850.00 150,000,000.00
Sub-total of cash outflows 1,235,379,045.94 858,288,245.08
Net cash flows from financing activities 8,846,036.29 89,765,254.92
4. Effects of foreign exchange rate changes
2,298,402.08 1,576,290.89
on cash
5.Net increases in cash and cash equivalents -64,843,134.10 82,782,405.53
Add: cash and cash equivalent, at the beginning
143,399,164.66 60,616,759.13
of year
6.Cash and cash equivalent at the end of the
78,556,030.56 143,399,164.66
year
6. Cash Flow Statement Of Parent Company.
Unit: RMB yuan
Account for the current
Item Account for the prior period
period
1.Cash from operating activities
Cash received from sale of goods or rendering of
1,136,286,551.83 2,041,670,619.37
services
Refund of taxes and fares
Other cash received relating to operating activities 3,320,910.44 10,677,200.05
Sub-total of cash inflows 1,139,607,462.27 2,052,348,044.74
Cash paid for goods and services 755,866,794.52 1,490,403,930.46
Cash paid to or on behalf of the employees 258,966,526.92 274,677,523.75
Tax payments 37,102,310.53 54,033,044.11
Other cash paid relating to operating activities 145,321,650.56 167,476,922.68
Sub-total of cash outflows 1,197,257,282.53 1,986,591,421.00
Net cash flows from operating activities -57,649,820.26 65,756,623.74
2.Cash flows from investing activities
Cash received from return of investment 240,000.00 240,000.00
Cash received from investment incomes
Net cash received from disposal of fixed assets,
33,571.20
intangible assets and other long-term assets
Proceeds from sale of subsidiaries and other
operating units
Other cash received relating to investing activities
Sub-total of cash inflows 240,000.00 273,571.20
Cash paid to acquire fixed assets, intangible
7,181,783.21 44,719,832.20
assets and other long-term assets
Cash paid to acquire investment 11,250,000.00 33,750,000.00
Net cash used in acquiring subsidiaries and other
operating units
Other cash paid relating to investing activities
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
Sub-total of cash outflows 18,431,783.21 78,469,832.20
Net cash flows from investment activities -18,191,783.21 -78,196,261.00
3.Cash flows from financing activities
Cash received from absorbing investment
Including: Cash received from increase in minority
interest
Proceeds from borrowings 635,000,000.00 646,000,000.00
Other proceeds relating to financing activities 635,000,000.00 646,000,000.00
Sub-total of cash inflows 635,000,000.00 646,000,000.00
Repayment of borrowings 658,000,000.00 666,000,000.00
Distribution of dividends or profits & interest
40,810,581.71 42,150,238.23
expenses
Cash paid for other financing activities 536,567,850.00 150,000,000.00
Sub-total of cash outflows 1,235,378,431.71 858,150,238.23
Net cash flows from financing activities 8,846,650.52 89,903,261.77
4. Effects of foreign exchange rate changes on
2,298,402.08 1,576,290.89
cash
5.Net increases in cash and cash equivalents -64,696,550.87 79,039,915.40
Add: cash and cash equivalent, at the
135,518,792.14 56,478,876.74
beginning of year
6.Cash and cash equivalent at the end of the
70,822,241.27 135,518,792.14
year
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
7. Consolidated Sheet Of Changes In Shareholder’s Equity
Unit: RMB yuan
Amount in current period
Owner’s equity attributable to parent company
Minority
Item less： General
Capital public Surplus public Undistributed shareholders’ Owner’s equity
Capital stock treasure provision for Others
reserves reserves profits equity
stock risk
1.Balance at the end of 402,600,000. 485,691,050.4
131,442,909.11 362,111,029.14 1,381,844,988.7
last year 00 7
Add: changes in
accounting policies
Changes in previous
errors
Others
2.Balance at the beginning 402,600,000. 485,691,050.4
131,442,909.11 362,111,029.14 1,381,844,988.72
of this year 00 7
3. The changes in this year
-33,380,013.39 -33,380,013.39
（decrease with“-”）
（1）Total of
-33,380,013.39 -33,380,013.39
comprehensive income
（2）Capital contribution
and reduction
1）Ordinary share
2）Capital contributed by
other equity instrument
holders
3）Share-based payments
charged to equity
4）Others
(4）Profits distribution
1)Provision for surplus
public reserves
2)provision for general
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
risks
3)distribution for
owner(shareholders)
4)others
(5）interior transference of
owner’s equity
1)capital (capital
stock)transferred by the
capital public reserves
2)capital (capital
stock)transferred by the
surplus public reserves
3)loss offset by the surplus
public reserves
4)others
4. Balance at the end of 402,600,000. 485,691,050.4
131,442,909.11 328,731,015.75 1,348,464,975.33
the current period 00 7
Unit: RMB yuan
Amount in previous period
Owner’s equity attributable to parent company Owner’s equity
Minority
less： General
Item Capital Capital public Surplus public shareholders’
treasure provision for Undistributed profits Others
stock reserves reserves equity
stock risk
1.Balance at the end of 402,600, 1,504,966,435.5
488,805,548.36 131,442,909.11 482,117,978.03
last year 000.00 0
Add: changes in
accounting policies
Changes in previous
errors
Others
2.Balance at the beginning 402,600, 1,504,966,435.5
488,805,548.36 131,442,909.11 482,117,978.03
of this year 000.00 0
3. The changes in this year -3,114,497.89 -120,006,948.89 -123,121,446.78
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
（decrease with“-”）
（1）Total of
-3,114,497.89 -103,902,948.89 -107,017,446.78
comprehensive income
（2）Capital contribution
and reduction
1）Ordinary share
2）Capital contributed by
other equity instrument
holders
3）Share-based payments
charged to equity
4）Others
(4）Profits distribution -16,104,000.00 -16,104,000.00
1)Provision for surplus
public reserves
2)provision for general
risks
3)distribution for
-16,104,000.00 -16,104,000.00
owner(shareholders)
4)others
(5）interior transference of
owner’s equity
1)capital (capital
stock)transferred by the
capital public reserves
2)capital (capital
stock)transferred by the
surplus public reserves
3)loss offset by the surplus
public reserves
4)others
4. Balance at the end of 402,600, 1,381,844,988.7
485,691,050.47 131,442,909.11 362,111,029.14
the current period 000.00 2
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WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
8. Sheet Of Changes In Shareholder’s Equity Of Parent Compamy.
Unit: RMB yuan
Amount in current period
Owner’s equity attributable to parent company
Item
less：treasure Surplus public General provision for Owner’s equity
Capital stock Capital public reserves Undistributed profits
stock reserves risk
1.Balance at the end of last year 402,600,000.00 485,678,443.26 131,442,909.11 350,783,815.44 1,370,505,167.81
Add: changes in accounting policies
Changes in previous errors
Others
2.Balance at the beginning of this year 402,600,000.00 485,678,443.26 131,442,909.11 350,783,815.44 1,370,505,167.81
3. The changes in this year（decrease with“-”） -10,661,018.45 -10,661,018.45
（1）Total of comprehensive income -10,661,018.45 -10,661,018.45
（2）Capital contribution and
reduction
1）Ordinary share
2）Capital contributed by other equity
instrument holders
3）Share-based payments charged to equity
4）Others
(4）Profits distribution
1)Provision for surplus public reserves
2)provision for general risks
3)distribution for owner(shareholders)
4)others
(5）interior transference of owner’s equity
1)capital (capital stock)transferred by the
capital public reserves
2)capital (capital stock)transferred by the
surplus public reserves
3)loss offset by the surplus public reserves
16
WafangWa Fangdian Bearing Co., Ltd（Wazhou B） 2015 Annual Report
4)others
4. Balance at the end of the current period 402,600,000.00 485,678,443.26 131,442,909.11 340,122,796.99 1,359,844,149.36
Amount in previous period
Item Owner’s equity attributable to parent company
Owner’s equity
Capital public less： Surplus public
Capital stock Undistributed profits
reserves treasure stock reserves
1.Balance at the end of last year 402,600,000.00 485,678,443.26 131,442,909.11 542,374,627.44 1,562,095,979.81
Add: changes in accounting policies
Changes in previous errors
Others
2.Balance at the beginning of this year 402,600,000.00 485,678,443.26 131,442,909.11 542,374,627.44 1,562,095,979.81
3. The changes in this year（decrease with“-”） -191,590,812.00 -191,590,812.00
（1）Total of comprehensive income -175,486,812.00 -175,486,812.00
（2）Capital contribution and reduction
1）Ordinary share
2）Capital contributed by other equity instrument holders
3）Share-based payments charged to equity
4）Others
(4）Profits distribution -16,104,000.00 -16,104,000.00
1)Provision for surplus public reserves
2)provision for general risks
3)distribution for owner(shareholders) -16,104,000.00 -16,104,000.00
4)others
(5）interior transference of owner’s equity
1)capital (capital stock)transferred by the capital public
reserves
2)capital (capital stock)transferred by the surplus public
reserves
3)loss offset by the surplus public reserves
4)others
4. Balance at the end of the current period 402,600,000.00 485,678,443.26 131,442,909.11 350,783,815.44 1,370,505,167.81
17
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Notes to financial statements for the year ended
I. General Information
Wafangdian Bearing Company Limited (the “Company”) is a joint stock limited company
established in the People’s Republic of China (the “PRC”) on 16 July, 1997. In the opinion of
the directors, its parent and ultimate holding company is Wafangdian Bearing Group
Company Limited (“Wazhou Group”).
The Company’s B shares have been listed on the Shenzhen Stock Exchange since 19February,
1997.
The parent company is Wazhou Group. General shareholders meeting is the company’s
authority and have the resolution power over company’s business policy, financing,
investment and profit appropriation etc.significant events in accordance with relevant law.
Board of directors is responsible for general meeting and has the power over the company’s
decision making. Management is in charge of implementation of resolution made by general
meeting and board meeting and is responsible for operation management. The company has
the following functional departments including: procurement department, portfolio
investment department, operating department, HR, marketing department, manufacturing and
construction department, quality control department, financial department and logistic
department. Wholly owned subsidiaries include Wazhou Liaoyang Bearing Manufacturing
Co., Ltd(“Liaoyang Bearing”), Dalian Wazhou Precision Electric Motor Car Bearing
(“DalianElectrical Motor”),and Wazhou Precision of Spherical Roller
Bearings(Wafangdian)Co., Ltd(“Spherical Bearings”).
The addresses of the registered office and principal place of business of the Company are
No.1, Phrase 1, Gongji Street, Wafangdian North, Liaoning Province, and the PRC.Legal
representative is Meng Wei.
The Company is principally engaged in the manufacturing and sale of bearing, bearing spare
parts, engineering equipment, automobile spare parts and relating products, bearing repair,
maintenance and technology service etc and also in renting mechanical equipment and estate,
inspection of bearings, mechanical equipment, measuring instruments and meters.
II.Financial Statement Consolidation Scope
13
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The Group’s financial statements consolidation includes Liaoyang Bearing, Dalian Wazhou
Precision Motor Car Bearing Company and Spherical Bearing three companies. There is no
change for consolidation scope by comparing to last year.
See the Note VII, ‘change in consolidation scope’ and Note VIII, ‘interest in other entities’ for
details.
III. Financial Statements Preparation Basis
The Company’s financial statements are prepared on the basis of going concern assumption,
according to the actual occurred transactions and events and in accordance with ‘Accounting
Standards for Business Enterprises’ and relevant regulations, and also based on the note IV
“Significant Accounting Policies, Accounting Estimates”.
IV. Significant Accounting Policies and Accounting Estimates
1. Declaration for compliance with accounting standards for business enterprises
The financial statements are prepared by the Group according to the requirements of
Accounting Standard for Business Enterprise, and reflect the relative information for the
financial position, operating performance, cash flow of the Group truly and fully.
2. Accounting period
The Group adopts the Gregorian calendar year as accounting period, i.e. from Jan 1 to Dec
31.
3.Operating cycle
Normal operating cycle refers to the duration starting from purchasing the assets for
manufactuing up to cash or cash equivelant realisation. The group sets twelve months for
one operating cycle and as the liquidity criterion for assets and liability.
4. Funcitonal currency
The Group adopts RMB as functional currency.
5. Accounting for business combination under same control and not under same control
As an acquirer, the assets and liabilities that The Group obtained in a business combination
under the same control should be measured on the basis of their carrying amount in the
14
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
consolidated financial statements on the combining date. As for the balance between the
carrying amount of the net assets obtained by the combining party and the carrying amount of
the consideration paid by it, the capital surplus shall be adjusted. If the capital surplus is not
sufficient to be offset, the retained earnings shall be adjusted.
For a business combination not under same control, the asset, liability and contingent liability
obtained from the acquirer shall be measured at the fair value on the acquisition date. The
combination cost shall be the fair value, on the acquisition date, of the assets paid, the
liabilities incurred or assumed and equity securities issued by the acquirer in exchange for the
control of the acquire, and sum of all direct expenses(if the combination is achieved in stages,
the combination cost shall be the sum of individual transaction). The difference when
combination cost exceeds proportionate share of the fair value of identifiable net assets of
acquiree should be recognized as goodwill. If the combination cost is less than proportionate
share of the fair value of identifiable net assets of acquiree, firstly, fair value of identifiable
asset, liability or contingent liability shall be reviewed, and so the fair value of non-monetary
assets or equity instruments issued in the combination consideration , after review, still the
combination cost is less than proportionate share of the fair value of identifiable net assets of
acquire, the difference should be recognized as non-operating income.
6. Method of preparation of consolidated financial statements
All subsidiaries controlled by the Group and structured entities are within the consolidation
scope.
If subsidiaries adopt different accounting policy or have different accounting period from the
parent company, appropriated adjustments shall be made in accordance with the Group policy
in preparation of the consolidated financial statements.
All significant intragroup transactions, outstanding balances and unrealized profit shall be
eliminated in full when preparing the consolidated financial statements. Portion of the
subsidiary’s equity not belonging to the parent, profit, loss for the current period, portion of
other comprehensive income and total comprehensive belonging to minority interest, shall
be presented separately in the consolidated financial statements under “minority interest of
equity”, ”minority interest of profit and loss”, “other comprehensive income attributed to
minority interest” and “total comprehensive income attributed to minority interest” title.
If a subsidiary is acquired under common control, its operation results and cash flow shall be
consolidated since the beginning of the consolidation period. When preparing the comparative
consolidated financial statements, adjustments shall be made to relevant items of comparative
15
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
figures as regarded that reporting entity established through consolidation has been always
there since the point when the ultimate controlling party starts to have the control.
If a business consolidation under common control is finally achieved in stages, consolidation
accounting method shall be disclosed additionally for the period in which the control is
obtained. For example, if a business consolidation under common control is finally achieved
in stages, when preparing the consolidated financial statements, adjustments shall be made for
the current consolidation status as if consolidation has always been there since the point when
the ultimate controlling party starts to control. In preparation of comparative figures, asset
and liability of the acquiree shall be consolidated into the Group’s comparative financial
statements, but to the extent no earlier than the point when the Group and acquiree are both
under ultimate control and relevant items under equity in comparative financial statements
shall be adjusted for net asset increased in combination. To avoid the duplicated computation
of net asset of acquiree, for long-term equity investment held by the Group before the
consolidation, relevant profit and loss, other comprehensive income and movement in other
net asset, recognized for the period between the combination date and later date when original
shareholding is obtained and when the Group and the acquiree are under common control of
same ultimate controlling party, shall be respectively used for writing down the opening
balance of retained earnings of comparative financial statements and profit and loss for the
current period.
If a subsidiary is acquired not under common control, its operation results and cash flow shall
be consolidated since the beginning of the consolidation period. In preparation of the
consolidated financial statements, adjustments shall be made to subsidiary’s financial
statements based on the fair value of its all identifiable assets, liability or contingent liability
on the acquisition date.
If a business consolidation under non-common control is finally achieved in stages,
consolidation accounting method shall be disclosed additionally for the period in which the
control is obtained. For example, if a business consolidation not under common control is
finally achieved in stages, when preparing the consolidated financial statements, the acquirer
shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair
value and recognize the resulting gain or loss as investment income for the current period.
Other comprehensive income, under equity method accounting rising from the interest held in
acquiree in relation to the period before the acquisition, and changes in the value of its other
equity other than net profit or loss, other comprehensive income and profit appropriation shall
be transferred to investment gain or loss for the period in which the acquisition incurs,
excluding the other comprehensive income from the movement on the remeasurement of ne
16
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
asset or liability of defined benefit plan.
When the Group partially disposes of the long –term equity investment in subsidiary without
losing the control over it, in the consolidated financial statements, the difference, between
disposals price and respective disposed value of share of net assets in the subsidiary since the
acquisition date or combination date, shall be adjusted for capital surplus or share premium,
no enough capital surplus, then adjusted for retained earnings.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it, in preparation of consolidated financial statements, remaining share of
interest in the subsidiary shall be remeasured on the date of losing control. Sum of the share
disposal consideration and fair value of remaining portion of shareholding minus the share of
the net assets in the subsidiary held based on the previous shareholding percentage since the
acquisition date or combination date, the balance of above is recognized as investment
gain/loss for the period and goodwill shall be written off accordingly. Other comprehensive
income relevant to share investment in subsidiary shall be transferred to investment gain /loss
for the period on the date of losing control.
When the Group partially disposes of the long –term equity investment in subsidiary and lose
the control over it by stages, if all disposing transactions are bundled, each individual
transaction shall be seen as a transaction of disposal of a subsidiary by losing control. The
difference between the disposal price and the share of the net assets in the subsidiary held
before the date of losing control, shall be recognize as other comprehensive income until the
date of losing control where it is transferred into investment gain/ loss for the current period.
7. Joint arrangement classification and joint operation accounting
The Group’s joint arrangement includes joint operation and joint venture. For joint operation,
the Group as a joint operator shall recognize its own assets and its share of any assets held
jointly, its liabilities and its share of any liabilities incurred jointly, its revenue from the sale
of its share of the output arising from the joint operation, its share of the revenue from the
sale of the output by the joint operation; and its expenses, including its share of any expenses
incurred jointly. When an entity enters into a transaction with a joint operation in which it is a
joint operator, such as a sale or contribution of assets, it is conducting the transaction with the
other parties to the joint operation and, as such, the joint operator shall recognize gains and
losses resulting from such a transaction only to the extent of the other parties’ interests in the
joint operation.
8. Cash and cash equivalent
17
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The cash listed on the cash flow statements of the Group refers to cash on hand and bank
deposit. The cash equivalents refer to short-term (normally with original maturities of three
months or less) and liquid investments which are readily convertible to known amounts of
cash and subject to an insignificant risk of changes in value.
9. Translation of foreign currency
(1) Foreign currency transaction
Foreign currency transactions are translated at the spot exchange rate issued by People’s Bank
of China (“PBOC”) when the transaction incurs. Monetary assets and liabilities in foreign
currencies are translated into RMB at the exchange rate prevailing at the balance sheet day.
Exchange differences arising from the settlement of monetary items are charged as in profit or
loss for the period. Exchange differences of specific borrowings related to the acquisition or
construction of a fixed asset should be capitalized as occurred, before the relevant fixed asset
being acquired or constructed is ready for its intended uses.
(2) Translation of foreign currency financial statements
The asset and liability items in the foreign currency balance sheet should be translated at a
spot exchange rate at the balance sheet date. Among the ower’s equity items except
“undistributed profit”, others should be translated at the spot exchange rate when they are
incurred. The income and expense should be translated at spot exchange rate when the
transaction incurs. Translation difference of foreign currency financial statements should be
presented separately under the other comprehensive income title. Foreign currency cash flows
are translated at the spot exchange rate on the day when the cash flows incur. The amounts
resulted from change of exchange rate are presented separately in the cash flow statement.
10. Financial assets and financial liabilities
A financial asset or liability shall be recognised when the entity becomes a party to the
contractual provisions of a financial instrument.
(1) Financial assets
1)Classification, recognition and measurement
The Group classifies its financial assets in the following categories: at fair value through
profit or loss, loans and receivables, held-to-maturity financial assets and available-for-sale.
18
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The classification depends on the purpose for which the financial assets were acquired.
Management determines the classification of its financial assets at initial recognition.
Receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. Receivables are subsequently measured at amortised cost
using the effective interest method.The amortisation, impairment and any gain or loss from
derecognition shall be recognized in the profit and loss for the current year.
Available-for-sale financial assets are non-derivative financial assets that are either
designated in this category or not classified as financial assets of any other class at initial
recognition. This category includes the derivative financial assets that linked to the
investments in equity instruments without a quoted price in an active market, no fair value
can be reliably measured and must be settled by delivery of such an equity instrument, and
shall be measured at cost subsequently. Others have a quoted price in an active market or fair
value can be measured reliably although no quoted price available, they shall be measured at
fair value. Any change on fair value shall be recognized in other comprehensive income and
subsequently be measured at fair value. Except impairment loss and exchange gain or loss
arising from foreign currency monetary financial assets, changes in fair value of
available-for-sale financial assets are directly recorded in shareholders’ equity until such
financial assets is derecognized and the accumulated fair value adjustments previously
recorded in equity are charged to profit or loss for the period. Interests for the period in
which the assets are held as investment in debt instrument is calculated using the effective
interest method and is charged to profit or loss for the period as ‘Investment income’. Cash
dividends declared by the investee company relating to available-for-sale equity instruments
are charged to profit or loss for the period as ‘Investment income’. Equity instruments that a
quoted price is not applicable in an active market and no fair value can be reliably measured,
shall be measured at cost.
2)Recognition and measurement of transfer of financial assets
Where an entity neither transfers nor retains substantially all risks and rewards of financial
asset and does not give up the control over such financial asset, then the entity recognises
such financial asset to the extent of its continuous involvement and recognises the
corresponding liabilities. The extent of the continuous involvement represents the extent to
which the entity exposes to changes in the value of such financial asset.
In the case where the financial asset as a whole qualifies for the derecognition conditions, the
difference between the carrying value of transferred financial asset and the sum of the
consideration received for transfer and the accumulated amount of changes in fair value that
19
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
was previously recorded under other comprehensive income is charged into profit or loss for
the period.
In the case where only part of the financial asset qualifies for derecognition, the carrying
amount of financial asset being transferred is allocated between the portions that to be
derecognised and the portion that continued to be recognised according to their relative fair
value. The difference between the amount of consideration received for the transfer and the
accumulated amount of changes in fair value that was previously recorded in other
comprehensive income of the part qualifies for derecognition and the above-mentioned
allocated carrying amount is charged to profit or loss for the period.
3) Impairment of financial assets
The Group assesses the carrying amount of financial assets other than financial assets at fair
value through profit or loss at each balance sheet date. If there is objective evidence that the
financial asset is impaired, the Group shall determine the amount of any impairment loss
accounts.
If an impairment loss on a financial asset carried at amortized cost has been incurred, the
amount of loss is measured at the difference between the asset’s carrying amount and the
present value of estimated future cash flows (excluding future credit losses that have not been
incurred). If there is objective evidence that the value of the financial asset recovered and the
recovery can be related objectively to an event occurring after the impairment was recognized,
the previously recognized impairment loss is reversed and the amount of reversal is
recognized in income statement.
Ifobjective evidence shows that impairment for available-for-sale financial assets will
occur,the cumulative loss arising from the decline in fair value that had been recognized
directly in equity is removed from equity and recognized as impairment loss. For an available
for sale debt instrument, if there is objective evidence that the value of the financial asset
recovered and the recovery can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is reversed and the
amount of reversal is recognized in income statement. For an available for sale equity
instrument, if there is objective evidence that the value recovered and the recovery can be
objectively related to an event occurring after the impairment loss recognized, the previously
recognized impairment loss is reversed and directly recognized in equity.
(2) Financial liabilities
20
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1) Classification, basis for recognition and measurement
Financial liabilities of an entity are classified at initial recognition as “financial
liabilities at fair value through profit or loss” and “other financial liabilities” on initial
recognition
Financial liabilities at fair value through profit or loss include financial liabilities held
for trading and those designated as fair value through profit or loss on initial recognition
（relevant basis for classification shall be disclosed by reference to financial assets）.
They are subsequently measured at fair value. The net gain or loss arising from changes
in fair value, dividends and interest paid related to such financial liabilities are recorded
in profit or loss for the period in which they are incurred.
Other financial liability is measured at amortized cost by adopting the effective rate
method.
2) Financial liability derecognition
A financial liability is derecognized when the underlying present obligations or part of
it are discharged. Existing financial liability shall be derecognized and new financial
liability shall be recognized when the entity sign the agreement with creditor to
undertake the new financial liability in replacement of existing financial liability, and
the terms of agreement are different in substance. Any significant amendment to the
agreement as a whole or part o it is made, then the existing liabilities or part of it shall
be derecognized and financial liability after terms amendment shall be recognized as a
new financial liability. The difference between the carrying amount of the financial
liability derecognized and the consideration paid is recognized in profit or loss for the
period.
11. Provision for bad debts of receivables
The Group shall review the carrying amount of receivables fully at the balance sheet date.
The Group shall calculate the full provision for bad debts for the following receivables:
debtor has been log-out, bankruptcy, minus net asset, significant poor cash flow and
significant nature disaster leads to discontinue production and the debtors could not pay for
the debts within the foreseeable time . Other solid evidences indicates that the receivables
cound not be paid or be of a slim chance.
The allowance method is applied to the potential loss of bad debt. The Group should make the
impairment test separately or in combination and accure the bad debt provisions which shall
be recorded into current profit or loss at the end of the period. If there is defined evidence for
21
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
the receivables not to or not likely to be received, which shall be recognized as the loss of bad
debt and write off the accrued bad debts provisions after going through the approval
procedure of the Group.
(1) Individually significant amounts of accounts receivable accrued bad debt provision as per
portfolio
The receivables with more than RMB 3 million
Judgment basis or amount standards of
individual amount shall be recognized as the
individually significant amounts
significant receivables;
The accruing method of the receivables The bad debt provisions shall be accrued based on
with individually significant amounts the difference between current value of future cash
flow and the carrying amounts.
(2) Accounts receivable accrued bad debt provision by credit risk portfolio
The basis of portfolio(aging analysis, other method)
Use the accounting aging of the receivables as the
Accounting aging
credit risk characteristics to classify the portfolio
Use the amount characteristics of the receivables ,
Related parties if the transaction party is related parties
characteristics need to classify the portfolio
Use the amount characteristics of the receivables,
the credit of transaction party, the nature of the
Risk-free amounts and the safeguard mechanism of
transaction as characteristics to classify the
portfolio
1) The percentage of provision for bad debts based on the age of receivables as followings:
Accounting aging Accrual percentage of the Accrual percentage of
receivables (%) other receivables (%)
Within 1 year 1 1
1-2 years 5 5
2-3 years 20 20
Over 3 years 50 50
2) The other methods is applied to accrualing of bad debts provision
Related parties No bad debt provision is needed, unless the related party is
unable to pay back
Risk-free No bad debt provision is needed
(3) Individually insignificant amount accounts receivable but accrued bad debt provision as
22
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
per portfolio
The individual amount is not significant, but the
Accrual reason accrued bad debt provision on the basis of portfolio
can not reflect its risk characteristic
The bad debt provisions should be accrued based on
Accrual method the difference between current value of future cash
flow and the carrying amount.
12. Inventories
Classification of inventory: Inventories are classified as raw material, wrappage, low-valuable
consumable, working-in-progress, and finished goods etc.
The inventories are processed on perpetual inventory system, and are measured at their
budgeted cost on acquistion. The raw materials are accounted daily on their bedgeted costs.
The differences between the budget and actual costs is recorded into the costs of materials
purchased and cost of materials dispatched according to proportion of inventory in stock and
dispatched, and adjust the budgeted costs of raw material into actual costs. The
working-in-progress and finished goods are accounted on their budgeted costs; the differences
between the budgeted costs and actual costs are recorded into the costs of
working-in-progress and finished goods according to the receiving and sending out proportion,
and finaly adjust the budgetedcosts into actual costs.Inventory usage and dispatch is measured
at average cost as actual cost.Low value consumables and packaging materials is recognized
in the income statement by one-off method.
At the balance sheet date inventory should be measured at the lower of the cost and net
realizable value. For the inventories which are damaged, fully or partly obsoleted and selling
price below cost, the Group should calculate the provision for impairment of inventories
according to the estimated nonrecoverable part of cost. Finished goods and a large amount
raw materials should be calculated provision for impairment based on the difference of the
cost exceed the realizable value of single item. For raw and accessorial materials with a large
quantities and lower unit price should be calculated provison for impairment according to
classify of inventory.
For the finished goods, working in progress and raw material held for sale etc which shall be
sold directly, the net realizable value should be confirmed at the estimated selling price less
estimated selling expenses and related tax and expenses. The raw material held for production,
its realizable value should be confirmed at the estimated selling price of finished goods less
estimated cost of completion, estimated selling expenses and related tax. The net realizable
23
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
value of inventories held for execution of sale contracts or labor contracts shall be calculated
based on the contract price. If the quantities of inventories in the Group are more than
quantities if inventories subscribed in the sales contracts, the net realizable value of the
excessive part of the inventories should be calculated based on the general selling price.
13. Long-term equity investment
Long term equity investments are the investment in subsidiary, in associated company and in
joint venture.
Joint control is the contractual agreement sharing of control over an economic activity by all
participants or participants’ combination and decisions or policies relating to the operating
activity of the entity require the unanimous consent of the parties sharing the control.
Significant influence exists when the entity directly or indirectly owned 20% or more but less
than 50% shares with voting rights in the investee company.If holding less than 20% voting
rights, the entity shall also take other facts or circumstances into accounts when judging any
significant influences. Factors and circumstances include: representation on the board of
directors or equivalent governing body ofthe investee, participation in financial or operating
activities policy-making processes,material transactions between the investor and the investee,
interchange of managerial personnel or provision of essential technical information.
When control exists over an investee, the investee is a subsidiary of an entity. The initial
investment cost for long-term equity investment acquired through business combination
under common control, is the carrying amount presented in the consolidated financial
statements of the share of net assets at the combination date in the acquired company. If the
carrying amount of net assets at the combination date in the acquired company is negative,
investment shall be recognized at zero.
If the equity of investee under common control is acquired by stages and business
combination incursin the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. For example, if the
equity of investee under common control is acquired by stages and business combination
incursin the end, and it’s a bundled transaction, the entity shall regard all transactions as a one
for accounting. If it’s not a bundled transaction, the carrying amount presented in the
consolidated financial statements of the share of net assets at the combination date in the
acquired company since acquisition is determined as for the initial cost of long-term equity
investment. The difference between the cost initially recognized and carrying amount of
long-term equity investment prior to the business combination plus the newly paid
24
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
consideration for further share acquired, and capital reserve shall be adjusted accordingly. If
no enough capital reserve is available for adjustment, retain earnings shall be adjusted.
If long-term equity investment is acquired through business combination not under common
control, initial investment cost shall be the combination cost.
If the equity of investee not under common control is acquired by stages and business
combination incursin the end, an entity shall disclose the accounting method for long-term
equity investment in the parent financial statement as a supplemental. If the equity investment
of investee not under common control is acquired by stages and business combination
incursin the end, and it’s a bundled transaction, the entity shall regard all transactions as a one
for accounting. If it’s not a bundled transaction, the carrying amount of the equity investment
held previously plus newly increased investment cost are taken as the initial investment cost
under cost model. If equity investment is held under equity method before the acquisition date,
other comprehensive income under equity method previously shall not be adjusted
accordingly. When disposing of the investment, the entity shall adopt the same basis as the
investee directly disposing of related assets or liability for accounting treatment. Equity held
prior to acquisition date as available for sale financial assets under fair value model,
accumulated change on fair value previously recorded in other comprehensive shall be
transferred into investment gain/loss for the period.
Apart from the long-term equity investments acquired through business combination
mentioned above, the cost of investment for the long-term equity investments acquired by
cash payment is the amount of cash paid. For long-term equity investment acquired by issuing
equity instruments, the cost of investment is the fair value of the equity instrument issued. For
long-term equity investment injected to the entity by the investor, the investment cost is the
consideration as specified in the relevant contract or agreement.
The Group adopts cost method to account for investment in subsidiary and equity method for
investment in joint venture and affiliate.
Long-term equity investment subsequently measured under cost model shall increase the
carrying amount of investment by adjusting the fair value of additional investment and
relevant transaction expenses. Cash dividend or profit declared by investee shall be
recognized as investment gain/loss for the period based on the proportion share in the
investee.
Long-term equity investment subsequently measured under equity method shall be adjusted
for its carrying amount according to the share of equity increase or decrease in the investee.
25
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The entity shall recognize its share of the investee’s net profits or losses based on the fair
value of the investee’s individual identifiable assets at the acquisition date, after making
appropriate adjustments thereto in conformity with the accounting policies and accounting
period, and offsetting the unrealized profit or loss from internal transactions entered into
between the entity and its associates and joint ventures according to the shareholding
attributable to the entity and accounted for as investment income and loss based on such
basis.
On disposal of a long-term equity investment, the difference between the carrying value and
the consideration actually received is recognised as investment income for the period. For
long-term investments accounted for under equity method, the movements of shareholder’s
equity, other than the net profit or loss, of the investee company, previously recorded in the
shareholder’s equity of the Company are recycled to investment income for the period on
disposal.
Where the entity has no longer joint control or significant influence in the investee company
as a result of partially disposal of the investment, the remaining investment will be changed to
be accounted for as available for sale financial assets, and the difference between the fair
value of remaining investment at the date of losing joint control or significant influence and
its carrying amount shall be recognized in the profit or loss for the year. Other comprehensive
income recognized from previous equity investment under equity model shall be accounted
for on the same basis as the investee directly disposing of related assets or liability when
stopping using under equity model.
Where the entity has no longer control over the investee company as a result of partially
disposal of the investment, the remaining investment will be changed to be accounted for
using equity method providing remaining joint control or significant influence over the
investee company. The difference between carrying amount of disposed investment and
consideration received actually shall be recognised in the profit and loss for the period as
investment gain or loss, and investment shall be adjusted accordingly as if it was accounted
for under equity model since acquisition. Where the entity has on longer joint control or
significant influence in the investee as a result of disposal, the investment shall be changed to
be accounted for as available for sale financial assets, and difference between the carrying
amount and disposal consideration shall be recognized in profit and loss for the period, and
the difference between the fair value of remaining investment at the date of losing control and
its carrying amount shall be recognized in the profit or loss for the year as investment gain or
loss.
If the entity loses its control through partially disposal of investment by stages and it’s not a
26
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
bundled transaction, the entity shall account for all transactions separately. If it’s a bundled
transaction, the entity shall regard all transactions as one disposal of subsidiary by losing
control, but the difference between disposal consideration and carrying amount of the equity
investment disposed prior to losing control, which arises from each individual transaction
shall be recognized as other comprehensive income until being transferred into profit and loss
for the period by the time of losing control.
14. Fixed assets
Recognition criteria of fixed assets: Fixed assets are defined as the tangible assets which are
held for the purpose of producing goods, rendering services, leasing or for operation &
management, and have more than one year of useful life, and whose unit price is over
RMB2,000.
Fixed assets shall be recognized when the economic benefit probably flows into the Group
and its cost can be measured reliably. Fixed assets include: building, machinery,
transportation equipment, electronic equipment and others.
All fixed assets shall be depreciated unless the fixed assets had been fully depreciated and are
still being used and land is separately measuered. Straight-line depreciation method is
adopted by the Group. Estimated net residual value rate, useful life, depreciation rate as
follows:
Estimated
Useful net Annual
No Category life residual depreciation
(years) value rate rate
(%)
1 Housing and Buildings
Including: Buildings 15 3 6.47%
Housing for 30 3 3.23%
production
Housing for 35 3 2.77%
non-production
2 Machinery equipment 10-15 3 6.47%～
9.70%
3 Transportation equipment 6 3 16.17%
4 Electronic equipment
Including: Computer 4 3 24.25%
27
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
General testing instruments 7 3 13.86%
Specialized electronic equipment 8 3 12.13%
Automated controlling equipment 8 3 12.13%
Automated controlling meters 8 3 12.13%
5 Others equipment
Including: Industrial kiln 7 3 13.86%
Tools & other production tools 9 3 10.78%
Transmission equipment 15 3 6.47%
Non-operational equipment and 18 3 5.39%
tools
The Group should review the estimated useful life, estimated net residual value and
depreciation method at the end of each year. If any change has occurred, it shall be regarded
as a change in the accounting estimates.
15. Construction in progress
The criteria and time spot of constructions in progress’s being transferred to fixed assets:
Constructions in progress are carried down to fixed assets on their actual costs when
completing and achieving estimated usable status. The fixed assets that have been completed
and reached estimated usable status but have not yet been through completion and settlement
procedures are charged to an account according to their estimate values; adjustment will be
conducted upon confirmation of their actual values. The Group should withdraw depreciation
in the next month after completion.
16. Borrowing costs
The borrowing cost includes the interest expenses of the borrowing, amortization of
underflow or overflow from borrowings, additional expenses and the foreign exchange profit
and loss because of foreign currency borrowings. The borrowing costs incurred which can be
directly attribute to the fixed assets, investments properties, inventories requesting over 1 year
purchasing or manufacturing so to come into the expected condition of use or available for
sale shall start to be capitalized when expenditure for the assets is being occurred, borrowing
cost has occurred, necessary construction for bringing the assets into expected condition for
use is in progress. The borrowing costs shall stop to be capitalized when the assets come into
the expected condition of use or available for sale. The borrowing costs subsequently incurred
should be recorded into profit and loss when occurred. The borrowing costs should
temporarily stop being capitalized when there is an unusual stoppage of over consecutive 3
months during the purchase or produce of the capitalized assets, until the purchase or produce
28
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
of the asset restart.
The borrowing costs of special borrowings, deducting the interest revenue of unused
borrowings kept in the bank or the investment income from transient investment should be
capitalized. The capitalized amount of common borrowings should be calculated as follows:
average assets expenditure of the accumulated assets expenditure excess the special
borrowing, multiplied by the capital rate. The capital rate is the weighted average rate of the
common borrowings.
17. Intangible assets
The intangible assets of the Group refer to land use right, ERP system software. The cost of
outsourcing intangible assets shall include the purchase price, relevant taxes and other
necessary expenditures directly attributable to intangible assets. The cost invested into
intangible assets by investors shall be determined according to the stated value in the
investment contract or agreement, except for those of unfair value in the contract or
agreement.
Land use right shall be amortized evenly within the amortization period since the remised
date.ERP system softwareand other intangible assets are amortized over the shortest of their
estimated useful life, contractual beneficial period and useful life specified in the law.
Amortization charge is included in the cost of assets or expenses, as appropriate, for the
period according to the usage of the assets. At the end of the year, for definite life of
intangible assets, their estimated useful life and amortization method shall be assessed. Any
change shall be treated as change on accounting estimate.
18. Impairment of non-financial assets
The Group checks the long-term equity investment, fixed asset, construction-in-progress,
intangible asset and others on each balance sheet date. When impairment indicators occur, the
Group shall perform impairments test. For goodwill andindefinite life of intangible assets,
impairment test shall be performed irrelevant to any impairment indicators, if any at the end
of every year.
After impairment test, if the book value exceeds the recoverable amount of the asset, the
difference should be recognized as impairment loss. Once any loss of impairment is
recognized, it shall not be reversed in the future accounting periods.
19. Long-term deferred expenses
29
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Long-term deferred expenses of the Group refer to expenses which are paid and should be
deferred over the future period. The amortization period shall be more than one year (no
including 1 year). The expenses should be amortized evenly over the beneficial period. If the
deferred expense cannot take benefit for the future accounting period, the unamortized
balance of the deferred expenses should be transferred into the current profit or loss.
20. Employee benefits
Employee compensation comprises short-term benefit, post-employment benefit, termination
benefit and other long-term employee’s benefit.
Employee’s payables include salary, bonus, allowance, welfare, social insurance, housing
funds, labour union expense, staff training expense, during the period in which the service
rendered by the employees, the actually incurred short term employee benefits shall be
recognized as liability and shall be recognized in P&L or related cost of assets based on
benefit objective allocated from the service rendered by employees.
Post-employment benefits include the basic pension scheme and unemployment insurance etc.
Based on the risk and obligation borne by the Group, post-employment benefits are classified
into defined contribution plan and defined benefit plan. For defined contribution plan,
liability shall be recognized based on the contributed amount made by the Group to separate
entity at the balance sheet date in exchange of employee service for the period and it shall be
recorded into current profit and loss account or relevant cost of assets in accordance with
beneficial objective.
Termination benefits are employee benefits payable as a result of either an entity’s decision to
terminate an employee’s employment before the contract due date or an employee’s decision
to accept voluntary redundancy in exchange for those benefits. An entity shall recognize the
termination benefits as a liability and an expense at the earlier date when the entity cannot
unilateral withdraw the termination benefits due to employment termination plan or due to
redundancy suggestion, or when the entity can recognize the restricting cost or expense
arising from paying termination benefits. For the termination benefits that will not be
expected to be fully paid within twelve months after the end of the reporting period, it shall
be accounted as other long-term employee benefit. For employee internally retired informally,
termination benefits accounting shall be applied. The Group shall recognized the planned
wages and social insurance of retired employee in the current profit and loss account when
provision conditions are met, for the period since the termination of employee service
rendered until the formal retirement date.(termination benefit).
30
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Other long-term employee benefit provided by the Group, shall be accounted for as defined
contribution plan if the defined contribution plan are met, otherwise shall be accounted for as
defined benefit plan.
21. Contingent liabilities
When the company has transactions such as commitment to externals, discounting the trade
acceptance, unsettled litigation or arbitration which meets the following criterion, provision
should be recognized: It is the Company's present obligation; carrying out the obligation will
probably cause the Company's economic benefit outflow; the obligation can be reliably
measured.
Provision is originally measured on the best estimate of outflow for paying off the present
obligations, and to consider the risk, uncertainty, time value of monetary relevant to
contingent items. If the time value of monetary is significant, the best estimate will be
determined by discounted cash outflow in the future. At each balance sheet date, the book
value of provision is reviewed and adjustment will be made on the book value if there is any
change, in order to reflect the current best estimate.
22. Principle of recognition of revenue
The revenue of the Group is mainly from selling goods, providing labour services and
abalienating the right of use assets. Recognition standards for revenue are as below:
1) Company has transferred all the significant risks and rewards of the ownership of the goods
to the buyers, and retains neither continuing managerial involvement to the degree
usually associated with ownership nor effective control over the goods sold. The relative
sale proceeds have been reliably measured, respective economic benefit probably inflow
to the company, and the incurred or incurring cost can be reliably measured, and then the
revenue can be recognized.
2) The service revenue should be recognized when the total revenue and outcome of the
services can be estimated reliably, and the economic benefits associated with the
transaction are likely to flow to the company, the stage of completion of the service can
be estimated reliably. At the balance sheet date, revenue is recognised using the
percentage of completion method when the outcome of the services rendered are
estimated reliably. The percentage of completion method is determined as the proportion
of completed work measured/ services rendered to date over the total contracted services/
(the proportion of costs incurred to date over the total estimated cost). When the outcome
31
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
of the services cannot be estimated reliably, costs incurred may be probably recovered,
revenue is recognized only to the extent of costs incurred that are expected to be
recoverable, and costs shall be recognized as an expense in the period in which they are
incurred. When the outcome of the services cannot be estimated reliably and costs
incurred are not probable of being recovered, then these cost incurred are recognized as
an expense immediately, no revenue shall be recognized.
3) Revenue from transfer of asset use rights is recognised when the economic benefits in
connection with the transaction are probably flow to the Group and the amount of
revenue can be reliably measured.
.23. Government grants
A government grant is a monetary asset or non-monetary asset granted by government
without consideration. It shall be recognized when the company complies with the
conditions attaching to the grant and when the company is able to receive the grant.
Where a government grant is in the form of a transfer of monetary asset, it is measured at the
amount received. Where a government grant is made on the basis of fixed amount or
conclusive evidence indicates relevant conditions for financial support are met and expect to
probably receive the fund, it is measured at the amount receivable. Where a government
grant is in the form of a transfer of non-monetary asset, it is measured at fair value. If fair
value cannot be determined reliably, it is measured at a nominal amount of RMB1 Yuan.
Assets-related government grants are recognized as deferred income, and evenly amortized
to profit or loss over the useful life of the related asset. Income-related government grants
that is a compensation for related expenses or losses to be incurred in subsequent periods are
recognized as deferred income and credited to the relevant period when the related expense
are incurred. Government grants relating to compensation for related expenses or losses
already incurred are charged directly to the profit or loss for the period.
24. Deferred tax assets and deferred tax liabilities
The deferred income tax assets or the deferred income tax liabilities should be recognized
according to the differences (temporary difference) between the carrying amount of the assets
or liabilities and its tax base. Deferred tax assets shall be respectively recognised for
deductible tax losses that can be carried forward in accordance with tax law requirements for
deduction of taxable income in subsequent years. No deferred tax liabilities shall be
recognized forany temporary difference arising from goodwill initially recognition. No
32
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
deferred tax assets or liabilities shall be recognized for any difference arising from assets or
liabilities initial recognition on non-business combination with no effect on either accounting
profit or taxable profit (or deductible tax loss). At the balance sheet date, deferred tax assets
and deferred tax liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realised or liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit
will be available to offset the deductible temporary difference, deductible loss and tax
reduction.
25.Lease
The leases of the Group refer to operating lease.
The rents paid for operating leases shall be recorded into the relevant asset costs or the profits
and losses for the current period by using the straight-line method over each period of the
lease term.Rents received, if the Group as a leaser shall be recognised as income under
straight line method.
26.Changes in Accounting Policies, Accounting Estimates
(1) Change in significant accounting policies
None
(2) Changes in accounting estimate
None
V. Taxation
1. The main applicable tax and rate to the Group as follows:
Tax Tax base Tax rate
Value-added tax (VAT) Sales revenue or Purchase 17%,13%,11%,6%,3%
Business tax Revenue from property lease, 5%
examination fee, surcharge
33
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
City construction tax Value-added tax payables, business tax 7%
Education surcharge Value-added tax payables, business tax 3%
Value-added tax payables, business tax
Local education surcharge 2%
Current period taxable profit
Enterprise income 15%
tax(EIT)
70% of cost of own property or
Real estate tax 1.2% or 12%
revenue from leasing property
Land use tax Land using right area RMB 6 per square
meter
Notes for tax principles with different EIT rate
Tax principles EIT rate
Wazhou Liaoyang Bearing construction Co.,Ltd 25%
Dalian Wazhou Precision Motor Car Bearing 25%
Company Limited
Wazhou Precision of Spherical Roller 25%
Bearings(Wafangdian)Co., Ltd
2. Tax preference
The company obtained the qualification of high and new technology enterprises at
29September, 2014.The Certificate No is GF201421200004, and the validity duration is three
years. According to the tax law, the company can be granted for the preferential tax policy of
enterprise income tax rate of 15% in three years.
VI. Notes to Consolidated Financial Statements
The following disclosure date on this financial statement without special indication, “opening”
refers to January 1, 2015; “closing” refers to December 31, 2015; “current period” refers to the
period from January 1, 2015to December 31, 2015; and “last period” refers to the period from
January 1, 2014 to December 31, 2014; with the currency unit RMB.
34
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
1. Cash and cash in bank
Item Closing Balance Opening Balance
Cash on hand
372,523.88 243,292.16
Cash in bank
78,183,506.68 143,155,872.50
Other cash and cash equivalents
37,759,990.01 37,170,000.00
Total 180,569,164.66
116,316,020.57
Including: sum of deposits - -
overseas
Notes: the closing balance of other cash and cash equivalents are all security deposits for
bank acceptance notes. Because of the liquidity limitation, this will be deducted from the
closing balance.
2. Notes receivable
(1) Category of notes receivable
Items Closing Balance Opening Balance
Bank acceptance notes
74,843,528.50 153,691,174.47
Commercial acceptance notes
25,662,475.20 34,426,801.24
Total 188,117,975.71
100,506,003.70
(2) No pledged notes receivable up to December 31, 2015.
(3) Notes receivable endorsed or discounted but not mature at the end of year
Item Closing amount no more Closing amount still
recognized recognized
Bank acceptance notes 280,154,387.39
Commercial acceptance
39,872,775.27
notes
Total 320,027,162.66
(4) Notes receivable transferred to accounts receivable due to defaulting at the end of year
Item Transferred at the end of year
Commercial acceptance notes 2,000,000.00
Total 2,000,000.00
35
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3. Accounts receivable
(1) Category of accounts receivable
Closing Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts receivable
with significant
individual amount 12,810,943.69 1.18 12,810,943.69 100.00 -
and separate bad
debt provision
Accounts receivable
with bad debt
provision based on 974,324,743.89 90.06 44,102,673.09 4.53 930,222,070.80
the characters of
credit risk portfolio
Related party 63,711,255.57 5.89 - - 63,711,255.57
Risk-free portfolio - - - - -
Accounts receivable
with insignificant
individual amount 30,991,469.16 2.85 30,991,469.16 100.00 -
and separate bad
debt provision
Total 1,081,838,412.31 100.00 87,905,085.94 — 993,933,326.37
(Continued)
Opening balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Accounts
receivable with
significant
9,002,676.43 0.77 9,002,676.43 100.00 -
individual amount
and separate bad
debt provision
36
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Accounts
receivable with bad
debt provision
1,121,255,143.72 95.54 51,607,095.89 4.60 1,069,648,047.83
based on the
characters of credit
risk portfolio
Related party 28,918,130.37 2.46 - - 28,918,130.37
Risk-free portfolio - - - -
Accounts
receivable with
insignificant
14,393,660.23 1.23 14,393,660.23 100.00 -
individual amount
and separate bad
debt provision
Total 1,173,569,610.75 100.00 75,003,432.55 — 1,098,566,178.20
1) Accounts receivable with significant individual amount and separate bad debt provision at
the end of year
Closing Balance
Debtors name Accounts Provision for Proportion Reasons for
receivable bad debts (%) provision
Company A 5,092,669.00 5,092,669.00 100.00 Bankrupt
A/R with over 5
years aging,
Company B 3,910,007.43 3,910,007.43 100.00
unlikely to be
collected
A/R with over 5
years aging,
Company C 3,808,267.26 3,808,267.26 100.00
unlikely to be
collected
Total 12,810,943.69 12,810,943.69 — —
37
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2) Accounts receivable with the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Accounts Provision for Proportion
receivable bad debts (%)
Within1 year 761,957,848.26 7,619,578.49 1.00
1 to 2 years 122,304,055.30 6,115,202.76 5.00
2 to 3 years 48,878,427.77 9,775,685.56 20.00
Over 3 years 41,184,412.56 20,592,206.28 50.00
Total 974,324,743.89 44,102,673.09 —
3) Receivables from the related parties are disclosed on this note XI.3.(1)
(2)Bad debt provision accrued and written-off (withdraw)
Bad debt is written off at the amount of 107,366.81 and the bad debt provision has been
accrued at the amount of 13,009,020.20 Yuan during the report period. No bad debt reversal
or withdrawn incurred during the year.
(3) Accounts receivable written off in current period
Item Written-off Amount
Accounts receivable written off 107,366.81
(4) The top five significant accounts receivable categorized by debtors
The total amount of top five significant accounts receivable categorized by debtors is
196,451,103.33 Yuan, representing18.16% of the closing balance of accounts receivable. The
bad debt provision of 3,009,518.73 Yuan is provided respectively.
4. Advances to suppliers
(1) Aging of advances to suppliers
Closing Balance Opening Balance
Items Amount Percentage Amount Percentage
(%) (%)
Within 1 year 21,395,885.05 65.48 33,178,587.95 75.35
1 to 2 years 1,883,664.93 5.77 6,035,528.97 13.71
38
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2 to 3 years 5,206,158.32 15.93 1,013,168.29 2.30
Over 3 years 4,187,915.47 12.82 3,803,916.45 8.64
Total 32,673,623.77 100.00 44,031,201.66 100.00
(2) The top five significant advances to suppliers categorized by debtors
The total amount of top five significant advances to suppliers categorized by debtors is
14,147,434.86 Yuan, representing 43.30% of the closing balance of advances to suppliers.
5. Dividends receivable
(1) Dividends receivable
Company Closing Balance Opening Balance
Shanghai ME Mechanical &
Electrical Equipment Chain Co., 240,000.00 240,000.00
Ltd
Total 240,000.00 240,000.00
6. Other receivables
(1) The categories of other receivable
Closing Balance
Items
Booking balance Provision
Booking balance
Amount % Amount %
Other receivables with
significant individual
- - - - -
amount and separate
bad debt provision
Other receivables
identified bad debt
17,843,354.32 73.09% 1,264,644.60 8.31 13,951,517.70
provision based on the
characters of credit risk
39
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
portfolio
Related party - - - - -
Risk-free portfolio 4,884,127.93 20.00% - - 7,511,319.95
Other receivables with
significant individual
1,687,122.13 6.91 1,687,122.13 100.00 -
amount and separate
bad debt provision
Total 24,414,604.38 100.00 2,951,766.73 — 21,462,837.65
(Continued)
Opening Balance
Items Booking balance Provision
Booking balance
Amount % Amount %
Other receivables
with significant
individual amount - - - - -
and separate bad
debt provision
Other receivables
identified bad debt
provision based on 14,351,723.39 68.61 1,705,933.04 11.89 12,645,790.35
the characters of
credit risk portfolio
Related party - - - - -
Risk-free portfolio 6,566,136.87 31.39 - - 6,566,136.87
Other receivables
with significant
individual amount - - - - -
and separate bad
debt provision
Total 20,917,860.26 100.00 1,705,933.04 — 19,211,927.22
1) Other receivables accrued the bad debt provisions under accounting aging analysis method
Closing Balance
Aging Provision for Proportion
Other receivables
bad debts (%)
Within 1 year 13,751,817.82 137,518.18 1.00
40
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Aging Provision for Proportion
Other receivables
bad debts (%)
1-2 years 1,743,875.00 87,193.75 5.00
2-3 years 446,326.91 89,265.38 20.00
Over 3 years 1,901,334.59 950,667.29 50.00
Total 17,843,354.32 1,264,644.60 —
2) Risk –free portfolio of other receivable has not been accrued for bad debts
Closing Balance
Aging Provision for Proportion
Other receivables
bad debts (%)
Prepaid electricity bill 3,981,531.40
Deposit 473,663.01
Others 428,933.52
Total 4,884,127.93
(2) Bad debt provision accrued or reversed
The bad debt provision has been accrued at the amount of 1,245,833.69 Yuan during the
report period. No bad debt reversal or withdrawn incurred during the year
(3) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Security deposit 4,343,508.37 2,178,077.92
Deposit 473,663.01 802,403.72
Personal petty cash 1,208,060.35 4,009,007.49
Others 18,389,372.65 13,928,371.13
Total 24,414,604.38 20,917,860.26
(4)Other receivables from the top 5 debtors
% of Closing
Closing
Name Category Aging the total Balance of
Balance
OR Provision
41
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
% of Closing
Closing
Name Category Aging the total Balance of
Balance
OR Provision
Insurance
Company A 5,016,153.85 1-2 years 20.55 50,161.54
compensation
Company B Electricity bill 3,726,684.67 within 1 year 15.26 -
Company C Bid deposit 1,854,996.25 within 1 year 7.60 18,549.96
Materials 1-2 years
Company D 490,288.89 2.01 37,421.16
payments
2-3 years
Materials
Company E 350,000.00 within 1 year 1.43 3,500.00
payments
Total —— 11,438,123.66 —— —— 109,632.66
7. Inventories
(1) Categories of inventories
Closing Balance
Item
Book value Provision for decline Net book value
Raw materials 136,420,995.34 2,654,008.58 133,766,986.76
Finished goods 821,542,628.29 67,782,949.02 753,759,679.27
Working in
184,481,338.87 602,496.86 183,878,842.01
progress
Low-value
3,869,947.98 - 3,869,947.98
consumable
Total 1,146,314,910.48 71,039,454.46 1,075,275,456.02
(Continue)
Opening Balance
Item
Book value Provision for decline Net book value
Raw materials 161,777,520.87 2,721,438.13 159,056,082.74
Finished goods 904,774,320.44 104,787,136.46 799,987,183.98
Working in
203,865,748.23 602,496.86 203,263,251.37
progress
Low-value
4,041,348.26 - 4,041,348.26
consumable
Total 1,274,458,937.80 108,111,071.45 1,166,347,866.35
(2) Provision for decline in the value of inventories
42
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Increase Decrease
Opening Reverse/ Closing
Item Others
Balance Accrual Other Written- Balance
transferred
off
Raw
2,721,438.13 - - 67,429.56 - 2,654,008.57
materials
Finished
104,787,136.46 2,061,384.57 - 39,065,572.00 - 67,782,949.03
goods
Working
in 602,496.86 - - - - 602,496.86
progress
Total 108,111,071.45 2,061,384.57 - 39,133,001.56 - 71,039,454.46
(3) Accrual for provision for decline in the value of inventories
Basis for net realizable value
Item Reason for reverse/write-off
recognition
Materials market price at the Market price falling
Raw materials
end of period
Average sale price of similar Falling product unit cost and
Finished goods
product promote backlogged stock
8. Other current assets
Item Closing Balance Opening Balance Nature
VAT to be deducted 6,999,716.88 21,777,741.91 Input Tax
Rental - 892,113.04 Unamortized rent
Prepaid income tax 1,973,315.90 1,864,330.37 Income Tax
Total 8,973,032.78 24,534,185.32 —
9. Available-for-sale financial assets
(1) Available-for-sale financial assets
Item Closing Balance Opening Balance
43
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Booking Booking
Provision Book value Provision Book value
balance balance
Available-for-
sale equity 2,000,000.00 - 2,000,000.00 2,000,000.00 - 2,000,000.00
instruments
Measured as
2,000,000.00 - 2,000,000.00 2,000,000.00 - 2,000,000.00
cost method
Total 2,000,000.00 - 2,000,000.00 2,000,000.00 - 2,000,000.00
(2) Available-for-sale financial assets measured at cost method
Proportion Cash
Booking Balance Provision
(%) dividend
Name
Opening Closing Opening Closing
Increase Decrease Increase Decrease
Balance Balance Balance Balance
Shanghai
ME
Mechanical
& Electrical 2,000,000.00 - 2,000,000.00 - - - - 4.76 240,000.00
Equipment
Chain Co.,
Ltd
Total 2,000,000.00 - 2,000,000.00 - - - - 4.76 240,000.00
10. Fixed assets
(1) Fixed assets detail
Machinery Transportation Electronic Other
Item Property Device Equipment Total
Equipment Equipment
I. Initial Cost —— —— —— —— —— ——
1. Opening
431,429,106.06 1,053,930,386.30 22,131,123.52 66,357,172.40 176,996,473.48 1,750,844,261.76
Balance
2. Increase 5,749,090.07 76,231,421.51 395,450.08 2,866,605.92 4,505,584.78 89,748,152.36
(1) Purchase 5,749,090.07 76,231,421.51 395,450.08 2,866,605.92 4,505,584.78 89,748,152.36
(2) Transferred
from
- - - - - -
construction-in-p
rogress
44
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Machinery Transportation Electronic Other
Item Property Device Equipment Total
Equipment Equipment
(3) Acquired
from business - - - - - -
combination
3. Decrease - 12,238,456.48 2,500,600.64 4,110,278.90 210,000.00 19,059,336.02
(1) Disposal - 12,238,456.48 2,500,600.64 4,110,278.90 210,000.00 19,059,336.02
4. Closing
437,178,196.13 1,117,923,351.33 20,025,972.96 65,113,499.42 181,292,058.26 1,821,533,078.10
Balance
II. Accumulated
—— —— —— —— —— ——
Depreciation
1. Opening
199,412,319.52 635,511,992.94 15,784,448.29 51,541,999.32 151,252,942.74 1,053,503,702.81
Balance
2. Increase 14,150,821.33 61,561,101.84 1,543,594.05 4,249,201.07 5,388,886.44 86,893,604.73
(1)Accrued 14,150,821.33 61,561,101.84 1,543,594.05 4,249,201.07 5,388,886.44 86,893,604.73
(2) Other transfer - - - - - -
3. Decrease - 9,592,065.49 1,552,701.48 4,070,505.68 210,000.00 15,425,272.65
(1) Disposal - 9,592,065.49 1,552,701.48 4,070,505.68 210,000.00 15,425,272.65
4. Closing
213,563,140.85 687,481,029.29 15,775,340.86 51,720,694.71 156,431,829.18 1,124,972,034.89
Balance
III. Impairment
—— —— —— —— —— ——
Reserve
1. Opening
- 1,319,560.01 200,000.00 - 1,159.51 1,520,719.52
Balance
2. Increase - 313,681.52 - - - 313,681.52
3. Decrease - 398,809.64 - - - 398,809.64
(1) Disposal - 398,809.64 - - - 398,809.64
4. Closing
- 1,234,431.89 200,000.00 - 1,159.51 1,435,591.40
Balance
IV. Book Value —— —— —— —— —— ——
1. Closing book
223,615,055.28 429,207,890.15 4,050,632.10 13,392,804.71 24,859,069.57 695,125,451.81
value
2. Opening book
232,016,786.54 417,098,833.35 6,146,675.23 14,815,173.08 25,742,371.23 695,819,839.43
value
45
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(2) Temporary idle fixed assets
Accumulated
Item Initial Cost Provision Book Value Note
Deprecation
Property 9,190,525.68 6,445,722.43 - 2,744,803.25 -
Machinery
16,559,354.62 13,478,911.00 876,309.58 2,204,134.04 -
Equipment
Transportation 605,992.53 587,812.75 - 18,179.78 -
Electronic
- - - - -
Device
Other
13,146,290.32 12,850,128.14 1,159.51 295,002.67 -
Equipment
Total 39,502,163.15 33,362,574.32 877,469.09 5,262,119.74 —
(3) Fixed assets leases out under operating lease
Item Book Value
Property 35,285,907.66
Total 35,285,907.66
(4) Fixed assets as pending certificate of ownership
Book value Reason for Pending
Item
Land certificate pending
Liaoyang Bearing’s Main workshop 16,853,651.83
Land certificate pending
Liaoyang Bearing’s Office building 4,594,252.78
Liaoyang Bearing’s Processing Land certificate pending
1,631,937.07
workshop
Land certificate pending
Liaoyang Bearing’s Staff canteen 1,066,114.21
Auto Bearing Western Industrial
42,590,399.28 Land certificate pending
Zone workshop (cone)
Auto Bearing Western Industrial
21,959,189.06 Land certificate pending
Zone workshop (column)
Dalian machine industry area
36,952,258.74 Land certificate pending
bearing factory
11. Construction-in-progress
46
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(1) Construction in progress details
Closing Balance Opening Balance
Item Book Book
Provision Book Value Provision Book Value
Balance Balance
Spherical
surface
124,994,399.66 - 124,994,399.66 119,522,927.09 - 119,522,927.09
bearings
new plant
Improvement
of
42,161,475.27 - 42,161,475.27 45,761,958.46 - 45,761,958.46
seven-finished
products
Improvement
of
39,589,942.44 - 39,589,942.44 37,988,266.40 - 37,988,266.40
one-finished
products
Improvement
of precision 24,819,080.90 - 24,819,080.90 57,715,726.04 - 57,715,726.04
roller branch
Dalian
industry park 20,650,648.09 - 20,650,648.09 19,885,742.72 - 19,885,742.72
project
Improvement
8,827,390.94 - 8,827,390.94 5,061,298.12 - 5,061,298.12
of Amerauto
Improvement
of grinding 8,677,462.24 - 8,677,462.24 9,045,850.67 - 9,045,850.67
machine
Grinding
7,534,651.82 - 7,534,651.82 10,566,935.30 - 10,566,935.30
product line
Heat treatment
5,166,367.38 - 5,166,367.38 2,723,139.00 - 2,723,139.00
product line
Improvement
of
4,470,874.95 - 4,470,874.95 3,455,196.16 - 3,455,196.16
second-finishe
d products
Improvement
of liaoyang 3,982,724.88 - 3,982,724.88 9,682,989.93 - 9,682,989.93
bearing
Improvement
3,734,829.95 - 3,734,829.95 6,836,609.99 - 6,836,609.99
of plant
Improvement
of special 3,448,969.98 - 3,448,969.98 7,565,073.68 - 7,565,073.68
large branch
Crane Project 2,861,762.32 - 2,861,762.32 2,861,157.05 - 2,861,157.05
Computer
2,646,148.77 - 2,646,148.77 875,831.49 - 875,831.49
Project
Overhaul
factory 2,195,185.79 - 2,195,185.79
reconstruction
Others 23,870,304.04 - 23,870,304.04 23,855,733.41 - 23,855,733.41
47
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance Opening Balance
Item Book Book
Provision Book Value Provision Book Value
Balance Balance
Total 329,632,219.42 - 329,632,219.42 363,404,435.51 - 363,404,435.51
(2) Change in the significant construction in progress
Decrease
Opening Transfer Closing
Name Increase Other
Balance to fixed Balance
decrease
assets
Spherical surface
bearings new 119,522,927.09 5,471,472.57 - - 124,994,399.66
plant
Improvement of
seven-finished 45,761,958.46 16,055,006.84 19,483,697.58 171,792.45 42,161,475.27
products
Improvement of
one-finished 37,988,266.40 3,140,975.99 1,539,299.95 - 39,589,942.44
products
Improvement of
precision roller 57,715,726.04 5,864,004.90 38,760,650.05 - 24,819,080.89
branch
Dalian industry park
19,885,742.72 764,905.37 - - 20,650,648.09
project
Improvement of
5,061,298.12 3,766,092.82 - - 8,827,390.94
Amerauto
Improvement of
9,045,850.67 534,325.76 902,714.19 - 8,677,462.24
grinding machine
Grinding product
10,566,935.30 - 3,032,283.48 - 7,534,651.82
line
Heat treatment
2,723,139.00 2,583,228.38 140,000.00 - 5,166,367.38
product line
Improvement of
two-finished 3,455,196.16 1,015,678.79 - - 4,470,874.95
products
Improvement of
9,682,989.93 177,208.67 5,877,473.72 - 3,982,724.88
Liaoyang bearing
Improvement of
6,836,609.99 24,930.49 3,126,710.52 - 3,734,829.96
plant
Improvement of
7,565,073.68 1,087,646.93 5,203,750.63 - 3,448,969.98
special large branch
Crane Project 2,861,157.05 605.28 - - 2,861,762.33
Computer Project 875,831.49 1,770,317.28 - - 2,646,148.77
Overhaul factory
2,195,185.79 - - 2,195,185.79
reconstruction
48
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Decrease
Opening Transfer Closing
Name Increase Other
Balance to fixed Balance
decrease
assets
Others 7,806,754.94 2,297,560.56 782,722.80 - 9,321,592.70
Total 347,355,457.04 46,749,146.42 78,849,302.92 171,792.45 315,083,508.09
(Continued)
Percent of Including: Interest
Accumulated
investment Accumulated capitaliz Source of
Name Budget capitalized
against capitalized ation funds
interest
budget(%) interest rate (%)
Spherical surface
Loan/Self
bearings new 123,000,000.00 102 - - -
plant financing
Improvement of
Loan/Self
seven-finished 69,102,889.00 61 513,221.98 219,861.41 4.8
products financing
Improvement of
Loan/Self
one-finished 46,439,419.00 85 3,207,768.31 68,813.40 4.8
products financing
Improvement of
Loan/Self
precision roller 27,129,511.00 84 2,576,913.72 1,988,658.11 4.8
branch financing
Dalian industry Loan/Self
40,114,352.61 51 376,653.11 943.26 4.8
park project financing
Improvement of Loan/Self
11,084,341.04 79 92,495.72 17,793.31 4.8
Amerauto financing
Improvement of Loan/Self
12,942,000.00 67 331,338.45 2,242.64 4.8
grinding machine financing
Grinding product Loan/Self
13,332,000.00 57 368,952.53 1,069.84 4.8
line financing
Heat treatment Loan/Self
9,047,300.00 57 14,986.39 427.89 4.8
product line financing
Improvement of
Loan/Self
two-finished 5,087,772.00 88 126,774.56 208.71 4.8
products financing
Improvement of Loan/Self
5,971,399.00 67 126,446.38 6,388.68 4.8
Liaoyang bearing financing
Improvement of Loan/Self
3,181,742.00 116 375,857.06 30,160.03 4.8
plant financing
Improvement of
Loan/Self
special large 3,233,570.00 107 38,141.78 3,362.54 4.8
branch financing
Crane Project 3,021,136.00 95 150,635.54 605.27 4.8 Loan/Self
49
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Percent of Including: Interest
Accumulated
investment Accumulated capitaliz Source of
Name Budget capitalized
against capitalized ation funds
interest
budget(%) interest rate (%)
financing
Loan/Self
Computer Project 3,286,898.00 80 19,999.90 9,633.52 4.8
financing
Overhaul
Loan/Self
factory 2,953,500.00 74 - - -
reconstruction financing
Loan/Self
Others 10,477,073.33 89 447,840.35 23,169.14 4.8
financing
Total 389,404,902.98 —— 8,768,025.78 2,373,337.75 —— —
12. Intangible assets
(1) Intangible assets list
Item Land use right ERP software Total
1.Initial cost —— ——
1). Opening balance 176,189,727.74 6,135,356.44 182,325,084.18
2).Increase - - -
(1) Purchase - - -
(2) Internal development - - -
(3) Acquired by company
- - -
combination
3). Decrease - - -
4). Closing balance 176,189,727.74 6,135,356.44 182,325,084.18
2. Amortization —— —— ——
1). Opening balance 36,599,751.53 5,369,996.52 41,969,748.05
2).Increase 4,437,473.08 551,254.96 4,988,728.04
(1)Accrual 4,437,473.08 551,254.96 4,988,728.04
(2)Transfer into - - -
3). Decrease - - -
4). Closing balance 41,037,224.61 5,921,251.48 46,958,476.09
3. Provision —— —— ——
for impairment
1). Opening balance - - -
2).Increase - - -
50
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Land use right ERP software Total
3). Decrease - - -
4). Closing balance - - -
4. Book value —— —— ——
1.Closing Book value 135,152,503.13 214,104.96 135,366,608.09
2.Opening Book value 139,589,976.21 765,359.92 140,355,336.13
(2) At the end of reporting period, there is no intangible asset established by internal
development.
13. Long-term repayments
Item Opening Other Closing
Increase Amortization
Balance Decrease Balance
Shanghai
657,022.39 67,830.36 - 589,192.03
sales office
Decoration
110,832.00 88,668.00 - 22,164.00
fees
Total 767,854.39 156,498.36 - 611,356.03
14. Deferred tax assets and deferred tax liabilities
(1) Deferred tax assets without deduction
Item Closing Balance Opening Balance
Deductible Deferred tax Deductible Deferred tax
temporary assets temporary assets
difference difference
Provision for
63,685,949.07 10,062,159.26 63,685,949.07 10,062,159.26
impairment of assets
Difference due to
depreciation of fixed 11,940,720.07 1,791,108.01 11,940,720.07 1,791,108.01
assets
Total 75,626,669.14 11,853,267.27 75,626,669.14 11,853,267.27
(2) Deferred tax liabilities without deduction
Item Closing Balance Opening Balance
Taxable Deferred tax Taxable Deferred tax
temporary liabilities temporary liabilities
difference difference
Asset evaluation 6,589,523.85 988,428.58 7,606,635.67 1,140,995.35
51
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
increment in business
combination without the
same control
Total 6,589,523.85 988,428.58 7,606,635.67 1,140,995.35
(3) The net value of deferred tax assets and deferred tax liabilities with deduction
Closing Closing Opening Opening Balance
Balance of Balance of Balance of of deferred tax
deferred tax deferred tax deferred tax assets/deferred
Item
assets and assets/deferred assets and tax liabilities
liabilities with tax liabilities liabilities with
deduction deduction
Deferred tax assets 988,428.58 10,864,838.69 1,140,995.35 10,712,271.92
(4) Unrecognized deferred tax assets details
Item Closing Balance Opening Balance
Deductible temporary difference 39,005,808.79 57,426,417.68
Deductible loss 271,715,626.48 187,793,926.49
Total 310,721,435.27 245,220,344.17
(5) Unrecognized deductible loss of deferred tax assets expired next period
Year Closing Balance Opening Balance Notes
2018 21,053,716.07 21,053,716.07
2019 166,740,210.42 166,740,210.42
2020 83,921,699.99 -
Total 271,715,626.48 187,793,926.49
15. Short-term loan
(1) Category of short term loan
Loan category Closing Balance Opening Balance
Credit loan 385,000,000.00 498,000,000.00
Total 385,000,000.00 498,000,000.00
16. Notes payable
52
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Notes category Closing Balance Opening Balance
Bank acceptance notes 324,380,000.00 195,850,000.00
Commercial acceptance
3,086,550.20 11,017,023.86
notes
Total 327,466,550.20 206,867,023.86
There is no unpaid expired notes payable by the end of the accounting period.
17. Accounts payable
(1) Accounts payable
Item Closing Balance Opening Balance
Goods payments 755,528,200.42 1,276,204,140.97
Project payments 103,948,960.02 112,220,509.73
Others 114,008,776.78 -
Total 973,485,937.22 1,388,424,650.70
(2) Accounts payable with age over 1 year
Closing Reason of unpaid or
Name of company
Balance not carried forward
Company A 4,053,746.60 Quality dispute
Company B 15,620,134.28 Inspection and warranty
Company C 4,750,083.63 Quality security deposit
Company D 4,508,856.01 Quality security deposit
Company E 3,361,967.57 Quality security deposit
Company F 3,251,170.70 Quality security deposit
Total 35,545,958.79
18. Received in advance
(1) Received in advance
Item Closing Balance Opening Balance
Goods payment 44,835,510.10 48,558,339.92
Total 44,835,510.10 48,558,339.92
19. Employee’s payable
(1) Category of employee’s payables
53
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing
Balance Balance
Short-term
employee’s 10,212,114.16 265,335,748.89 265,998,906.56 9,548,956.48
payable
Post-employment
benefit –defined 10,063,250.28 48,802,408.09 48,973,913.06 9,891,745.32
contribution plan
Total 20,275,364.44 314,138,156.98 314,972,819.62 19,440,701.80
(2) Short-term employee’s payables
Item Opening Increase Decrease Closing
Balance Balance
Salaries, bonus,
allowance, and 967,372.74 204,933,130.19 205,268,923.37 631,579.56
subsidy
Welfare 14,550,708.31 14,550,708.31 -
-
Social insurance 495,865.45 23,003,040.74 22,909,478.85 589,427.33
Include: Medical
207,498.96 20,264,717.33 20,180,359.02 291,857.26
insurance
On-duty
injury 218,585.45 2,146,024.99 2,138,430.10 226,180.34
insurance
Maternity
69,781.04 592,298.42 590,689.73 71,389.73
insurance
Housing funds 2,950,467.55 21,341,184.54 21,318,511.14 2,973,140.95
Labour union and
5,798,408.42 1,507,685.11 1,951,284.89 5,354,808.64
training expense
Total 10,212,114.16 265,335,748.89 265,998,906.56 9,548,956.48
(3) Defined contribution plan
Item Opening Increase Decrease Closing
Balance Balance
54
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Opening Increase Decrease Closing
Balance Balance
Pension 9,736,874.04 46,270,007.65 46,451,631.66 9,555,250.03
Unemployment
326,376.25 2,532,400.44 2,522,281.40 336,495.29
insurance
Total 10,063,250.29 48,802,408.09 48,973,913.06 9,891,745.32
20. Tax payable
Item Closing Balance Opening Balance
Value-added tax 4,025,060.14 2,438,511.93
Business tax 458,152.37 213,979.71
Individual income tax 172,957.42 125,184.92
Enterprise income tax 6,153.34 284,087.56
City maintenance and construction tax 319,932.74 142,857.25
Real estate tax 310,655.78 30,992.40
Land use tax 252,121.87 4,006.25
Stamp duty 92,079.71 106,863.15
Education surcharge 230,567.80 102,825.26
River toll fee 3,768.13 222,694.43
Others 202,897.93 4,985.02
Total 6,074,347.23 3,676,987.88
21. Interest payable
(1) Category of interest payables
Item Closing Balance Opening Balance
Interest for long-term loan with 70,000.00
instalments
Interest for short-term loan 1,400,000.00 5,872,500.00
Total 1,400,000.00 5,942,500.00
22. Other accounts payable
(1) Other payables categorized by payments nature
55
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Payments nature Closing Balance Opening Balance
Bid security deposits 5,075,575.42 5,958,511.02
Risk deposits from branch manager 22,857,703.42 24,204,458.00
Trademark fees 4,931,241.97 6,320,088.31
Others 100,967,926.86 146,802,701.48
Total 133,832,447.67 183,285,758.81
(2) Significant other payables with age over 1 year
Name of company Reason of unpaid or not
Closing Balance
carried forward
Not reach the return condition
Risk deposit from branch manager 22,752,958.00 of contract
Not due yet according to the
Bid security deposits 3,875,100.00 contract payment timeline
Liaoyang Baolin Real Estate
Development Co., Ltd 34,000,000.00 Settlement day not due yet
Total 60,628,058.00
23. Non-current liabilities due within one year
Item Closing Balance Opening Balance
Long-term loan due within one year 50,000,000.00 90,000,000.00
Total 50,000,000.00 90,000,000.00
24. Other current liabilities
(1) Category of other current liabilities
Item Closing Balance Opening Balance
Government subsidy
4,761,103.83
4,411,103.83
Total
4,761,103.83
4,411,103.83
(2) Government subsidy
56
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Recorded
Related
Opening into non Other Closing
Project Increase with
Balance -operatio Change Balance
asset/equity
n income
Technology
subsidy from 737,000.00
-
737,000.00
737,000.00 737,000.00 asset
province
Dalian
sub-factory
- asset
remove 2,704,235.83 2,704,235.83 2,704,235.83 2,704,235.83
subsidy
Intelligent
equipment
manufacturin
g 400,000.00 - 400,000.00 400,000.00 400,000.00 income
development
specific
subsidy
High-end
bearing
472,320.00 - 472,320.00 472,320.00 asset
improvement 472,320.00
project
Amer-auto
bearing
350,000.00 - - asset
project 350,000.00
subsidy
Liaoyang
Bearing
97,548.00 - 97,548.00 97,548.00 asset
Industry 97,548.00
subsidy
Total 4,761,103.83 - 4,761,103.83 4,411,103.83 4,411,103.83 ——
“Other Change”: the expected amortization occurred during the next year will be re-categorized
from deferred income to other current liabilities.
25. Long-term loan
(1) Category of long-term loan
57
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category Closing Balance Opening Balance
Guarantee loan 90,000,000.00 50,000,000.00
Credit loan 90,000,000.00
Total 180,000,000.00 50,000,000.00
Guarantee loan is secured by the controlling shareholder, Wazhou Group, refer to the note XI.2.
(3).
26. Long-term payables
(1) Long-term payables categorized by payments nature
Payments nature Closing Balance Opening Balance
Equipment payments 100,000.00 100,000.00
Housing subsidy 1,497,305.72 1,497,305.72
Total 1,597,305.72 1,597,305.72
27. Special payables
Items Opening Increase Decrease Closing Formation Basis
Balance Balance
Granted by Wafangdian
Bureau of Finance and
Special Wafangdian Bureau of
pollution 221,698.98 - - 221,698.98 Environment Protection
treatment with approval with
“WaCaiZhi Qi
No.[2004]217”
Dalian Financial Bureau
and Municipal Office of
Economic and
Informatization Information Technology
100,000.00 - - 100,000.00
Construction Committee with approval
with “Da CaiZhi Qi No.
[2012]917” and “Da Jing
Xin Fa No. [2012]199”
58
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Total 321,698.98 - - 321,698.98
28. Deferred income
(1) Category of deferred income
Item Opening Increase Decrease Closing Formation
Balance Balance Basis
Government 51,122,51 4,472,31 46,650,19
subsidy 3.64 6.82 6.82
Total 51,122,51 4,472,31 46,650,19 —
—
3.64 6.82 6.82
(2) Government subsidy project
59
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Governm Recorded Related
Opening
ent Increase
into non Other Closing with
Note
subsidy Balance -operatio Change Balance asset/equ
item n income ity
Liaozhou
Industry 4,487,208.
developm - - 97,548.00 4,389,660.00 asset A
ent 00
subsidies
Technology
1,473,999.
subsidy from - - 737,000.00 736,999.97 asset B
97
province
Compensa
tion for 35,155,065
plants - - 2,704,235.83 32,450,829.84 asset C
.67
moving
Developm
ent of
intelligent 3,600,000.
manufactu - - 400,000.00 3,200,000.00 asset D
ring 00
equipment
subsidies
Improvement
of high-end
3,306,240.
bearing - - 472,320.00 2,833,920.00 asset E
00
production
subsidies
Interest
subsidy of 2,400,000.
- - - 2,400,000.00 asset F
grand axle 00
load
Construction
of workshop
for
700,000.00 - 61,212.99 - 638,787.01 asset G
technology
masters
subsidy
51,122,513
Total - 61,212.99 4,411,103.83 46,650,196.82 -
.64
60
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
“Other change”: carried forward the non-operation income occurred in 2015 from the subsidy
and re-categorized to other current liabilities.
(1) A: Deferred income: the RMB 4,877,400.00 of “Industry development subsidies” is
distributed by the Liaoyang Economic and Development district Bureau of Finance in
2013. The grant is related to land and amortized over 50 years in accordance with land
amortization criteria.
(2) B: Deferred income: the improvement subsidy is the railway transportation bearing
technologic improvement subsidy with total amount of RMB 7,370,000.00 granted by
Bureau of Finance Liaoning province in 2008. The subsidy related to asset should be
deferred over the useful life of 10 years.
(3) C: Deferred income: the compensation for plants moving is RMB 59,820,000.00 granted
from Dalian government-owned assets investment and operating Co., Ltd in 2011. And
the amount of making up for the removal loss of the current period is RMB
11,143,755.05；The rest of 48,676,244.95 are recognized as the removal compensation
related with assets, which is amortized 18 years, according to the new fixed assets
formed after the Dalian branch removal.
(4) D: Deferred income: the RMB 4,000,000.00 of development of intelligent manufacturing
equipment subsidy is distributed by Dalian City Finance Bureau in 2012.The subsidies
are used in the project “Grinding vehicle integration and processing digitalization”.
Currently, the equipment has been used for production manufacturing and grant is
amortized over 10 years.
(5) E: Deferred income: the RMB 4,723,200 interest subsidy of “Improvement of bearing
base in high-end equipment sector” is distributed by Wafangdian Finance Bureau in
2013 for the year of 2011. The subsidy is specially used to improve the project of
improvement of bearing base in high-end equipment sector. The item is amortized within
10 years.
(6) F: Deferred income: the RMB 2,400,000.00 interest subsidy of “Axle box and bearing
technology improvement of grand axle load railway carriages” is granted by Wafangdian
Finance Bureau in 2014. The subsidy is now in processing the project “Axle box and
61
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
bearing technology improvement of grand axle load railway carriages”. This project is
still in the progress and is expected to be completed for inspection in 2016.
(7) G: Deferred income: the 700,000.00 RMB of the construction of workshop for
technology masters subsidy is granted by Dalian Finance Bureau in 2014 according to
“Da Cai She (Zhuan) No. [2013]26”, “Da Cai She (Zhuan) No. [2013]37”, “Da Cai She
(Zhuan) No. [2013]45”, “Da Cai She (Zhuan) No. [2014]27”, and “Da Cai She (Zhuan)
No. [2014]32”. No assets are established yet so far, the grant has been booked into
non-operating income.
29. Share capital
Opening Balance Change for current period Closing Ba
Shareholde Issui Transferr
rs’ ng Distribut ing capital Othe Subto
name/categ Amounts % new ing reserves Amounts
ory share shares to share rs tal
s capital
Shares
under
- - - - - - - -
restriction
for sale
Domestical
ly legal
244,000,000.00 60.61 - - - - - 244,000,000.00
person
shares
Total
shares
under 244,000,000.00 60.61 — — — — — 244,000,000.00
restriction
for sale
Shares without
restriction for - - - - - - - -
sale
Domestically
listed foreign 158,600,000.00 39.39 - - - - - 158,600,000.00
shares
Total shares
158,600,000.00 39.39 — — — — — 158,600,000.00
without
62
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
restriction for
sale
Total shares 402,600,000.00 100.00 — — — — — 402,600,000.00
30. Capital reserves
Items Opening Balance Increase Decrease Closing Balance
Share premium 201,956,446.52 - - 201,956,446.52
Other
283,734,603.95 - - 283,734,603.95
capital reserves
Total 485,691,050.47 - - 485,691,050.47
31. Surplus reserves
Item Opening Increase Decrease Closing
Balance Balance
Statutory - -
110,852,290.20 110,852,290.20
surplus reserve
Discretionary - -
20,590,618.91 20,590,618.91
surplus reserve
Total 131,442,909.11 - - 131,442,909.11
32. Undistributed profits
Item 2015 2014
Closing balance of 2014 362,111,029.14 482,117,978.03
Add: Adjustments to the opening balance of
- -
undistributed profits
Including: additional retrospective
adjustments according to the new accounting - -
standards
Change on accounting policy - -
Correction of prior period significant errors - -
Change on combination scope under same - -
63
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
control
Other factors - -
Opening balance of 2015 362,111,029.14 482,117,978.03
Add: net profit attributable to shareholders of
-33,380,013.39 -103,902,948.89
parent company in the year
Less: Provision for statutory surplus reserves - -
Provision for any surplus reserves - -
Provision of general risk - -
Dividends payable for common shares - 16,104,000.00
Share dividends - -
Closing balance of 2015 328,731,015.75 362,111,029.14
33. Operating revenue and cost
Items 2015 2014
Sales revenue Cost of sales Sales revenue Cost of sales
Revenue from
principle 2,073,259,105.49 1,872,373,555.89 2,635,352,627.84 2,450,941,573.58
operation
Revenue from
other 226,902,190.99 207,103,551.31
372,225,954.12 316,736,175.97
operation
Total 2,300,161,296.48 2,079,477,107.20 3,007,578,581.96 2,767,677,749.55
(1) Principle operation - classified according to products or operation
2015 2014
Items
Sales revenue Cost of sales Sales revenue Cost of sales
Export 353,230,102.39 285,923,237.04 274,637,094.05
331,205,551.30
Domestic 1,689,192,669.88 1,502,142,078.02 2,251,373,759.43 2,065,530,190.44
Including:
Transportation
556,417,955.42 496,110,751.32 966,465,387.04 882,656,346.90
vehicle
bearings
Special use 595,546,617.11 566,838,486.10 580,622,061.86 569,127,159.48
64
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
bearings
General use
537,228,097.35 704,286,310.53 613,746,684.06
bearings 439,192,840.60
Industrial
30,836,333.22 98,055,631.37 110,774,289.09
Operations 39,025,926.57
Total 2,073,259,105.49 1,872,373,555.89 2,635,352,627.84 2,450,941,573.58
34. Operating taxes and surcharges
Items 2015 2014
Business tax 1,518,770.40 884,464.00
City construction tax 5,928,564.29 5,832,614.82
Education surcharge 4,234,717.06 4,172,882.02
Other 32,760.39 50,313.63
Total 10,940,274.47
11,714,812.14
35. Selling expenses
Items 2015 2014
Transportation expense 78,571,050.56 86,008,634.37
Employee benefit 44,243,570.98 38,164,205.27
Travel expense 20,927,121.64 25,514,504.31
Conference expense 8,246,362.99 25,581,519.55
Trademark use fee 4,579,774.48
8,256,840.09
Other expense 34,248,580.61
82,070,707.06
Total 265,596,410.65
190,816,461.26
36. Administrative expenses
Items 2015 2014
65
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Employee benefit 35,150,237.58 29,624,491.92
Tax expense 7,986,509.60 7,714,041.45
Technology development expense 5,743,653.45 6,653,443.72
Intangible assets amortization 4,988,728.04 4,623,973.61
Guide and firefighting expense 3,290,900.00 3,290,900.00
Depreciation expense 3,832,977.51 3,353,649.21
Business entertaining expense 785,228.40 862,283.00
Travel expense 1,143,180.63 1,206,130.48
Other expense 15,737,540.13 17,184,313.77
Total 74,513,227.16
78,658,955.34
37. Financial expenses
Items 2015 2014
Interest expenses
37,988,953.46 38,200,459.38
Less: Interest income
730,953.57 933,679.01
Add: Exchange loss
-7,931,075.89 -1,239,282.04
Add: Others expenditure
1,281,521.51 2,411,682.17
Total
30,608,445.51 38,439,180.50
38. Assets impairment losses
Items 2015 2014
Loss of bad debts 11,893,610.83
14,254,853.89
Provision for inventory impairment -32,641,616.99 48,145,847.91
66
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Provision for fixed assets impairment -
313,681.52
Total 60,039,458.74
-18,073,081.58
39. Investment income
Items 2015 2014
Long-term equity investment income under
- 4,033,452.23
equity method
Available-for-sale financial assets in
240,000.00 240,000.00
holding
Gain on fair value remeasurement of share
- 10,612,925.16
equity held before the acquisition date
Income transferred into investment income
from other comprehensive income in
- 3,114,497.89
relation to share equity held before the
acquisition date
Total 240,000.00 18,000,875.28
40. Non-operating income
(1) Non-operating income list
Amounts recognized
into current
Item 2015 2014
non-recurring profit or
loss
Gains on disposal of non-current
1,883,903.96 6,010,809.66 1,883,903.96
assets
Including: gains on disposal of
1,883,903.96 6,010,809.66 1,883,903.96
fixed assets
Income from debt restructuring 32,454,287.65 1,916,930.56 32,454,287.65
Government grants 4,867,966.82 6,969,137.88 4,867,966.82
Gains from acquisition of
subsidiary when initial cost less
- 74,049,202.70 -
than the fair value of invested
company
Penalty income 76,249.26 - 76,249.26
67
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Others 1,895,862.98 2,411,974.81 1,895,862.98
Total 41,178,270.67 91,358,055.61 41,178,270.67
(2) Government subsidy list
2015 2014 With
Item Resource and basis
asset/equity
No.57 (2007) Bureau
Improvement subsidy 737,000.00 737,000.00 of Finance Liaoning asset
Province
Compensation deal of
Compensation for plants Dalian state-owned
2,704,235.83 2,704,235.88 property investment asset
moving and operating group
Co., LTD
Wacaijian[119] ( notice
about distributing 6th
Improvement of high-end
472,320.00 472,320.00 interest subsidy fund asset
bearing production subsidies
for the year of 2100 to
the company)
Granted by Liaoning
Exhibition subsidy 20,050.00 20,034.00 foreign economic income
operation office
The reward for economic
Da CaiZhi Qi No.
increments in 2014 by - 2,393,000.00 income
[2014] 1177
Bureau of Finance of Dalian
Subsidy for overseas market Granted by Liaoning
development by foreign trade - 145,000.00 foreign economic income
operation office
operation office
Industry development fund Liao Tai CaiYuzhi No.
97,548.00 97,548.00 asset
[2014] 656
Technology research and Liao Shi Cai Zhi
400,000.00 income
development fund Qi[2013] 497
Technology research and Liao Shi Cai Zhi
350,000.00 income
development fund Qi[2014] 978
Special project subsidy for Dalian Municipal
intelligent manufacture 400,000.00 - Finance Bureau[2012] income
1163
equipment development
Dalian Municipal
Skill master studio subsidy 61,212.99 income
Finance Bureau[2013]
68
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2015 2014 With
Item Resource and basis
asset/equity
26
Development foster fund in Forster fund for
25,600.00 development given by income
2014 Chinese ECI company
Total 4,867,966.82 6,969,137.88
41. Non-operating expenses
Amounts
recognized into
Item 2015 2014 non-recurring
profit or loss
for the year
Loss on disposal of non-current assets 584,454.86
584,454.86 567,566.60
Including: Loss on disposal of fixed
584,454.86
assets 584,454.86 567,566.60
Loss from debt restructuring 1,726,269.35 381,595.11
381,595.11
Penalty loss 10,852.00 117,284.91
117,284.91
Shortage on physical count - - -
Others 88,242.18 94,277.80
94,277.80
Total 2,392,930.13 1,177,612.68
1,177,612.68
42. Income tax expenses
(1) Income tax expenses
Items 2015 2014
Current income tax expenses 731,834.76 -82,548.44
Deferred income tax expenses -152,566.77 1,323,778.98
Total 579,267.99 1,241,230.54
43. Notes to cash flow statement
69
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(1) Cash receipt/payment of other operating/investing/financing activities
1) Other cash received relating to operating activities
Items 2015 2014
Interest income 652,081.18 412,285.34
Government subsidy 6,058,034.00
-
AC or AP 881,296.88 5,966,522.72
Return of reserve fund, deposit etc. 1,186,141.08 235,200.57
Others 1,073,052.45 1,672,171.01
Total 3,792,571.59 14,344,213.64
2) Other cash paid relating to operating activities
Items 2015 2014
Travel expenses 23,315,843.57
28,055,861.49
Conference expense 9,235,960.84
19,674,256.03
Advertising expense 532,652.34
775,185.62
Trademark use fee 579,774.48
-
Rent expense 10,997,373.48
8,373,369.16
Business promotion expense 8,635,200.46
12,705,777.55
Freight service expense 17,649,146.02
25,456,167.41
Security and fire-fighting 103,583.15 -
Office expense 6,668,429.82
5,931,684.35
Collection and payment for others 11,793,902.51
8,581,025.95
Other expense 54,344,161.07
52,744,436.83
Security deposit transfer 11,928,649.85
17,099,672.21
Total 155,784,677.59 179,397,436.60
3) Others cash received relating to financing activities
Items 2015 2014
Financing accepted notes 191,645,382.23
Borrowings by presenting received order 417,579,700.00 302,053,500.00
70
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
302,053,500.00
Total 609,225,082.23
4) Others cash paid relating to financing activities
Items 2015 2014
Repayment of borrowings 536,567,850.00 150,000,000.00
Total 536,567,850.00 150,000,000.00
(2) Supplementary information of consolidated cash flow statement
Items 2015 2014
1. Adjusting net profit into cash flows of operating —— ——
activities:
Net profit -33,380,013.39 -103,902,948.89
Add: Provision for impairment of assets -18,073,081.58 60,039,458.74
Depreciation of fixed assets,Amortization ofmineral
86,893,604.73 75,813,460.85
resources, and biological assets
Amortization of intangible assets 4,988,728.04 4,623,973.61
Amortization of long-term deferred expenses 156,498.36 67,830.36
Losses on disposal of fixed assets, intangible assets, and
-1,299,449.10 -5,443,243.06
long-term assets (income listed with”-”)
Losses on write-off of fixed assets (income listed
- -
with”-”)
Change of fair value profit or loss - -
Financial expense (income listed with”-”) 37,988,953.46 38,083,783.17
Investment loss (income listed with”-”) -240,000.00 -18,000,875.28
Decrease of deferred tax assets(increase listed
- 182,783.63
with”-”)
Increase of deferred tax liabilities(decrease
-152,566.77 1,140,995.35
listed with”-”)
Decrease of inventories (increase listed with”-”) 129,810,005.29 -37,912,089.70
Decrease of operating receivables (increase listed
115,564,845.60 -330,556,953.05
with”-”)
Increase of operating payables (decrease listed
-373,785,552.85 460,385,193.83
with”-”)
Others - -74,049,202.70
Net cash flows arising from operating activities -51,528,028.21 70,472,166.86
71
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2. Significant investment and financing activities —— ——
unrelated to cash income and expenses
Liabilities transferred to capital - -
Convertible bonds within 1 year - -
Financing leased fixed assets - -
3. Net increase (decrease) of cash and cash equivalent —— ——
Closing balance of cash 78,556,030.56 143,399,164.66
Less: Opening balance of cash 143,399,164.66 60,616,759.13
Add: Closing balance of cash equivalent
Less: Opening balance of cash equivalent
Net increase of cash and cash equivalent -64,843,134.10 82,782,240.53
(3) Cash and cash equivalents
Items 2015 2014
Cash 78,556,030.56 143,399,164.66
Including: Cash on hand 372,523.88 243,292.16
Bank deposit used for paying at any moment 78,183,506.68 143,155,872.50
Closing balance of cash and cash equivalents 78,556,030.56 143,399,164.66
Note: The difference between cash and cash equivalent and cash at the end of this year refers to
notesVI.1.
44. Monetary category of foreign currency
(1) Monetary category of foreign currency
Item Closing Balance Exchange Closing Balance
(foreign currency) Rate (RMB)
Cash
Including：USD 4,866,080.81 6.4936 31,598,382.35
EURO 50,173.26 7.0952 355,989.31
HKD 60.03 0.8034 48.23
GBP 110.00 9.6159 1,057.75
Accounts receivable
Including: USD 15,956,843.52 6.4936 103,617,359.08
EURO 1,159,721.30 7.0952 8,228,454.57
Received in advance
Including: USD 702,839.25 6.4936 4,563,956.95
72
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Item Closing Balance Exchange Closing Balance
(foreign currency) Rate (RMB)
EURO 506,007.08 7.0952 3,590,221.43
Accounts payable
Including: USD 94,530.73 6.4936 613,844.75
EURO
Advances to supplier
Including: USD 66,930.00 6.4936 434,616.65
EURO 14,008.07 7.0952 99,390.06
Other receivables
Including: USD 247,379.85 6.4936 1,606,385.79
Other payables
Including: USD 108,890.24 6.4936 707,089.66
EURO
VII.Change of Consolidation Scope
No change
VIII. Interest in other entity
1. Equity of subsidiaries
(1) Organization structure of group company
Name of Nature of Share（%）
Location Registered Location Method
subsidiary operation Direct Indirect
Wazhou Liaoyang Manufacturing
Liaoyang Baita
Bearing and selling
Wafangdian District Weiguo Rd 100 acquisition
construction bearing and
No.61
Co.,Ltd machines
Dalian Wazhou Dalian Free Trade Manufacturing
Precision Motor Zone and selling
Wafangdian 100 investment
Car Bearing SanshiliYongsheng Rd bearing and
Company Limited No.12 machines
Wazhou Precision Wafangdian Wafangdian Beigongji Manufacturing 100 acquisition
73
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Name of Nature of Share（%）
Location Registered Location Method
subsidiary operation Direct Indirect
of Spherical St No.1 and selling
Roller bearing and
Bearings(Wafangd machines
ian)Co., Ltd
IX. Risk Related to Financial Instruments
The main financial instruments held by the group company are including investment in share
equity, borrowing, accounts receivable, and accounts payable. The details introduction about
each financial instrument is referred to this notes No.VI above. The related risks of these
financial instruments and the risk management policy conducted to reduce these risks by the
group company are introduced as below. The Group management conducts to manage and
monitor these risks exposure and control these risks under certain risk level.
1. Objectives and policies of each risk management
The objectives of risk management conducted by the group company are to reach the balance
between risk and profit return by reducing the negative influence to operating performance
to the minimum level as well as maximising the shareholders’ and other investors’ profits.
Based on these objectives, the basic risk management policy is to recognize and analyse all
sorts of risk that the group company faced with, to set up the proper risk tolerance bottom
line conducting risk management, as well as to monitor these risks in a timely and effective
manner, and to ensure these risks under the limit level.
(1) Market risk
1) Currency risk
The currency risk is referred as the risk caused by the fluctuation of exchange rate. The main
currency risk that the company faced with is related to the USD since the main export
business is settled by USD. Other than the balance of foreign currency presented in Note VI.
44, all assets and liabilities of company are presented in RMB On December 31, 2015.The
balance in foreign currency of assets and liabilities may cause currency risk with influence to
74
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
operating performance.
2) Interest risk
The main potential interest risk which is caused by the fluctuation of the cash flow of
financial instruments is related to the floating rate of bank loan (Note VI. 15). The policy that
adopted by the Group is to maintain the floating rate of loan.
(2) Credit risk
On 31 December, 2015, the Group’s most probable credit risk exposure is from the financial
loss primarily due to the failure of fulfilling the obligation by one party of the contract. The
impairment losses of company’s financial assets are including:
Among the book value of recognized financial assets in the consolidated statement of
financial position, for the financial instruments measured at fair value, their book values
reflect the risk exposure, however, not maximum risk level; the level is changing along with
the fair value.
As the aim to reduce the credit risk, the Group sets up the credit department to ensure the
credit limit, to examine and approve the credit application, and to carry out monitor
procedures to claim expired creditor’s right. In addition, at each of balance sheet date, the
Group checks with every single process of receipt of receivable to ensure the sufficiency of
provision of bad debt. Therefore, the management of the Group believed the credit risk had
been minimized significantly.
The working capital has low level of credit risk since the cash is deposited in the banks with
high credit reputation.
(3) Liquidity risk
As the management of liquidity risk, the Group’s policy is to regularly monitor the
sufficiency of cash and cash equivalent, the liquidity requirements to ensure the normal
operations, and the fluctuation of cash flow. The bank loan activities are under monitoring by
management to make sure to comply with the loan agreement.
The liquidity risk is referred as the Group failed to fulfil its financial obligations by the due
75
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
date. The Group manages the liquidity risk by the maintain sufficiency of working capital to
cover the expired debt to avoid the unacceptable losses or the damage of Group’s reputation.
The Group analyses the debt structure and due time periodically to ensure the sufficiency of
available cash flow. The bank loan activities are under monitoring by management to make
sure to comply with the loan agreement. At the same, the Group has consultation with
financial organizations about the financing activities to maintain the credit level and to
reduce the credit risk.
The Group’s main financial resources come from bank loan. By the date of 31 December,
2015, the unencumbered bank loan credit is 2.14 billion Yuan.
X. Disclosure of Fair Value
There is no asset or liability measured by fair value at the end of report period.
XI.Related Parties Relationship and Transactions
1. Related parties relationship
(1) Parent company and ultimate controller
1) Parent company and ultimate controller
Parent Registered Business Registered Shareholding Voting
company address nature capital percentage power
(%) percentage
(%)
Manufacture
No. 1 North
and sales of
Wazhou Gongji Street,
bearing and 413,793,100.00 60.61 60.61
Group Wafangdian
other
City, Dalian
equipments
2) Registered capital and its movement of parent company
76
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Parent Opening Balance Increase Decrease Closing Balance
company
Wazhou Group 413,793,100.00 — — 413,793,100.00
3) Share held and its movement of parent company
Parent company Amount Share holding
(%)
Closing Balance Opening Balance Closing Opening
Balance Balance
Wazhou Group 244,000,000.00 244,000,000.00 60.61 60.61
(2). Subsidiaries
(1) Referring to the content in Note VIII. 1. (1) Organization structure of group
company
(3).Other related parties
Name of related party Related party relationship
Dalian Wazhou Bearing Manufacturing Other entity controlled by the same parent
Equipment Co., Ltd company and ultimate controlling party
Other entity controlled by the same parent
Wazhou Precision Steel Ball Company
company and ultimate controlling party
Other entity controlled by the same parent
Wazhou Exact Forge Ltd.,
company and ultimate controlling party
Other entity controlled by the same parent
Wazhou Group Precision Turnplate Bearing Ltd
company and ultimate controlling party
Wazhou Group Exact Transmission Bearing Other entity controlled by the same parent
Co., Ltd company and ultimate controlling party
Wazhou Group Equipment Technology Project Other entity controlled by the same parent
Co., Ltd. company and ultimate controlling party
Wazhou Group Special Precision Bearing Co., Other entity controlled by the same parent
Ltd. company and ultimate controlling party
Wazhou Group National Bearings Engineering Other entity controlled by the same parent
Research Centre Co., Ltd company and ultimate controlling party
Dalian North Metal Materials Trade Centre Co., Other entity controlled by the same parent
Ltd company and ultimate controlling party
Other entity controlled by the same parent
Wazhou Group (USA) Bearing CO., Ltd.
company and ultimate controlling party
Dalian GONA Wazhou Auto Bearings Co., Ltd Other related party
Dalian Wazhou Jinzhou Machinery Co., Ltd Other related party
Dalian WazhouFengyuan Machinery Co., Ltd Other related party
77
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
2. Related party transactions
(1) Purchase of goods, provide, and receive labour services
1) Purchase of goods/receive labour services
Related party Content 2015 2014
WazhouPrecision Steel Ball Purchase of
2,447,586.39 6,183,163.07
Company goods
Purchase of
Wazhou Exact Forge Ltd., 181,319,845.46 279,989,617.78
goods
Dalian Wazhou Bearing Purchase of
28,640,645.96 19,948,287.07
Manufacturing Equipment Co., Ltd goods
Wazhou Group Precision Turnplate Purchase of
114,778,082.50 246,255,677.00
Bearing Ltd goods
Wazhou Group Exact Transmission Purchase of
85,767,947.90 104,544,089.32
Bearing Co., Ltd goods
Wafangdian Tongda Bearing Purchase of
39,849,495.82 -
Manufacturing Co., Ltd. goods
Wazhou Group Equipment Purchase of
- 34,987,895.70
Technology Project Co., Ltd. goods
Wazhou Group Equipment Purchase of
27,238,416.71 -
Technology Project Co., Ltd. equipments
Purchase of
Dalian SKF Wazhou Bearings Co., Ltd. - 171,107,515.76
goods
Dalian GONA Wazhou Auto Bearings Purchase of
goods 37,816,125.17 48,846,137.88
Co., Ltd
Dalian WazhouFengyuan Machinery Purchase of
87,672,622.48 146,106,031.41
Co., Ltd goods
Dalian Wazhou Jinzhou Machinery Purchase of
87,942,288.16 112,469,655.13
Co., Ltd goods
Purchase of
Wazhou Group 102,965,462.79 -
goods
Dalian Wazhou Manufacturing Purchase of
16,718,495.72 -
Equipment Co., Ltd equipments
Wazhou Group Special Precision Purchase of
goods 473,889.00 -
Bearing Co., Ltd.
Wazhou Group (USA) Bearing CO., Purchase of
goods 23,409,777.81 -
Ltd.
Total 820,322,186.15 1,170,438,070.12
2) Sales of goods/provide labour services
Related party Content 2015 2014
Wazhou Group Sales of goods 56,017,310.64 1,271,818.79
Dalian SKF Wazhou Bearings Co., Ltd. Sales of goods - 62,885,527.32
WazhouPrecision Steel Ball Company Sales of goods 563,694.87 5,252,101.33
78
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Wazhou Exact Forge Ltd., Sales of goods 192,664,350.35 328,726,014.43
Dalian Wazhou Bearing Manufacturing Sales of goods
1,321,714.03 1,405,274.78
Equipment Co., Ltd
Wazhou Group Precision Turnplate Sales of goods
764,491.84 806,448.91
Bearing Ltd
Wazhou Group Exact Transmission Sales of goods
29,053,894.69 22,998,475.35
Bearing Co., Ltd
Wazhou Group Special Precision Sales of goods
4,769,271.76 4,426,915.56
Bearing Co., Ltd.
Dalian North Metal Materials Trade Sales of goods
17,512,466.00 -
Centre Co., Ltd
Dalian Wazhou Jinzhou Machinery Co., Sales of goods
496,012.46 310,425.96
Ltd
Wazhou Group (USA) Bearing CO., Ltd. Sales of goods 105,169,678.68 21,734,280.64
Wafangdian Tongda Bearing
Sales of goods 485,664.95 -
Manufacturing Co., Ltd.
provide labour
Dalian SKF Wazhou Bearings Co., Ltd. - 4,358,305.71
services
provide labour
Wazhou Precision Steel Ball Company 1,720,779.29 1,272,089.15
services
Wazhou Group Exact Transmission provide labour
1,342,679.19 2,108,441.03
Bearing Co., Ltd services
Wazhou Group Special Precision provide labour
451,703.91 412,008.52
Bearing Co., Ltd. services
Dalian Wazhou Jinzhou Machinery Co., provide labour
642,918.49 323,849.51
Ltd services
Wafangdian Tongda Bearing provide labour
69,676.23 -
Manufacturing Co., Ltd. services
Dalian WazhouFengyuan Machinery provide labour
33,168.16 -
Co., Ltd services
Total 413,079,475.54 458,291,976.99
(2) Assets rent
1) Assets rent out
Category of assets
Lessor Lessee 2015 Profits 2014 Profits
rent out
Land (located in
No.1, Phrase1,
The Wazhou Exact Forge
North Gongji Street, - 126,096.00
Company Ltd.
with area of 7,881
m).
Land (located in
The Wazhou Exact Forge
No.1, Phrase1, 434,000.00 -
Company Ltd.
North Gongji Street,
79
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of assets
Lessor Lessee 2015 Profits 2014 Profits
rent out
with area of
48,220.82 m).
Land (located in
No.1, Phrase1,
The Wazhou Special Steel
North Gongji Street, 197,565.00 105,368.00
Company Ball Company
with area of 13,171
m).
Land (located in
Wazhou Group Special No.1, Phrase1,
The
Precision Bearing Co., North Gongji Street, 88,000.00 46,915.20
Company
Ltd with area of
5,864 .40m).
The Wazhou Exact Forge
Buildings 463,700.00 345,515.00
Company Ltd.
Wazhou Group Special
The
Precision Bearing Co., Buildings 514,300.00 514,303.17
Company
Ltd
Dalian
The
WazhouFengyuan Buildings 107,460.00 107,460.00
Company
Machinery Co., Ltd
Dalian Wazhou
The
Jinzhou Machinery Buildings 803,160.00 803,160.00
Company
Co., Ltd
2) Assets under lease
Category of 2015 Lease 2014 Lease
Lessor Lessee
assets rent in fees fees
Land (located in
Wazhou Group
Two finished branch
WazhouGroup industrial park, - 115,300.00
of the Company
with area of
14,418.00 m).
Land (located in
Wazhou Group
Two finished branch
WazhouGroup industrial park, 211,700.00 -
of the Company
with area of
14,112.57 m).
Land (located in
No.1, Phrase1,
Wazhou Group The Company North Gongji - 5,700.00
Street, with area
of 715.20 m).
Wazhou Group The Land (located in - 142,600.00
80
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of 2015 Lease 2014 Lease
Lessor Lessee
assets rent in fees fees
company(logistic Wazhou Group
department ) industrial park,
with area of
17,829.00 m).
Land (located in
The Wazhou Group
Wazhou Group company(logistic industrial park, 253,900.00
department ) with area of
16,921.42 m).
Land (located in
No.1, Phrase1,
Wazhou Group The Company North Gongji - 130,152.36
Street, with area
of 21,692.06 m).
Land (located in
west industrial
Wazhou Group The Company 351,000.00 351,000.00
park, with area of
58,500 m).
Land (located in
Precision bearing Wazhou Group
Wazhou Group branch of the industrial park, 455,700.00 243,000.00
Company with area of
30,380 m).
Land (located in
Wazhou Group
Special large branch
Wazhou Group industrial park, - 161,700.00
of the Company
with area of
20,207 m).
Land (located in
Wazhou Group
Special large branch
Wazhou Group industrial park, 291,000.00
of the Company
with area of
19,401.24 m).
Land (located in
Wazhou Group
Special large branch
Wazhou Group industrial park, - 131,100.00
of the Company
with area of
16,388.00 m).
Land (located in
Wazhou Group
Special large branch
Wazhou Group industrial park, 184,300.00
of the Company
with area of
12,286.33 m).
Land (located in
Wazhou The precision rolling Wazhou Group
company of the industrial park, - 57,600.00
Group Company with area of
7,199.00 m).
81
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Category of 2015 Lease 2014 Lease
Lessor Lessee
assets rent in fees fees
Land (located in
Wazhou The precision rolling Wazhou Group
company of the industrial park, 100,000.00
Group Company with area of
6,663.86 m).
Land (located in
Wazhou The precision rolling Pulandian
company of the Fengrong office, 339,900.00
Group Company with area of
37,768.00 m).
Wazhou Group The Company Buildings - 213,200.00
Precision bearing
Wazhou Group branch of the Buildings 2,339,300.00 3,244,200.00
Company
Two finished branch
Wazhou Group Buildings 1,118,000.00 1,771,800.00
of the Company
Special large branch
Wazhou Group Buildings 1,653,800.00 2,773,500.00
of the Company
The precision rolling
Wazhou Group company of the Buildings 528,700.00 892,000.00
Company
The (logistic
Wazhou Group department ) of the Buildings 571,000.00 557,600.00
company
Special large branch
Wazhou Group Buildings 1,006,800.00 2,604,000.00
of the Company
Wazhou Steel The precision rolling
company of the Buildings 448,416.00 224,208.00
Ball Company Company
Two finished branch
Wazhou Group Equipment - 180,117.65
of the Company
The precision rolling
Wazhou Group company of the Equipment 3,113,527.18 5,783,102.24
Company
The auto bearing
Wazhou Group company of the Equipment 113,861.70 126,000.00
Company
The railway bearing
Wazhou Group company of the Equipment 1,936.17
Company
Special large branch
Wazhou Group Equipment 4,830,268.91 4,927,233.58
of the Company
(3) Warranty provided by related parties
82
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Whether the
Amounts Inception of Maturity of warranty
Warrantor Warrantee
warranted warranty warranty finished
(Y or N)
Wazhou
The Company 50,000,000.00 15 Dec. 2014 15 Mar. 2016 N(Note 1)
Group
Note1: The warranty is Wazhou Group guarantying for the Company’s loan from Import and
Export Bank with the amount of RMB 50 million. As at the end of Dec 31, 2015, the ending
balance of the loan is RMB 50 million.
(4) Related party assets transfer and debt structure reconstruction
Type of
Related party 2015 2014
transaction
Dalian SKF Wazhou Bearings Co., Ltd. Assets transfer 1,216,000.00
Wazhou Group Turnplate Bearing Ltd Assets transfer 1,508,000.00
Dalian WazhouFengyuan Machinery
Assets transfer 404,000.00
Co., Ltd
Wazhou Group Exact Transmission
Assets transfer 1,900,315.73 507,000.00
Bearing Co., Ltd
Wazhou Exact Forge Ltd., Assets transfer 774,000.00
Dalian Wazhou Bearing Manufacturing
Assets transfer 1,972,353.78
Equipment Co., Ltd
Dalian Wazhou Precision Motor Auto
Assets transfer 929,113.68
Bearing Co., Ltd
Non-operating
Wazhou Exact Forge Ltd., income 2,600,000.00
Non-operating
Wafangdian Bearing Co., Ltd income 3,900,000.00
Non-operating
Wazhou Group Turnplate Bearing Ltd income 1,770,000.00
Dalian Wazhou Bearing Manufacturing Non-operating
Equipment Co., Ltd income 937,500.00
Wazhou Group Exact Transmission Non-operating
income 1,250,000.00
Bearing Co., Ltd
Non-operating
Wazhou Precision Steel Ball Company income 350,000.00
83
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Wafangdian Tongda Bearing Non-operating
Manufacturing Co., Ltd. income 1,056,500.00
Dalian WazhouFengyuan Machinery Non-operating
Co., Ltd income 315,000.00
Dalian Wazhou Jinzhou Machinery Non-operating
Co., Ltd income 653,002.74
(5) Management remuneration
Item 2015 2014
Total 401,600.00 392,000.00
(6) Use of trademark
According to the ‘Trade Mark License contract’ signed between the Company and the
Group on January 1, 2015, within the valid period up to December 31, 2015, the Company
shall pay license fees to the Group at 0.5% of net sales by using the trade mark of Wazhou
Group for self-manufactured stock. In 2015, the Company shall pay license fees of
4,579,774.48Yuan (inc VAT) which is not settled during the year.
(7) Acceptance of comprehensive service
Other expenses paid to the Group during the year
Item 2015 2014
Firefight and security 3,290,900.00 3,290,900.00
Technology development 5,400,000.00 5,400,000.00
Advertising 800,700.00 800,700.00
Total 9,491,600.00 9,491,600.00
3. Balances with related parties
(1) Accounts receivable due from related parties
Closing Balance Opening Balance
Item Related party
Book Balance Provision Book Balance Provision
84
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Accounts
Wazhou Group 6,903,361.61 - 6,903,361.61 -
receivable
Wazhou Group Special
Accounts
Precision Bearing Co., 8,421,176.40 - 9,399,082.68 -
receivable
Ltd
Accounts Wazhou Group (USA)
48,281,914.32 - 12,344,182.91 -
receivable Bearing CO., Ltd.
Wazhou Group Exact
Accounts
Transmission Bearing 104,803.24 - 104,803.24 -
receivable
Co., Ltd
Accounts Wazhou Exact Forge
receivable - - 154,404.30 -
Ltd.,
Dalian Wazhou
Accounts
receivable Fengyuan Machinery - - 12,295.63 -
Co., Ltd
Wafangdian Bearing
Prepaid Manufacturing 40,853.62 - - -
Equipment Co., Ltd
(2) Accounts payable due from related parties
Item Related party Closing Balance Opening Balance
Dalian Wazhou Bearing
Accounts payable Manufacturing 37,230,732.63 5,464,593.44
Equipment Co., Ltd
Wazhou precisionSteel Ball
Accounts payable 4,099,619.68 8,324,811.37
Company
Accounts payable Wazhou Group 5,723,806.00 -
Accounts payable Wazhou Exact Forge Ltd. 30,763,439.55 85,227,380.13
Wazhou Group Turnplate Bearing
Accounts payable 9,451,169.77 152,988,835.67
Ltd
Wazhou Group Exact
Accounts payable 73,147,036.86 104,433,713.52
Transmission Bearing Co., Ltd
Dalian Wazhou Jinzhou
Accounts payable 18,007,755.48 16,305,773.72
Machinery Co., Ltd
85
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Dalian WazhouFengyuan
Accounts payable 10,024,155.08 27,241,707.14
Machinery Co., Ltd
Wazhou Group Equipment
Accounts payable 12,482,589.73 3,829,959.81
Technology Project Co., Ltd.
Wafangdian Tongda Bearing
Accounts payable 27,932,114.26 -
Manufacturing Co., Ltd.
Wazhou Group (USA) Bearing
Accounts payable 484,765.77 -
CO., Ltd
Wazhou Group Special Precision
Accounts payable 395,708.76 -
Bearing Co., Ltd
Dalian GONA Wazhou Auto
Accounts payable 17,871,582.98
Bearings Co., Ltd
Other payables Wazhou Group 21,234,927.86 36,820,099.09
Dalian Wazhou Bearing
Other payables Manufacturing 358,588.45 286,088.45
Equipment Co., Ltd
Wazhou Group Equipment
Other payables 952,000.00 952,000.00
Technology Project Co., Ltd.
Wazhou Group (USA) Bearing
Other payables 37,444.44 -
CO., Ltd
XII. Share-Based Payment
There is no share-based payment occurred in the report period.
XIII. Contingency
As at 31 December 2015, the Group does not have any other contingencies for disclosure.
XIV.Commitment
As at 31 December 2015, the Group does not have any other significant commitments.
XV. Events after the Balance Sheet Date
1. Financing after the balance sheet date
The Company’s the asset debt ratio is 55.22%, liquidity ratio is 1.21, and net current asset
is 0.403 billion Yuan, solvency indicator is good and the Company still has good financing
86
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
capability. The Company borrowed 0.285 billion Yuan from banks during the first quarter
in 2016.
.
2. Sales of assets and liability
On January 14, 2016, the Company held the first provisional board directors meeting, and
planned to sign the ‘selling assets agreement’ with Wafangdian Bearing Co., Ltd. The Company
planned to use January 31, 2016 as the asset valuation date, after valuation, the Company sells
the assets and liability, which involved by auto transfer case bearing as a whole to the Group
and also transfer the personnel in relation to underlying the assets. Assets being sold include
equipments and machinery, construction in progress and inventories etc.
Except matters mentioned above, up to the audit report date, there are no other significant post
balance sheet events for disclosure.
XVI. Other Significant Events
1. Debt restructuring
In 2015, the Company has signed the ‘Debt Restructuring Agreement’ with the customers,
through cash reimbursement less than the debt carrying value, and implemented the
restructuring, which results in the debt restructuring losses of RMB 381,595.11Yuan, and
were recognized as non-operating expenses.
In 2015, the Company has signed the ‘Debt Restructuring Agreement’ with the creditors,
through cash or bank notes reimbursement less than the debt carrying value, and
implemented the restructuring, which results in the debt restructuring income RMB
32,454,287.65 Yuan and were recognized as non-operating revenue.
XVII. Notes to the Main Items of the Financial Statements of Parent Company
1. Accounts receivable
(1) Accounts receivable category
Closing Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
Accounts
7,718,274.69 0.71 7,718,274.69 100.00 -
receivable with
87
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
significant
individual
amount and
separate bad debt
provision
Accounts
receivable with
bad debt
provision based 971,471,437.76 88.76 44,006,790.85 4.53 927,464,646.91
on the characters
of credit risk
portfolio
Related party 93,169,136.63 8.51 - - 93,169,136.63
Risk-free
portfolio - - - - -
Accounts
receivable with
insignificant
individual 22,131,211.74 2.02 22,131,211.74 100.00 -
amount and
separate bad debt
provision
Total 1,094,490,060.82 100.00 73,856,277.28 - 1,020,633,783.54
(Continued)
Opening Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
Accounts
receivable
with 3,910,007.43 0.33 3,910,007.43 100.00 -
significant
individual
88
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Opening Balance
Item Booking balance Provision
Booking balance
Amount % Amount %
amount and
separate bad
debt
provision
Accounts
receivable
with bad debt
provision
1,109,359,402.98 94.68 47,135,177.04 4.00 1,062,224,225.94
based on the
characters of
credit risk
portfolio
Related party 44,098,306.15 3.76 - - 44,098,306.15
Risk-free
portfolio - - - - -
Accounts
receivable
with
insignificant
individual 14,393,660.23 1.23 14,393,660.23 100.00 -
amount and
separate bad
debt
provision
Total 1,171,761,376.79 100.00 65,438,844.70 - 1,106,322,532.09
1) Significant individual amounts of accounts receivable the bad debt provision separately
accrued at the end of 2015
Closing Balance
Debtors
Accounts Provision for Proportion
name Reasons for provision
receivable bad debts (%)
Company A 3,910,007.43 3,910,007.43 100.00 A/R with over 5 years
89
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
Closing Balance
Debtors
Accounts Provision for Proportion
name Reasons for provision
receivable bad debts (%)
aging, unlikely to be
collected
A/R with over 5 years
Company B 3,808,267.26 3,808,267.26 100.00 aging, unlikely to be
collected
Total 7,718,274.69 7,718,274.69 —— —
2) Accounts receivable in the portfolio as the bad debt provisions accrued under accounting
aging analysis method
Closing Balance
Aging Provision for bad Proportion
Accounts receivable
debts (%)
Within 1 year 759,735,442.44 7,597,354.43 1.00
1-2 years 121,953,909.43 6,097,695.47 5.00
2-3 years 48,597,673.33 9,719,534.67 20.00
Over 3 years 41,184,412.56 20,592,206.28 50.00
Total 971,471,437.76 44,006,790.85 -
(2) Bad debt provision accrued and reversed (withdraw)
The bad debt provision has been accrued in the amount 8,524,799.39 Yuan and been written
off in the amount of 107,366.81 元, during the report period no bad debt provision is reversed
or withdrawn.
(3) Accounts receivable written off in current period
Item Written-off Amount
Accounts receivable written off 107,366.81
(4) The top five significant accounts receivable categorized by debtors
90
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
The total amount of top five significant accounts receivable categorized by debtors is
196,451,103.33 Yuan, representing 17.95% of the closing balance of accounts receivable. The
bad debt provision is accrued accordingly in the amount of 3,009,518.73 Yuan.
2. Other receivables
(1) The category of other receivables
Closing Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with
significant individual
- - - - -
amount and separate bad
debt provision
Other receivables with bad
debt provision based on the
15,851,523.01 71.31 1,037,522.18 7.85 12,186,808.81
characters of credit risk
portfolio
Related party 1,139,009.84 5.12 - - 1,139,009.84
Risk-free portfolio 3,726,684.67 16.77% - - 6,353,876.69
Other receivables with
insignificant individual
1,512,562.13 6.80 1,512,562.13 100.00 -
amount and separate bad
debt provision
Total 22,229,779.65 100.00 2,550,084.31 - 19,679,695.34
(Continued)
Opening Balance
Items Booking balance Provision Booking
Amount % Amount % balance
Other receivables with
significant individual
- - - - -
amount and separate
bad debt provision
Other receivables with
12,056,730.54 71.21 1,269,642.75 10.53 10,787,087.79
bad debt provision
91
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
based on the characters
of credit risk portfolio
Related party - - - - -
Risk-free portfolio 4,874,336.51 28.79 - - 4,874,336.51
Other receivables with
insignificant individual
- - - - -
amount and separate
bad debt provision
Total 16,931,067.05 100.00 1,269,642.75 - 15,661,424.30
1) Other receivables in the portfolio with the bad debt provisions as accounting aging
analysis method
Closing Balance
Aging Provision for Proportion
Other receivables
bad debts (%)
Within 1 year 13,065,383.82 130,653.84 1.00
1-2 years 856,616.46 42,830.82 5.00
2-3 years 335,746.14 67,149.23 20.00
Over 3 years 1,593,776.59 796,888.29 50.00
Total 15,851,523.01 1,037,522.18 -
(2) Bad debt provision accrued and reversed
The bad debt provision has been provided in the amount 1,280,441.56 Yuan during the report
period and no bad debt provision is reversed or withdrawn.
(3) Other receivables categorized by nature
Nature Closing Balance Opening Balance
Security deposit 3,607,765.95 1,670,769.50
Deposit 461,163.01 727,403.72
Individual petty cash 1,122,983.35 3,910,278.09
Others 17,037,867.34 10,622,615.74
Total 22,229,779.65 16,931,067.05
92
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
(4) Other receivables from the top 5 debtors
Closing
Closing % of the
Name Category Aging Balance of
Balance total OR
Provision
Insurance within 1
Company A 5,016,153.85 22.57 50,161.54
compensation year
within 1
Company B Electric bill 3,726,684.67 16.76 -
year
within 1
Company C Bid deposit 1,854,996.25 8.34 18,549.96
year
within 1
Company D Labor charge 1,139,009.84 5.12 -
year
Prepayment of within 1
Company E 319,694.17 1.44 3,196.94
materials year
Total 12,056,538.78 —— —— 71,908.44
93
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
3. Long-term equity investments
(1) Category of long-term equity investments
Closing Balance Opening Balance
Item
Closing Balance Provision Book Value Opening Balance Provision Book Value
Investment into
211,583,897.67 - 211,583,897.67 211,583,897.67 211,583,897.67
subsidiaries
Investment into associates - - - - -
Total 211,583,897.67 - 211,583,897.67 211,583,897.67 - 211,583,897.67
(2) Investments into subsidiaries
Opening Provision in Closing Balance
Subsidiaries names Increase Decrease Closing Balance
Balance current period of provision
Wazhou Liaoyang Bearing
17,337,259.95 - - 17,337,259.95
construction Co.,Ltd
Dalian Wazhou Precision Motor Car
45,478,956.37 - - 45,478,956.37
Bearing Company Limited
Wazhou Precision of Spherical Roller
148,767,681.35 - - 148,767,681.35
Bearings(Wafangdian)Co., Ltd
Total 211,583,897.67 211,583,897.67
94
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
4. Operating revenue and cost
Item 2015 2014
Revenue Cost Revenue Cost
Revenue
from main 2,155,351,753.13 1,963,925,859.18 2,639,675,681.68 2,460,934,438.76
operation
Revenue
from other 228,089,553.44 208,343,310.30 376,537,715.68 321,421,071.71
operation
Total 2,383,441,306.57 2,172,269,169.48 3,016,213,397.36 2,782,355,510.47
(1) Principle operation - classified according to Industries
2015 2014
Industries
Sales revenue Cost of sales Sales revenue Cost of sales
Export
353,230,102.39 285,923,237.04 275,162,393.89
321,347,866.66
Domestic 1,688,266,252.80 1,515,079,588.39 2,249,304,340.05 2,066,687,794.59
Including:
Transportation 556,417,955.42 496,110,751.32 966,465,387.04 882,656,346.90
vehicle bearings
Special use
595,546,617.11 566,838,486.10 580,622,061.86 569,127,159.48
bearings
General use
bearings 536,301,680.27 702,216,891.15 614,904,288.21
452,130,350.97
Industrial
113,855,397.94 104,448,104.59 119,084,250.28
Operations 127,498,404.13
Total 2,155,351,753.13 1,963,925,859.18 2,639,675,681.68 2,460,934,438.76
5. Investment income
Items 2015 2014
Income from long-term equity investments
4,033,452.23
under equity method
Income from disposal long-term share -
95
Wafangdian Bearing Co., Ltd
Notes to financial statements for the year ended December 31, 2015
(The currency is in RMB Yuan except otherwise indicated)
(English translation for reference only)
equity investments
Income occurred since the change of value
when holding financial assets investments -
measured by fair value
Income from disposal financial assets
-
investments measured by fair value
Income from holding the held-to-maturity
-
assets
Income from the available-for-sale financial
240,000.00 240,000.00
assets held
Income from disposal of available-for-sale
-
financial assets
Income from the recalculation of remain
equity capital measured by fair value when -
losing control right
Income from long-term equity investments
-
under cost method
Total 240,000.00 4,273,452.23
XVIII.Approval of Financial Statements
The parent and consolidated financial statements of the Company were approved by the Board
of Directors of the Group on April 22, 2016.
96
Wafangdian Bearing Co., Ltd（Wazhou B） 2014 Audited Report
Supplementary Information to the Financial Statements
1. Non-operating profit or loss
Based on No.1 on Non-operating Profit or Loss (2008) of Explanation and Announcement of Information
Disclosure and Presentation Rules for Companies Making Public Offering issued by China Securities
Regulatory Commission, the Group’s Non-operating profit or loss in 2015 is as follows:
Items 2015 Notes
Gain or loss from disposal of non-current assets 1,299,449.10 See note 40. 41.
Government grants recorded into profit or loss during
4,867,966.82 See note 40.
current period
Gains from acquisition of subsidiary or associates when
-
initial cost less than the fair value of invested company
Profit or loss from debts restructuring 32,072,692.54 See note 40. 41.
Others non-operating revenue and expense besides the
1,760,549.53 See note 40. 41.
above items
Other profit or loss
Subtotal 40,000,657.99
Effect on income tax 6,933,993.73
Total 33,066,664.26
2. Return on equity and earnings per share
Pursuant to Information Disclosure and Presentation Rules for Companies Making Public Offering No.9
computation and disclosure of Return on net assets and earnings per share (revised in 2010) issued by
China Securities Regulatory Commission, the weighted average return on net assets, basic earnings per
share and diluted earnings per share of the Group for the financial year of 2015 are as follows:
Weighted average Earnings per share (EPS)
Profit of report period return on net Basic Diluted EPS
assets (%) EPS
Net profit attributable to shareholders of parent company -2.45% -0.0829 -0.0829
Net profit after deducting non-recurring gains and losses
-4.87% -0.1650 -0.1650
attributable to shareholders of parent company
Wafangdian Bearing Co., Ltd
April 22, 2016
97
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