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Short title:WaZhou B Code: 200706 No.: 2016-14

Wafangdian Bearing Company Limited

Progress of Related Transaction of Assets Sale

The company, the whole members of the board of directors and top managements ensured

the truth, accuracy, completeness, no false record, misleading statement and fatal omit of the

announcement.

The "proposal of related transaction and peeling of bearings entirety for auto transfer case" was

deliberated and approved by the first extraordinary meeting of the board for 2016 held on 14 Jan. 2016,

and released the Notice on Related Transaction of Assets Sale of Wafangdian Bearing Co., Ltd.

(Found more in Resolution of First Extraordinary Meeting of the Board for 2016 and Notice on Related

Transaction of Assets Sale of Wafangdian Bearing Co., Ltd. Published in Securities Journal, Hong

Kong Commercial Daily and Juchao Website dated 16 Jan. 2016). Progresses are:

I. Audit and assessment

In accordance with the rules of State-owned Assets Supervision and Administration Commission of the

Government of Dalian, the audit authority (Shine Wing CPA) with securities and futures business

practice qualification and assessment authority (Beijing CEA) are appointed by the procedures for

assets auditing and assessment. On base of the auditing from Shine Wing CPA, Beijing CEA carried

out an "Appraisal Report of Auto Bearing Business Transfer and Related Net Assets for Wafangdian

Bearing Co., Ltd. and its Wholly-owned Subsidiary - Wazhou Liaoyang Bearing Manufacturing Co.,

Ltd"(CEA PBZi[2016] No.370)

Main assessment as:

(1) Valuation date: 31 January 2016

(2) Types of value: market value

(3) Appraisal procedure: asset-based approach

(4) Summary sheet of valuation

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Short title:WaZhou B Code: 200706 No.: 2016-14

Summary Sheet of Assets Valuation

In 10 thousand Yuan

Book value Appraisal value +/- Value-added ratio (%)

Share subtotal Share subtotal Share subtotal Share subtotal

Item HQ Auto branch Liaozhou Company Total HQ Auto branch Liaozhou Company Liaozhou Company Liaozhou Company

Total Total Total

A B C=A+B D E=C+D F G H=F+G I G=H+I K=H-C L=I-D M=K+L N=K/C*100 O=L/D*100 P=M/E*100

Current assets 1 252.16 1050.75 1302.91 935.87 2238.78 252.16 1022.38 1274.55 919.28 2193.83 -28.36 -16.58 -44.94 -2.18 -1.77 -2.01

Non-current assets 2 6528.95 2357.29 8886.24 48.32 8934.56 6869.31 2470.97 9340.28 57.94 9398.22 454.04 9.62 463.66 5.11 19.91 5.19

Long-term equity investment 3

Investment real estate 4

Fixed assets 5 4490.39 2357.29 6847.68 48.32 6896.00 4786.41 2470.97 7257.38 57.94 7315.33 409.70 9.62 419.32 5.98 19.91 6.08

Construction in process 6 2038.56 2038.56 2038.56 2082.90 2082.90 2082.90 44.34 0.00 44.34 2.18 2.18

Oil/gas assets 7

Intangible assets 8

Including: land use right 9

Other assets 10

Total assets 11 6781.11 3408.03 10189.15 984.19 11173.34 7121.47 3493.35 10614.82 977.23 11592.05 425.68 -6.96 418.72 4.18 -0.71 3.75

Current liability 12 7880.77 1236.04 9116.81 1380.95 10497.75 7880.77 1236.04 9116.81 1380.95 10497.75 0.00 0.00 0.00 0.00 0.00 0.00

Non-current liability 13

Total liability 14 7880.77 1236.04 9116.81 1380.95 10497.75 7880.77 1236.04 9116.81 1380.95 10497.75 0.00 0.00 0.00 0.00 0.00 0.00

Net assets 15 -1099.66 2172.00 1072.34 -396.75 675.58 -759.30 2257.32 1498.02 -403.72 1094.30 425.68 -6.96 418.72 39.70 -1.75 61.98

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Short title:WaZhou B Code: 200706 No.: 2016-14

Found more auditing and appraisal report in "Juchao Website"

II. Underlying asset

1. History

The divestitures are part of the Company and Auto Branch, the auto bearing business of the

wholly-owned subsidiary (Wazhou Liaoyang Bearing Manufacturing Co., Ltd) and related part of the

assets, liabilities and employees.

The high-end bearing businesses had showed consecutive losses in recent years, and have a strong

impact on business performance of the Company, the market competition came more and more fierce

without making up the deficits in short terms, and take actual condition into account, the Company plan

to strip the abovementioned assets, liability, employee and business.

According to the audit from Shine Wing CPA, the profit of auto bearing business, plans to transfer from

the Company (including headquarter and auto branch) and wholly-owned subsidiary (Wazhou

Liaoyang Bearing Manufacturing Co., Ltd) on valuation date and previous three years are:

Profit statement on valuation date and previous three years

In RMB

Item 2013 2014 2015 Jan. 2016

I. Operation revenue 6385424.03 27589171.18 120067541.46 12352822.64

Less: operation cost 8842429.34 34128675.65 131735922.31 12737848.63

Business tax and surcharge 22029.76 119264.49 332491.41 25288.57

Operation expenses 0.00 0.00 173887.38 48968.47

Administration expenses 17319.31 61408.33 666359.37 84684.76

Financial expenses 712.24 978.63 799.78 75.56

II. Operation profit -2497066.62 -6721155.92 -12841918.79 -544043.35

Add: non-business revenue 0.00 0.00 0.00 0.00

Less:non-business expenditure 0.00 916.54 0.00 0.00

III. Total profit -2497066.62 -6722072.46 -12841918.79 -544043.35

Less: income tax 0.00 0.00 0.00 0.00

IV. Net profit -2497066.62 -6722072.46 -12841918.79 -544043.35

2. The credit and debt involved in divestiture is part of the normal operation results, and operates in

line with the management of internal control of the Company. As for the debts transfer, creditors are

recognized before the board meeting.

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Short title:WaZhou B Code: 200706 No.: 2016-14

III. Other

1. After assets transfer, Wazhou Group will lease the lands and houses of the Company.

Name Area £¨©O£© Rent price per unit£¨RMB/©O£© Total rental£¨RMB£© Pricing principle

Reference to similar

Lands 17550 9 157950

business of the Company

Houses 12900 120 1548000 and market price

The related transactions will conform to the standard by two parties, and included in the routine related

transaction for management.

2. The proposal needs a deliberation and approval from shareholders meeting

3. The two parties will enter into Assets Transfer Agreement, the assets delivery officially in 10 working

days after the Agreement come into force, and the Agreement activated after approved by the

shareholders meeting.

4. Reasons of selling the assets to the first majority shareholder of the Company instead of the third

party

(1) The assets sale by the Company excludes houses and buildings, as for other assets such as

equipment, are transfer objectively and impartially in line with auditing and appraisal results without

interest of the listed company are been damaged.

(2) The Company and Wazhou Group are consider as the state holding enterprise, and have the same

actual controller- State-owned Assets Supervision and Administration Commission of the Government

of Dalian. On way of transfer, such as assets and employee placement, the approval procedures are

easy to operate relatively; recognition for the assets audit appraisal results is relatively simplified.

VII. Documents available for reference

1. Resolution of the board meeting of Wafangdian Bearing Co., Ltd.;

2. Independent opinion;

3. Prior approval from independent director;

4. Audit report;

5. Appraisal report

Hereby notify

Board of Director of

Wafangdian Bearing Co., Ltd.

25 April 2016

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