Wafangdian Bearing Company Limited
Midyear Report of 2009
(Report period：Jan. 1 ,2009－Jun. 30, 2009)
Chairman（Signature）：
August 20, 2008Wafangdian Bearing Company Ltd. 2009-6-30
2
Index
Ⅰ Important notice Page 2
Ⅱ Brief introduction of the Company
Page 3~4
Ⅲ Change of capital Stock and the stocks holding by the major shareholders
Page 4-6
Ⅳ Status of directors, supervisors and top managers
Page 6-7
Ⅴ Discussion and analysis of the management
Page 7~10
Ⅵ Important events
Page 10-15
Ⅶ Financial statement
Page 15-52
Ⅸ Reference documents
Page 52Wafangdian Bearing Company Ltd. 2009-6-30
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Wafangdian Bearing Company Ltd.
Midyear Report of 2009
Section 1. Important notice
The board of directors, the supervisory committee, the director, the supervisor and the top management
guaranteed no false record, false statement of misleading data or major omission in the report, and took
associated responsibilities of the truth, accuracy and completeness.
All the Directors presented to the board meeting.
This midyear financial report was not audited.
Chairman Mr. Wang Lushun, finance controller Mr. Zhang Xinghai and financial charger Ms. Yao Chunjuan
guaranteed the truth, completeness of the financial report in the midyear report.Wafangdian Bearing Company Ltd. 2009-6-30
4
Section 2. Brief introduction of the Company
Ⅰ Brief introduction of the Company
1. Chinese name of the Company: 瓦房店轴承股份有限公司
Abbreviation of Chinese name: 瓦轴股份公司
English name of the Company: Wafangdian Bearing Company Limited
Abbreviation of English name: WBC
2. Legal representative of the Company: Wang Lushun
3. Secretary of the Board of Directors of the Company: Zhang Xinghai
Authorized Stock and Security Affairs Representative: Su Shaoli
Correspondence address: No. 1 Beigongji Street, Wafangdian City, Liaoning
Province, China.
Consulting telephone: 0411-85509888 ext. 3373
Fax: 0411-85500794
E-mail: zwz2308＠126.com
4. Registered address: No. 1 Beigongji Street, Wafangdian City, Liaoning Province, China
Office address of the Company: No. 1 Beigongji Street, Wafangdian City, Liaoning Province, China
Post code: 116300
International net address: http//www.zwz-bearing.com
E-mail address: zwz2308@126.com
5. The Company chose Securities Times, Hong Kong Commercial Newspaper, and Wen Wei Po for disclosure of
information of the Company
International net address for disclosure: http//www.cninfo.com.cn
Preparation and liaison office of this report: Investment and Securities Department of the Company
6. Listing location of the Company’s stock:: Shenzhen Stock Exchange
Abbreviated name of the stock: Wazhou B
Stock code: 200806
7. Other relative information
1). The originally registered date of the company was March 20, 1997
The originally registered location of the company was: No. 1, Section 1, Beigongji Street, Wafangdian City,
Liaoning Province, China
2). Business license registration No. of the entity: 大工商企法字6-14522102001101996
3).Tax registration No. of the company: 国税大字2102812242399712
4). Certified public accountants engaged by the company and its address:
Shine wing Certified Public Accountants: Floor 9 of A section of FuHua mantion ,No. 8 ,north street of ChaoYang
door ,Dong Cheng area ,Bei Jing .Wafangdian Bearing Company Ltd. 2009-6-30
5
ⅡAbstract of accounting data and business data
1.Main financial indexes
Unit: RMB Yuan
At the end of current
period
At the end of
previous period
+/-（％）comparing with the
previous period
Total assets 2,872,055,101.90 2,869,772,017.86 0.08%
Owner’s equity 1,356,093,373.94 1,300,780,197.09 4.25%
Share capital 402,600,000.00 402,600,000.00 0.00%
Net asset on per share 3.37 3.23 4.33%
2009.01.01-.06.30 2008.01.01-06.30 +/-（％）comparing with the
previous period
Total operating revenue 1,112,240,287.20 1,577,028,157.89 -29.47%
Operating profits 57,336,986.22 113,435,911.28 -49.45%
Total proft 61,038,732.35 110,910,907.46 -44.97%
Net profits attribute to the shareholder 55,313,176.85 94,151,413.47 -41.25%
Net profits with abnormal profits and losses
deducted 51,611,430.72 96,676,417.29 -46.61%
Basic gains on per share 0.14 0.23 -39.13%
Diluted gains on per share 0.14 0.23 -39.13%
Net returns on assets 4.08% 7.55% -3.47%
Net cash flow from the operation activities 58,758,348.64 76,090,861.44 -22.78%
Net cash flow from the operation activities on
per share 0.15 0.19 -21.05%
* Note 1: the deducted abnormal profits and losses
Unit: RMB Yuan
The item of the abnormal profits and losses Amount
Profits and losses relating to disposal of fixed assets 273,757.20
Other non-operating incomes and expenses with the provisions for
impairment of assets depreciation deducted according to the
enterprises’ routine accounting system
1,086,265.21
Profits and losses relating to the debt restructure 2,341,723.72
Total 3,701,746.13
* Note2: The calculation methods of main financial indexes:
Earnings per share = Net Profit/total amount of the ordinary shares at the end of the report period
Net assets per share = Shareholder’s equities at the end of the report period/ Numbers of the total ordinary
shares at the end of the report period
The net returns on assets = Net profit/total shareholder’s equities at the end of the year.
Section 3. The change of capital stock and stocks holding
by major shareholders
(Ⅰ) Explanation of the total shares and changes of share structure in report period:
In the report period, there was no change either in the total shares or in the share structure due to allocation of
gift shares, transferred capital stock, allotment of shares and new issues.Wafangdian Bearing Company Ltd. 2009-6-30
6
(Ⅱ) The number of the total shareholders at the end of the report period:
At the end of the report period, there are 10,108 registered shareholders, including 1 state-owned shareholder
and 10,107public shareholders.
(III) The introduction to the main shareholders:
1. The particulars of the top 10 shareholders:
The top 10 main shareholders and top 10 current shareholders registered prior to June 30, 2009
Unite : shares
Total shareholders 10,108
Top ten shareholders’ status
Name Nature Proportio
n Total shares Non-circulatio
n shares
Impawned and
frozen shares
Wang Fangdian Bearing Group
Corporation
State-owned
shareholder 60.61% 244,000,000 244,000,000 None
AKTIEBOLAGET SKF Foreign
shareholder 19.70% 79,300,000 0 Unknown
USB WARBURG CUSTODY
PET LTD.瑞士银行
Foreign
shareholder 0.36% 1,457,976 0 Unknown
Huang Junyue Domestic
shareholder 0.35% 1,390,000 0 Unknown
Merchant securities Hong Kong
Company
Domestic
private
shareholder
0.27% 1,102,122 0 Unknown
CREDIT SUISSE (HONG
KONG )LIMITED
Domestic
private
shareholder
0.25% 1,000,103 0 Unknown
BGL S.A. Domestic
private
shareholder
0.23% 926,408 0 Unknown
GUOTAI JUNAN
SECURITIES(HONGKONG)
LIMITED
Domestic
private
shareholder
0.20% 789,735 0 Unknown
MAN,KWAI WING 文贵荣 Domestic
shareholder 0.17% 703,101 0 Unknown
Xie Qingjun Domestic
shareholder 0.17% 684,523 0 Unknown
the top 10 current shareholders
Name Amount Type
AKTIEBOLAGET SKF 79,300,000 B
USB WARBURG CUSTODY PET LTD.
瑞士银行 1,457,976 B
Huang Junyue 1,390,000 B
Merchant securities Hong Kong
Company 1,102,122 B
CREDIT SUISSE (HONG
KONG )LIMITED 1,000,103 B
BGL S.A. 926,408 B
GUOTAI JUNAN
SECURITIES(HONGKONG) LIMITED 789,735 BWafangdian Bearing Company Ltd. 2009-6-30
7
MAN,KWAI WING 文贵荣 703,101 B
Xie Qingjun 684,523 B
Yang Guoxi 576,377 B
The explanation on the relationship
and consistent activities between
above shareholders
There is no relationship and consistent activities between the first big shareholder
and the top ten current shareholders in the major ten shareholders of the company,
The relationship among other shareholders, top ten current shareholders, top ten
current shareholders and other shareholders is not clear.
Note: In the report period, the frozen period of the shares purchased by the company’s strategic investor
AKTIEBOLAGET SK expired in 1999, and has not dealt with the releasing-procedure in this report period.
2. Introduction to shareholdings of the top ten shareholders
(1) Wafangdian Bearing Group Corporation Limited (hereinafter referred to as WBGC, the parent company
of the Company) holds 244 million shares of the Company, taking up 60.61% of the total shares.
(2) AKTIEBOLAGET SKF holds 79.3 million shares of the Company, which account for 19.70% of the total
shares.
(3) There is no change for the shareholders during the current period.
Section 4. The information of the directors, supervisors
and top managers
(Ⅰ) The changes of the shares held by the directors, supervisors and top managers:
No directors, supervisors or top managers have ever held the Company’s shares during the report period.
(Ⅱ) Appointment and removal of the directors, supervisors and top managers:
In the report period, there was new appointment, but no removal of the directors, supervisors and top managers.
The Directors and Supervisors and top management now in the post are as follows:
Name Position Sex age term
Shares
Holding in the
beginning of
year
shares Holding
at the end of
year
+/-
,reason
Wang Lushun Chairman Male 58 2009.8-2012.8 0 0 0
Cong Hong Vice-Chairman Male 50 2009.8-2012.8 0 0 0
Shao Yang Director, GM Male 42 2009.8-2012.8 0 0 0
Zhang Xinghai Director, chief account,
Secretary of BOD Male 40 2009.8-2012.8 0 0 0
Su Shaoli Director Male 57 2009.8-2012.8 0 0 0
Sun Najuan Director Female 40 2009.8-2012.8 0 0 0Wafangdian Bearing Company Ltd. 2009-6-30
8
Magnus
Johansson Director Male 53 2009.8-2012.8 0 0 0
Fang Bo Director Female 37 2009.8-2012.8 0 0 0
Zhang Qiluan Independent director Male 52 2009.8-2012.8 0 0 0
Wang Keyi Independent director Male 65 2009.8-2012.8 0 0 0
Liu Yuping Independent director Male 53 2009.8-2012.8 0 0 0
Sun Maolin Supervisor Male 45 2009.8-2012.8 0 0 0
Qu Rongjun Supervisor Male 54 2009.8-2012.8 0 0 0
Chen Jiajun Supervisor Male 41 2009.8-2012.8 0 0 0
Wang Longjie Supervisor (staff
representative) Male 47 2009.8-2012.8 0 0 0
Yao Chunjuan Supervisor (staff
representative) Female 43 2009.8-2012.8 0 0 0
Gao Yongyang Vice-GM Male 55 2009.8-2012.8 0 0 0
Meng Wei Vice-GM Male 40 2009.8-2012.8 0 0 0
Section 5. Work report of BOD
(Ⅰ) The summary of the business in the current period:
1.The discussion and analysis on the operation situation in the current period
In the report period, under the background of global economic crisis, the world real economy is slump, and the
market, company operation and development are all in a hazard and complex situation. Led by scientific outlook on
development, and take widening market, structure adjustment and guarantee increase” as primary work, the company
actively adjusted the market and product structure; adjusted the marketing system and widen the distribution channel;
conducted the resources-efficient action in all round way, reducing the cost to seek development in the crisis.
Pushing forward the technique reform on the bearings matched for major technique equipment, overall strength of the
company has been further enhanced. While affected by the export, and because the transportation kind bearing
market has changed obviously, the main operation incomes and operation profit are to some extent declining.
In the first half-year of 2009, the company’s operating incomes reached up to 900,400,000RMByuan with an
decrease by 30.5% comparing with the previous period; the operating profits reached up to 57,336,000 RMByuan with
an decrease by 49.45% comparing with the previous period; the net profits reached up to 54,958,000RMByuan with an
decrease by 41.69% comparing with the previous period .
2. Business scope and operation situation of the Company:
The business scope of company is sales of bearings, machinery, automobile auxiliaries and relative products,
rent of building and machinery; inspection of bearings, related machinery and Metrologic instruments. The company
has become a modernized enterprise system integrating the production, supply and sales.Wafangdian Bearing Company Ltd. 2009-6-30
9
3. The company and the subsidiaries’ main business calculated by region
The company and its subsidiaries’ main business calculated by region is shown in annotation 6.4 (main business)
of the Financial Report.
4. The main business of the company and its subsidiaries according to industry and product
Unit: RMB’0000 Yuan
The information on the main business according to industry
Items
Main
business
income
Main
business
cost
Main
business
Profit ratio
Increase/
Decrease
of the main
business
income (%)
Increase/
Decrease of
main business
cost (%)
Increase/
Decrease of
main
business
profit ratio
(%)
Export 5,595.15 4,835.16 13.58% -59.43% -63.41% 9.40%
Domestic 81,385.87 67,294.30 17.31% -24.71% -21.98% -2.90%
Including: Transit
bearing 33,368.21 30,955.38 7.23% -23.55% -21.10% -2.88%
Special-used bearing 17,904.90 12,112.97 32.35% -22.13% -21.39% -0.63%
General –used bearing 30,112.77 24,225.95 19.55% -27.34% -23.35% -4.20%
The information on the main business according to product
Bearings 86,981.03 72,129.46 17.07% -28.63% -27.48% -1.32%
Components 3,059.14 2,221.85 27.37% -59.88% -64.91% 10.42%
5. Introduction to the joint holding company whose investment gains can occupy over 10% of net profits
of the company:
Unit: RMB Yuan
Name of joint stock company Dalian SKF Wazhou Co., Ltd.
Investment gains from the participating interest
company in the report period 2,543,309.735
Proportion occupying the net
profit of the listed company 4.59%
Participating Business scope Produce and sell the spherical roller bearings
company Net profits 5,190,428.03
6. The problems and difficulties in operation
Under the background of global economic crisis, the world real economy is slump, and the market, companyWafangdian Bearing Company Ltd. 2009-6-30
10
operation and development are all in a hazard and complex situation. Details are as follows: (1) the demand of the
bearing market is declining, so are the orders. (2) The export products are affected, which strongly affected the main
business, causing the A/R on the increase and the company’s capital stress. (3) The competitors of the home and
aboard expand the investment and reduce the price, causing the structural surplus of the product and fiercely
competition.
Facing the problems and difficulties, the company takes following measures:
(1) Focusing on the key customers, the company adjusts market structure and expand the market quickly; (2)
Implement the “hawk-hunting plan” in all round way, pushing the market by products; (3) Expand the export proportion
and main-channel market; (4) Push forward the value-added service system construction, and serve the market
roundly; (5) Push forward the reform of production method, conduct the process control and achieve the balance of
production and sales; (6) Conduct “excellent project”, improving the product quality.(7) Implement the overall budget
management, expand the resources and save expenses, explore the internal potential, and reduce cost. Thus,
improve the economic operation quality roundly and guarantee the operation quality in the next half–year get good
result.
(Ⅱ)Investment of the Company in the report period:
1. Application of the B share fund:
The company had no raising, and no previous B share continued using in current period.
2. The circumstance of using with non-share funds and Gain from investment:
Up to the first half-year of 2009, the company raised 5299 RMB’0000 Yuan by itself for technique improvements,
including: Dalian Branch factory, Big-size bearing factory, cage factory, Automobile bearing factory and other upgrade
reform projects. The information refers to the following table.
3. Application of non-B-share fund item:
Capital
Items Details Total
investment
The
investment in
1st half of year
Process Gains
Workshop construction 2800 2289 2009.09
The new
constructed
workshop has
completed
Auxiliary equipment 1200 0 2009.10
The auxiliary
equipments
prepare for being
used in July and
August.
Process equipment 2900 374 2009.11
The new additional
equipments
prepare for being
used in August and
September
Dalian Branch
factory reform
Reform and removal out-dated
equipment 980 0 2009.11
The reforming is on
the way and begin
remove in
September.Wafangdian Bearing Company Ltd. 2009-6-30
11
Big sized
bearing reform
Heat treatment additional capability/
reforming the rough grinding to hard
turning
1500 754 2009.12 In manufacturing
Cage reform Matched cage reforming 500 389 2009.12
Some equipments
prepare to being
used and come into
production; other
equipments are in
manufacturing
Automobile
bearing factory
reform
Add the production capacity of the
2nd generation hub 240 193 2009.11 in manufacturing
Upgrade
reform
Equipment upgrading of main
products 2100 1300 2009.12
The main products
equipment
supplement and
upgrading
Grand total 12220 5299
(Ⅲ) Business achievements and financial situation analysis:
Unite: RMByuan
Item June 30, 2009 Dec. 31, 2008 Increase or decrease
(%)
Total assets 2,872,055,101.90 2,869,772,017.86 0.08
Owner’s equity 1,358,344,304.43 1,303,386,172.11 4.22
Item June 30, 2009 June 30, 2008 Increase or
decrease (%)
Operating revenue 1,112,240,287.20 1,577,028,157.89 -29.47
Operating cost 943,475,326.36 1,319,938,535.70 -28.52
Operating profits 57,336,986.22 113,435,911.28 -49.45
Net profit 54,958,132.32 94,255,448.75 -41.69
The net increment of cash and its
equivalents 24,720,348.90 22,309,966.97 10.80
Section 6 Important events
Ⅰ . Practical situation of corporation government
The Company followed the regulations of Company Law, Corporation Government Rules, the AOA, etc to
regulate its operations and perfect its corporation government step by step.
1. The holding of the shareholders, board of directors and board of supervisors, the voting procedures
and the formation of the resolutions were totally subject to these regulations.
2. The Company has made its interior management systems and regulations for restriction of budgeting,
purchasing, logistics and sale, etc, and executed them strictly.
3. The company has Separated business, personnel, assets, interior organization and finance from its
holding shareholder:Wafangdian Bearing Company Ltd. 2009-6-30
12
(1) The Company had independent operations itself, with its business separated from its holding shareholders;
(2)The Company was independent in terms of its personnel, labor and salary management, and had its own
independent labor and personnel management systems. Except the Chairman of Board of Directors of the parent
company Wafangdian Bearing Group Corporation who occupies as the Chairman of the Company, the General
Manager, Deputy-General Managers and the Finance Controller of the Company were all independent from the
controlling shareholder.
(3)The production system, auxiliary production system and supplementary facilities of the Company were
independent from the controlling shareholder.
(4)The Company has separated the accounting from the controlling shareholder. The Company carried out
independent finance and accounting on its own and paid taxes independently.
(5)The Company has established the organizations independent on the holding shareholder.
In the report period, the key control activities that the company controls the subsidiaries, associated transaction,
guaranteeing for other companies, important investment and information disclosure, all conforms to relative laws,
regulations, and requirements made by the supervisors. And no violation of “Interior control index” issued by Shen
Zhen Stock exchange and the regulations systems issued by the company circumstances occurred.
ⅡThe profit distribution plan of 2008 and reserves transferred to the capital plan
The statutory and free surplus public reserve is separately provided based on the tax-excluding net profits of
parent company with a proportion of 10% and 20%. Based on the total capital stock of 402,600,000shars at the end of
2008, 0.4RMB Yuan will be paid per 10 shares (including tax). Remain profits leave for the next year for another
arrangement. The profits distribution plan has approved by the 2008 annual Shareholders’ meeting. The company has
completed the dividend distribution on August 25. The B stock will not deduct the tax temporarily.
No capital public surplus transferred into capital stock in the report period.
Ⅲ In the report period, the Company was not involved in any material lawsuits or arbitration issues.
Ⅳ There is no significant asset purchase, sales, disposal and enterprise purchase issues in the report
period.
Ⅴ There are no other significant items in the report period.
Ⅵ Significant associated transactions in the report period:
1. The purchase of products(merchandise)or receipt of labor
Related parties Content Principle of
price Amount
Occupies by
the same
transactions
Settlement
Wafangdian Bearing Precision
Steel Ball Manufacturing Co.,
Ltd.（Precision Ball）
Components Market price 389 0.38 Pay by cash
Wafangdian Bearing Precision
Forging Co., Ltd.（Precision
Forging）
Components Market price 9,137 8.86 Pay by cash
Dalian WBGC Bearing
Equipment Manufacturing Co.,
Ltd.（Equipment Manufacturing）
Products Market price 749 0.73 Pay by cashWafangdian Bearing Company Ltd. 2009-6-30
13
Dalian SKF Wazhou Bearing Co.,
Ltd.(SKF Wazhou) Bearings Market price 6,436 6.24 Pay by cash
Managerial
expense
Market price 471 0.46 Pay by cash
Promotional
service
Market price - - Pay by cash
Technique
development
service
Market price
Trademark Market price 500 0.49 Pay by cash
Land and
housing lease
Market price 135 0.13 Pay by cash
Wafangdian Bearing Group
Corporation
Equipment Market price 162 0.16 Pay by cash
WBGC Slewing Bearing Co.,Ltd Bearing Market price 3,106 3.01 Pay by cash
WBGC transmission driving Bearing
Co.,Ltd
Bearing Market price 501 0.49 Pay by cash
2 The sale of products (merchandise)or supply of labor :
Related parties Content Principle of
price Amount
Occupies by
the same
transactions
Settlement
Materials Market
Wafangdian Bearing Precision price 365 1.30 Pay by cash
Steel Ball Manufacturing Co.,
Ltd.（Precision Ball） Heat treament Market
price 33 0.12 Pay by cash
Wafangdian Bearing Precision
Forging Co., Ltd.（Precision
Forging）
Materials Market price 12,429 44.17 Pay by cash
Dalian WBGC Bearing
Equipment Manufacturing Co.,
Ltd.（Equipment
Manufacturing）
Materials Market price 139 0.49 Pay by cash
Dalian SKF Wazhou Bearing Components Market price 2,106 7.48 Pay by cash
Co., Ltd.(SKF Wazhou)
Heat treament Market price 124 0.44 Pay by cash
Wafangdian Bearing Group
Corporation
Products Market price 69 0.25 Pay by cash
WBGC Slewing Bearing
Co.,Ltd
Materials Market price 5,902 20.97 Pay by cash
WBGC transmission driving
Bearing Co.,Ltd
Materials Market price 456 1.62 Pay by cashWafangdian Bearing Company Ltd. 2009-6-30
14
Ⅶ Significant contracts and the fulfillment
1. In the report period, the Information that the company entrusted, contracted and leased other
company’s assets or other company entrusted, contracted and leased the company’s assets
The company and the Wafangdian Precision forging and pressing Co., Ltd.signed the “lease of land use proporty
right”contract. The land covers 482, 20.82 square meters. The rent period is from Jan1, 2008 to Dec 31, 2009. The
lease fee is 385,766.56RMB in this period.
The company and the Wafangdian Precision forging and pressing Co., Ltd.signed the “lease of worshop proporty
right”contract. The land covers 8,249.00 square meters. The rent period is from Nov.1, 2008 to Oct. 31, 2009. The
lease fee is 261,012.00 RMB in the period.
Special Large Bearing Branch of the Company and Precision Bearing Branch of the Company were founded in
2007.Two branches rent the buildings of industrial park of Wazhou Group as the workshop. Pursuant to Lease
Contract signed with Wazhou Group on October 20, 2007, the rental period from January 1, 2007 to December 31,
2011, the rental for this year is RMB 4,335,500.00,
In the report period, Roller Branch and No. 2 Branch of the Company entered into a building lease contract with
Wazhou Group on January 20, 2008. The rental period from January 1, 2008 to December 31, 2012, the retal for the
year is 2,663,859.00.
The company has been renting the land, houses and workshops from the Wafangdian Bearing Group
Corporation, and using the trademark of ”ZWZ” for pay, and receiving the services of Security, fire-fighting,
propagandize and technology development.
2. Major items
The Company sells products with the trademark of “ZWZ” and pay for that fee. In the report period, the company
paid for the Wafangdian Bearing Group Corporation 5 million RMB accumulately.
3. In the report period, there are no major guarantee items.
4. In the report period, there are no major entrusted financing occurred.
Ⅷ Independent opinions of, and Special explanations on the related parties capital employment and
information of external guarantee issued by Independent directors.
1. The independent opinions regarding the capital employment by related parties
According to the regulations and stipulations of the Notice of Standardization of the Capital Relationship
Between The Listed Company And The Related Parties issued by the CSRC with the Zhengjianfa No.56(2003) and
the Notice of Standardization of The External Guarantee Of Listed Company with Zhengjianfa No.120(2005), As the
independent directors of Wa Fangdian Bearing Co.,Ltd(hereafter refers to as “the company), under the principle of
seeking truth from facts and being responsible for the company and the investors, we took a serious examination and
investigation to the situation of capital employment by holding shareholders and other related parties and the situation
of external guarantee. Following were our independent opinions:
The capital employment by the holding shareholder and other related parties did not occur.
2. The independent opinions regarding the external guarantee
In the report period, there is no external guarantee.Wafangdian Bearing Company Ltd. 2009-6-30
15
Signature of independent director: Mr.Liu Yuping, Mr. Zhang Qiluan, Mr. Wang Keyi
9. In the report period, neither the Company nor shareholders, directors, superviors and top
management made any commitment that may significantly influence on the operating performance and
financial position of the Company.
10. In the report period, the changing or dismissing of the certified public accountants.
In the report period the Company did not change or dismiss the certified public accountants. In 2009, the
Company decides to continuously employ Shine Wing Certified Public Accountants as the Certified Public Accountants,
with the annual expenses of 450,000RMB Yuan.
11. In the report period, neither did check, administration penalty or notifying criticism by CSRC occurred ,
board of directors of the company and the directors, nor publicly condemned by the Shenzhen Stock
Exchange.
12. The investigation, communication and interview, etc. in the report period
In the report period, the company communicated with the investor by hotline. When communicating with the
visitors and receiving the investigation, the company based on the fair information disclosure, hasn’t disclose/let out
the unannounced major information to specific object, and guaranteed the fair.
Time Site Method Object Content and documents supplied
Feburary
24,2009
Office of secretary of
board of directors
Spot
investigation Ctics Securities Company The general information of the
company
March 3, 2009 Office of secretary of
board of directors
Spot
investigation Fuyou Fuqin financing Co,.Ltd The general information of the
company
March 23, 2009 Office of secretary of
board of directors
Spot
investigation Ctics Securities Company The general information of the
company
March 23, 2009 Office of secretary of
board of directors
Spot
investigation Union Securities The general information of the
company
April 15,2009 Office of secretary of
board of directors
Spot
investigation Yecun international The production information and
issues on cooperating with Japan
May 14,2009 Office of secretary of
board of directors
Spot
investigation
MartinCurrie investment
company
The company’s business scope ,
products , order and the outlook
June 3,2009 Office of secretary of
board of directors
Spot
investigation Qingfeng investment Co.,Ltd The intention of purchasing
American enterprise
13 The disclosure information
The important information was all published on the Securities times, HongKong commercial newspaper, the Wen
Wei Po and http://www.cninfo.com.cn .
Date Items
Announcement of resolution of the 12th meeting of the 4th board session;
Announcement of resolution of the 8th meeting of the 4th board of supervisors;
Announcement of daily related transactions of 2009;
April 25, 2009
The annual report of 2008 and abstractWafangdian Bearing Company Ltd. 2009-6-30
16
the 1st quarter report of 2009
Audit report
Special explanation on the undistributed profit adjustment at the end of 2008
Self- assessment report of internal control
June 9, 2009 The notice of holding the 2008 annual shareholders’ meeting
The notice of adding extraordinary proposals on 2008 annual shareholders’ meeting
June 17, 2009 Announcement of the Nominator of the Independent Director and Announcement of
the Independent Director Candidates
June 30, 2008 Announcement of resolution of 2008 annual shareholders’ meeting
Section 7 Financial statements( non-audited)
Wa Fangdian Bearing Co.,Ltd
Balance Sheet
2009.01.01---2009.06.30
Unit:RMByuan
Item Consolidated 2 009.06.30 Parent Consolidated 20 08.12.31 Parent
Current assets：
Monetary capital 153,903,466.92 150,743,272.46 129,512,540.80 128,066,634.31
Settlement preparation cash
Borrowing capital
Trading financial assets
Notes receivables 65,224,269.58 65,224,269.58 61,344,054.83 61,344,054.83
Account receivables 779,684,231.18 765,483,344.76 701,641,881.64 683,979,031.00
Prepayment 15,601,254.01 14,337,714.15 5,355,110.87 4,302,394.09
Interests receivables
Dividend receivables
Other receivables 21,515,638.52 18,472,852.94 10,688,266.07 7,481,880.49
Inventories 945,011,528.51 889,900,909.69 1,072,250,663.70 1,006,291,300.51
Non current assets due within
1 year
Other current assets 164,452.08 164,452.08 309,149.38 309,149.38
Subtotal current assets 1,981,104,840.80 1,904,326,815.66 1,981,101,667.29 1,891,774,444.61
Non-current assets：
Long-term receivables
Long-term equity investment 70,822,454.50 116,190,089.95 78,810,523.20 125,256,859.80
Investment-purpose real
estate
Fixed assets 575,135,698.61 563,924,402.37 573,368,279.75 562,834,590.51
Construction in process 83,602,327.71 83,264,405.68 71,494,307.74 70,884,787.01
Projects materialsWafangdian Bearing Company Ltd. 2009-6-30
17
Disposal of fixed assets
Productive biologic assets
Petro and gas assets
Intangible assets 142,604,102.89 142,604,102.89 144,793,523.11 144,793,523.11
exploitation expense
Reputation
Long-term prepaid expenses 1,829,951.37 1,829,951.37 2,276,409.35 2,276,409.35
Deferred income tax assets 16,955,726.02 16,955,726.02 17,927,307.42 16,955,726.02
Other non-current assets
Subtotal non-current assets 890,950,261.10 924,768,678.28 888,670,350.57 923,001,895.80
Total assets 2,872,055,101.90 2,829,095,493.94 2,869,772,017.86 2,814,776,340.41
Current liabilities ：
Short-term loans 380,160,235.14 359,000,000.00 325,393,777.75 304,233,542.61
Trading financial liabilities
Notes payables 148,550,000.00 148,550,000.00 115,330,000.00 115,330,000.00
Account payables 504,917,412.41 473,185,324.64 632,582,740.43 591,553,783.91
Advances from customers 38,606,382.45 33,843,429.41 29,344,299.86 23,259,217.24
Fees and commission
payables
Accrued payroll 27,534,862.70 17,327,326.63 29,872,800.60 20,072,752.22
Tax payables 16,343,763.02 10,256,704.28 -402,118.38 -6,521,357.08
Interests payables
Other payables 97,153,634.02 90,740,388.51 87,802,183.41 82,874,804.88
Provision for the insurance
contract
Non-current liabilities due
within 1 year 140,000,000.00 140,000,000.00 190,000,000.00 190,000,000.00
Other current liabilities 9,808.75 9,808.75 27,463.10 27,463.10
Subtotal current liabilities 1,353,276,098.49 1,272,912,982.22 1,409,951,146.77 1,320,830,206.88
Non-current liabilities ：
Long-term loans 149,500,000.00 148,000,000.00 149,500,000.00 148,000,000.00
Debenture payables
Long-term account payables 100,000.00 100,000.00
Special account payables 201,698.98 201,698.98 201,698.98 201,698.98
Predicted liabilities
Deferred income tax liabilities
Other non-current liabilities 10,633,000.00 10,633,000.00 6,633,000.00 6,633,000.00
Subtotal non-current liabilities 160,434,698.98 158,834,698.98 156,434,698.98 154,834,698.98
Total liabilities 1,513,710,797.47 1,431,747,681.20 1,566,385,845.75 1,475,664,905.86
Owner’s equity（shareholders’
equity）：
Paicl-0up capital（capital
stock ） 402,600,000.00 402,600,000.00 402,600,000.00 402,600,000.00
Capital public reserves 485,431,518.07 482,563,945.37 485,431,518.07 482,563,945.37
less：stock shares
Surplus public reserves 101,403,904.38 101,403,904.38 101,403,904.38 101,403,904.38
General provision for risk
Unallocated profits 366,657,951.49 410,779,962.99 311,344,774.64 352,543,584.80
Total owner’s equity available
for parent company 1,356,093,373.94 1,397,347,812.74 1,300,780,197.09 1,339,111,434.55
Minority owner’s equity 2,250,930.49 2,605,975.02
Total owner’s equity 1,358,344,304.43 1,397,347,812.74 1,303,386,172.11 1,339,111,434.55
Total liabilities and owner’s
equity 2,872,055,101.90 2,829,095,493.94 2,869,772,017.86 2,814,776,340.41Wafangdian Bearing Company Ltd. 2009-6-30
18
Wa Fangdian Bearing Co.,Ltd
Income statement
2009.01.01---2009.06.30
Unit:RMByuan
Item Consolidated 2 009.06.30 Parent Consolidated 2 008.12.31 Parent
Total operating revenue 1,112,240,287.20 1,096,659,725.09 1,577,028,157.89 1,547,905,727.10
including：operating revenue 1,112,240,287.20 1,096,659,725.09 1,577,028,157.89 1,547,905,727.10
Interest revenue
Total operating cost 1,057,446,610.71 1,038,032,785.16 1,469,274,417.18 1,440,967,732.45
including：operating cost 943,475,326.36 930,057,864.36 1,319,938,535.70 1,298,611,572.60
Interest payment
Operating tax and adds 5,938,885.80 5,621,598.33 5,968,405.61 5,752,411.06
Sales expense 60,799,480.32 60,044,098.14 77,363,402.68 76,286,573.80
Administrative expense 34,273,068.88 30,051,895.80 37,209,627.63 32,396,614.98
Financial expense 12,979,849.35 12,277,328.53 21,174,740.83 20,300,855.28
Loss on depreciation of
assets -20,000.00 -20,000.00 7,619,704.73 7,619,704.73
plus：gains on the changes of
fair value （loss as “-”）
Gains on investment（loss as
“-”） 2,543,309.73 2,543,309.73 5,682,170.57 5,682,170.57
Including: the gains on
investment to affiliated and joint
stock companies
2,543,309.73 2,543,309.73 5,682,170.57 5,682,170.57
Gains on currency exchange
（loss as “-”）
Operating profits（loss as “-”） 57,336,986.22 61,170,249.66 113,435,911.28 112,620,165.22
plus：non-operating revenue 5,194,761.71 4,421,261.68 2,038,396.52 1,812,525.90
less：non-operating expenses 1,493,015.58 1,274,533.12 4,563,400.34 4,293,494.13
including：losses on disposal
of non-current assets 58,785.38 48,557.83
Total profits（loss as “-”） 61,038,732.35 64,316,978.22 110,910,907.46 110,139,196.99
Less: income tax 6,080,600.03 6,080,600.03 16,655,458.71 16,655,458.71
Net profits（net loss as “-”） 54,958,132.32 58,236,378.19 94,255,448.75 93,483,738.28
Net profits available for parent
company 55,313,176.85 58,236,378.19 94,151,413.47 93,483,738.28
Minority owner’s equity -355,044.53 104,035.28
Gains on per share
basic gains on per share 0.14 0.14 0.23 0.23
diluted gains on per share 0.14 0.14 0.23 0.23
Wa Fangdian Bearing Co.,Ltd
Cash flow statement
2009.01.01---2009.06.30
Unit:RMByuan
Item Consolidated 2 009.06.30 Parent 2008.12.31 Consolidated
1 Cash flow from operating
activitiesWafangdian Bearing Company Ltd. 2009-6-30
19
Cash received from sales of
goods or rendering services 543,063,206.16 524,386,118.93 776,280,750.91 741,497,502.85
Refunds of taxes 13,664.26 13,664.26 9,518,692.08 9,387,015.86
Cash received relating to
other operating activities 6,006,701.12 6,006,684.04 862,093.63 791,881.74
Sub-total of cash inflows from
operating activities 549,083,571.54 530,406,467.23 786,661,536.62 751,676,400.45
Cash paid for goods or
receiving services 273,509,127.96 267,821,227.78 485,612,127.50 464,902,242.27
Cash paid to and on behalf
of employees 102,719,631.33 97,089,348.62 113,210,278.84 105,614,030.28
Tax payments 52,165,618.01 48,980,753.38 60,431,997.99 57,946,578.10
Cash paid relating to other
operating activities 61,930,845.60 59,862,151.81 51,316,270.85 47,633,432.40
Sub-total of cash outflows from
operating activities 490,325,222.90 473,753,481.59 710,570,675.18 676,096,283.05
Net Cash Flow from Operating
Activities 58,758,348.64 56,652,985.64 76,090,861.44 75,580,117.40
2 Cash Flow from Investing
Activities
Cash received from disposal
of investments
Cash received from
investments income
Net cash received from
disposal of fixed assets, intangible
assets and other long-term assets
276,297.01 276,297.01
Cash received from disposal
of subsidiary or other operating
business units
Cash received relating to
other investing activities
Sub-total of cash inflows 276,297.01 276,297.01
Cash paid to acquire fixed
assets, intangible assets and
other long-term assets
25,119,859.80 24,913,324.80 19,879,517.71 19,804,576.71
Cash paid to acquire
investments 12,300.00
Net increase of the mortgage
loans
Cash payments relating to
other investing activities 12,300.00
Sub-total of cash outflows 25,119,859.80 24,913,324.80 19,891,817.71 19,816,876.71
Net Cash Flow from Investing
Activities -25,119,859.80 -24,913,324.80 -19,615,520.70 -19,540,579.70
3 Cash Flow from Financing
Activities
Cash received by investors
Cash received from
borrowings 131,000,000.00 131,000,000.00 179,140,000.00 179,140,000.00
Cash from issuing debenture
Cash received relating to
other financing activities 995,593.78 995,593.78 419,167.66 419,167.66
Sub-total of cash inflows 131,995,593.78 131,995,593.78 179,559,167.66 179,559,167.66Wafangdian Bearing Company Ltd. 2009-6-30
20
Repayments of borrowings 126,541,543.67 126,541,543.67 197,090,000.00 196,840,000.00
Cash payment for
dividends ,profits and the interests 13,230,714.45 13,046,174.42 15,492,029.66 14,997,529.26
Cash payments relating to
other financing activities 1,141,475.60 1,141,475.60 1,142,511.77 1,142,511.77
Sub-total of cash outflows 140,913,733.72 140,729,193.69 213,724,541.43 212,980,041.03
Net Cash Flow from Financing
Activities -8,918,139.94 -8,733,599.91 -34,165,373.77 -33,420,873.37
4 Effect of cash and cash
equivalents Foreign Currency
Translation
5 Net Increase (Decrease) in
Cash and Cash Equivalents 24,720,348.90 23,006,060.93 22,309,966.97 22,618,664.33
plus：the balance in the
period-beginning 125,662,540.80 124,216,634.31 65,233,285.21 63,822,830.51
6 The balance in the period-end 150,382,889.70 147,222,695.24 87,543,252.18 86,441,494.84
The annotation is enclosed as the complement of the above statements.
The balance sheet(consolidated and parent ), the income statement (consolidated and parent)and the cash flow
statement (consolidated and parent) have been approved by the board meting held on August 20, 2009.
Charger : Charger :
Wafangdian Bearing Co., Ltd.
Statement of the provision for assets depreciation(consolidated)
June 30, 2009
Unit: RMByuan
Decreases in current period
Item Book value in the
year-beginning
Provided in
current period Transferred Transferred and
written off
The book value in
the period-end
1 provision for bad debt 45,266,219.57 74,106.07 1,115,407.62 44,224,918.02
2 provision for the impairment of
inventories 71,481,454.92 10,325,819.22 61,155,635.70
3 provision for the depreciation of
trading financial assets
4 the provision for the depreciation of
investment holding to be matured.
5 the provision for the depreciation of
long-term equity investment
6 the provision for the depreciation of
invest-purposed real estate
7 provision for the depreciation of fixed 4,341,838.31 4,341,838.31Wafangdian Bearing Company Ltd. 2009-6-30
21
assets
8 provision for the depreciation of project
materials
9 provision for the depreciation of
construction in progress 1,403,093.55 1,403,093.55
10 provision for the impairment of
productive biology assets
including：provision for the impairment
of matured productive biology assets
11 provision for the impairment of petro
and oil assets
12 provision for the impairment of
intangible assets
13 provision for the impairment of
reputation
14 others
Total 122,492,606.35 74,106.07 11,441,226.84 111,125,485.58
Wafangdian Bearing Co., Ltd.
Statement of the provision for assets depreciation (parent)
June 30, 2009
Unit :RMByuan
Decreases in current period
Item Book value in the
year-beginning
Provided in
current period Transferred
Transferred and
written off
The book value in
the period-end
1 provision for bad debt 34,887,394.93 0.00 1,115,407.62 33,771,987.31
Account receivables 33,860,049.35 1,115,407.62 32,744,641.73
Other receivables 1,027,345.58 1,027,345.58
2 provision for the impairment of
inventories 70,475,664.33 10,325,819.22 60,149,845.11
Inventories 55,134,188.07 774,562.56 54,359,625.51
Raw materials 2,658,311.39 2,658,311.39
Semi-products 12,683,164.87 9,551,256.66 3,131,908.21
3 provision for the depreciation of
financial assets available for sale
4 the provision for the depreciation of
investment holding to be matured.
5 the provision for the depreciation of
long-term equity investment
6 the provision for the depreciation of
invest-purposed real estate
7 provision for the depreciation of fixed
assets
4,341,838.31
4,341,838.31
Machines and equipmentWafangdian Bearing Company Ltd. 2009-6-30
22
4,341,838.31 4,341,838.31
8 provision for the depreciation of project
materials
9 provision for the depreciation of
construction in progress
Machines and equipment
10 provision for the impairment of
productive biology assets
including：provision for the impairment
of matured productive biology assets
11 provision for the impairment of petro
and oil assets
12 provision for the impairment of
intangible assets
13 provision for the impairment of
reputation
14 others
Total 109,704,897.57 11,441,226.84 98,263,670.73Wafangdian Bearing Company Ltd. 2009-6-30
23
Wafangdian Bearing Co., Ltd.
The changes of owner’s equity(consolidated)
June 30, 2009
Unit: RMByuan
Amount of this period Amount of previous period
Owner’s equity attributed to parent Owner’s equity attributed to parent
items Paid-in
capital
(capital
stock)
Capital
surplus
Minus:
stock
shares
Surplus
reserve
s
Reserv
es for
general
risks
Undistri
buted
profits
Others
Minority
owner’s
equity
Total
owner’s
equity
Paid-in
capital
(capital
stock)
Capital
surplus
Minus:
stock
shares
Surplus
reserve
s
Reserv
es for
general
risks
Undistri
buted
profits
Others
Minority
owner’s
equity
Total
owner’s
equity
1.Balance in the previous
year-end
402,600,
000.00
485,431,
518.07 101,403,
904.38 311,344,
774.64 2,605,97
5.02
1,303,38
6,172.11
402,600,
000.00
485,431,
518.07 68,449,5
33.31 243,660,
433.16 2,635,63
0.01
1,202,77
7,114.55
Plus : the changes in
accounting standards
Correction to previous
2.Balance in current
year-beginning
402,600,
000.00
485,431,
518.07 101,403,
904.38 311,344,
774.64 2,605,97
5.02
1,303,38
6,172.11
402,600,
000.00
485,431,
518.07 68,449,5
33.31 243,660,
433.16 2,635,63
0.01
1,202,77
7,114.55
3.The increase or decrease
in this period (decrease as -) 55,313,1
76.85 -355,044.
53
54,958,1
32.32 94,151,4
13.47 104,035.
28
94,255,4
48.75
(1)Net profits 55,313,1
76.85 -355,044.
53
54,958,1
32.32 94,151,4
13.47 104,035.
28
94,255,4
48.75
(2)The profits and losses
directly calculated as
owner’s equity
0.00 0.00
0.00
1)Net amount of changes in
fair value of financial assts
for sale
2)the changes in other
owner’s equity of the unites
invested
3) the tax calculated into the
owner’s equity
4)others 0.00Wafangdian Bearing Company Ltd. 2009-6-30
24
Total of (1) and (2) 0.00 55,313,1
76.85 -355,044.
53
54,958,1
32.32 0.00 94,151,4
13.47 104,035.
28
94,255,4
48.75
(3) the investment or
withdrawal of the owner
1) the investment
2)the shares calculated into
the owner’s equity
3)others
(4) profits distribution 0.00
1 )withdrawal of surplus
reserves
2).withdrawal of reserves for
general risks
3)distribution to owners and
shareholders
4)others
(5)owner’s equity internally
transferred
(1)transferring capital
reserves to capital
(capital stock)
(2) transferring surplus
reserves to capital (capital
stock)
(3)Offsetting the loss by
surplus reserves
(4).Others
4.Balance in current
period-end
402,600,
000.00
485,431,
518.07 101,403,
904.38 366,657,
951.49 2,250,93
0.49
1,358,34
4,304.43
402,600,
000.00
485,431,
518.07 68,449,5
33.31 337,811,
846.63 2,739,66
5.29
1,297,03
2,563.30Wafangdian Bearing Company Ltd. 2009-6-30
25
Ⅱ.Financial annotations:
Annotations of the midyear incorporate financial statements of WBC
Accounting session is from Jan. 1, 2009 to June 30, 2009
(The currency is in RMB Yuan except otherwise indicated)
I. Company Profile
WAFANGDIAN BEARING COMPANY LIMITED (hereinafter referred to as the Company) was incorporated on July 16, 1996
with approval by Dalian Municipal Commission of Economic System Reform with Document of DMCESR [1996] No. 64, with
Wafangdian Bearing Group Co., Ltd. (hereinafter referred to as Wafangdian Bearing Group as the Company’s exclusive
promoter, with the major production and operation assets (and the relevant liabilities) held by Wafangdian Bearing Group
through authorization by the central government as the share capital contribution after being converted into money by means
of proceeds raising through share offering to the public.
On February 19, 1997, through approval by China Securities Regulatory Commission with Document ZHENG FA [1997] No. 9,
the Company was approved to issue domestically listed foreign shares (B shares)to the public and the shares were listed for
trading.
On March 19, 1997, the Company’s founding ceremony and the 1st meeting of the 1st Board of Directors decided that April 1,
1997 was the date when the Company’s joint stock system based reorganization came into force in terms of accounting (i.e.
the date of setting up account).
On March 20, 1997, the Company was granted the corporate business licence with registration No. DA GONG SHANG QI FA
ZI 24239971-2. The business scope is manufacture and sales of bearings, machinery equipment, automobile parts and
components and relevant products.
On March 25, 1997, the domestically listed foreign ordinary public shares (B shares) were been listed on the Shenzhen Stock
Exchange. The proceeds raised through the offering amounted to RMB 406.58 million and the Company’s registered capital
after issuing was RMB 330 million.
On August 7, 2003, the 9th meeting of the 2nd Board of Directors decided to change the Company’s business scope, for
which the Company was granted new corporate business licence with registration No. DA SHANG QI FA ZI 2102001. The
business scope after the change is: manufacture and sales of bearing, machinery equipment, automobile parts and
components and relevant products, lease of machinery equipment and housing, testing of bearings and relevant machinery
equipment and measuring instruments and meters.
According to the supplementary notice regarding the stock distributing of listed company sent by Shen Zhen Stock Exchange
on August ,30th,2006 (herein refers to as “supplementary notice”) and based on the audited financial statements offered on
Sep.30,2006, the company decided to transfer the capital public reserves to the shares . with 2.2 shares gifted by per 10
shares, the total stocks of the company are up to 402,600,000 shares based on330,000,000 shares, totally adding 72,600,000
shares .the legal person shares owned by Wa Fangdian Bearing Group Corporation add up to 244,000,000 shares based on
200,000,000 shares ,which are equivalent to 60.6% of the total stock ; the shares held by SKF add up to 79,300,000 shares
based on 65,000,000 shares, which are equivalent to19.7% of the total stock. the social public shares add up to 79,300,000Wafangdian Bearing Company Ltd. 2009-6-30
26
shares based on 65,000,000 shares, which are equivalent to19.7% of the total stock.
After the distribution, the share structure of the company meets the stipulations of “Supplementary notice”.
II. Principal Accounting Policies, Accounting Estimation and Preparation of the Consolidated Accounting Statements
1. Accounting system
The group prepares the financial statements on the basis of going concern.
The Company implements the PRC Enterprise Accounting Standards and the PRC Enterprise Accounting System and the
complementary provisions.
2. Fiscal Year:
A fiscal year: from January 1 to December 31 of a calendar year.
3. Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
4. Bookkeeping basis and valuation principle:
Bookkeeping is based on the accrual system. Assets are stated at actual cost at the time of acquisition. Afterwards, provision
for impairment of various assets is made in case of impairment according to the Enterprise Accounting System.
5 Foreign Currency Translation
Foreign currency transactions are translated into Renminbi at the median price of the exchange rate (market exchange rate)
published by the People’s Bank of China on the first day of the very month.
At the end of a month, adjustment is made for the non-standard currency balances in monetary items based on the market
exchange rate of the very day. The exchange gain/loss arising therefore was stated long term expenses to be apportioned if
such gain/ loss belonged to the period of preparation to build. Any balance in connection with purchase or construction of fixed
assets is disposed based on the capitalization of loan expenses; the remaining is stated in the financial expenses of the very
period.
6. Recognition of Cash Equivalent
The Company takes the investments held by short term highly liquid, readily convertible into known amounts of cash and
involve very little risk in the change of their value.
7. Financial assets
(1) Classification of financial assets
The financial assets are classified into the following four categories according to investment purpose and economic substance.
1) Financial asset measured at fair value and the amount of the change in fair value of a financial asset is recognized in profit
and loss in current period: mainly represents the objective of being held for sale in short term and presented at financial asset
held for transaction in balance sheet.Wafangdian Bearing Company Ltd. 2009-6-30
27
2) Investment held to maturity: non-derivative financial assets of fixed maturity, fixed or confirmable recoverable amount, which
management have definite purpose and capacity to hold to maturity.
3) Accounts receivable: represents non-derivative financial assets of no quote, fixed or confirmable recoverable amount,
including notes receivable, accounts receivable, interest receivable, dividends receivable and others receivable etc.
4) Financial assets available for sale: financial assets available for sale include non-derivative financial assets available for
sale when initially recognized and others financial assets which are classified.
(2) Recognition and measurement of financial assets
Financial assets should be initially recognized at fair value. Financial assets which are measured at fair value and the variation
of fair value is charged as the profit or loss for the current period, related transaction expenses incurred when acquiring
financial assets shall be directly charged as profit or loss for the current period. The transaction expenses of others financial
assets shall be charged as initial amount. When the contractual rights for collecting the cash flow of the said financial asset
are terminated, or when the risk and reward accompanied with the ownership of the said financial assets have been
transferred to the receiving party, the recognition of financial assets shall be terminated.
For the financial assets measured at their fair values and of which the variation is charged as the profit or loss for the current
period and financial assets held for sale shall be measured subsequently at fair value. Accounts receivable and investment
held to maturity shall be measured on the basis of the post-amortization costs by adopting actual interest rate method.
For the financial assets measured at fair values and of which the variation is charged as profit or loss for the current period,
changes of their fair values shall be recorded into changes of fair value of financial assets. The interest and cash dividends
from financial assets when held shall be recognized investment income. When the financial assets are disposed, the
difference between its fair value and initial recognition amount shall be recognized into investment profit or loss, and
meanwhile, adjust the change of fair value of financial assets.
The change of fair value of financial assets held for sale shall be recorded as owner’s equity. The interests of the financial
assets held for sale calculated according to the actual interest rate method shall be recorded into the investment income of the
current period. The cash dividends of the equity instrument investments available-for-sale shall be recorded into the
investment income of the current period when the investee announces the distribution of dividends. When the financial assets
are disposed, the difference between the prices with carrying amount deducted accumulated change amounts of fair values
which recorded into owner’s equity shall be recorded into investment profit and loss.
(3) Impairment of financial assets
The Company carries out an inspection, on the balance sheet day, on the carrying amount of the financial assets other than
those measured at their fair values. Where there is any objective evidence proving that such financial asset has been impaired,
an impairment provision shall be made. Where a financial asset available-for-sale is impaired, even if the recognition of the
financial asset has not been terminated, the accumulative losses arising from the decrease of the fair value of the owner’s
equity which was directly included shall be transferred out and charged as the profit or loss for the current period. As for the
debt instruments available-for-sale whose impairment-related losses have been recognized, if, within the accounting periodWafangdian Bearing Company Ltd. 2009-6-30
28
thereafter, the fair value has risen and are objectively related to the subsequent events that occur after the originally
impairment-related losses were recognized, the originally recognized impairment-related losses shall be reversed and be
charged as the profit and loss for the current period. As for the debt instruments available-for-sale whose impairment-related
losses have been recognized, if, within the accounting period thereafter, the fair value has risen and are objectively related to
the subsequent events that occur after the originally impairment-related losses were recognized, the originally recognized
impairment-related losses shall be reversed and be recorded as the owner’s equity. The impairment-related losses incurred to
an equity instrument investment for which there is no quoted price in the active market and whose fair value cannot be reliably
measured, and which shall be settled by delivering the said equity instrument, should not be reversed.
8. Calculation of the Loss from Doubtful Debt in Accounts Receivable
The Company shall recognize it as significant accounts receivable when the amounts of the receivable exceed RMB 3
million. When there is evidence to prove that the Company can’t collect the receivable it shall made the impairment test and
the provision for the bad debts based on the difference between the present value of cash flow and the carrying amounts.
For the single amount of non-significant accounts receivable, the Company will divide the amount into some
combinations altogether with the individually tested and non-impaired significant accounts receivable according to their credit
risk quality, and calculate the provision for bad debts for the current period based on the actual loss rate of the combination of
accounts receivable which is the same as or similar to the previous years and with the similar credit risk quality, and the rate of
provision for bad debts combined with the actual situation of current period. The Company recognizes the mortgage with the
age more than three years and the amounts with the evidence showing non-collectable or little possibility on collection as
special assets combination, and fully makes provision for bad debts.
The rate of provision for bad debts based on the age of accounts receivable as follows:
Age Provision proportion
Within a year 1％
1 to 2 years 5％
2 to 3 years 20％
Over 3 years 50％
The rate of provision for bad debts based on the age of the other A/R as follows:
Age Provision proportion
Within a year 1％
1 to 2 years 5％
2 to 3 years 20％
Over 3 years 50％
9. Inventories
(1) Classification of inventory: Inventories are classified as raw material, wrappage, low-valuable consumable,
working-in-progress, and finished goods etc.
(2) Pricing of inventories received and sent out: The inventories are processed on perpetual inventory system, purchased
and stored based on their standard cost. The raw materials are priced daily on their standard costs. The differences between
the standard and actual costs is recorded into the costs of materials and for sending out according to proportion of storage and
sending out of materials, and adjust the planned costs of raw material into actual costs. The working-in-progress finished
goods are priced on their standard costs; the differences between the standard and actual costs are recorded into the costs of
working-in-progress and finished goods according to the receiving and sending out proportion, and finally adjust the planned
costs into actual costs.
(3) Low-valuable consumable and wrappage are to be amortized in lump sum at the time of requisition.Wafangdian Bearing Company Ltd. 2009-6-30
29
(4) The inventory pricing principal and inventory provision for impairment recognition standard and withdrawal method:
At the balance sheet date inventory should be measured at the lower of the cost and realizable value. For the inventories
which are damaged, fully or partly obsolete and selling price below cost, the Company should calculate the provision for
impairment of inventories according to the estimated non-recoverable part of cost. Finished goods should be calculated
provision for impairment based on the difference of the cost exceeds the realizable value of sole item. Semi-products with the
age of over 3 years, the Company withdraws 10% provision for impairment based on the booked real cost; Raw materials with
age of over 3 years, the Company withdraws 5% provision for impairment based on the booked real cost.
(5) For the goods, working in progress and raw material held for sale etc which shall be sold directly, their 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 value of inventories held for
execution of sale contracts or labor contracts shall be calculated based on the contract price. If the enterprise holds more
inventories than quantities 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.
10. Long-term investment check method
(1) Long-term equity investment
The initial cost of long term equity investments formed in the merger of enterprise under the same control shall be
recognized at the carry amounts of equity of the merged enterprise. The initial cost of long term equity investments acquired in
the merger of enterprise under the different control shall be recognized at fair value of the assets paid, liabilities happened or
charged, and equity securities issued.
Besides the long-term equity investments acquired by the merger of enterprises, the initial cost of a long-term equity
investment obtained by other means shall be ascertained in accordance with the provisions as follows:
1) The initial cost of a long-term equity investment obtained by making payment in cash shall be the purchase cost which
is actually paid. The initial cost consists of the expenses directly relevant to the obtaining of the long-term equity investment,
taxes and other necessary expenses.
2) The initial cost of a long-term equity investment obtained on the basis of issuing equity securities shall be the fair value
of the equity securities issued.
3) The initial cost of a long-term equity investment of an investor shall be the value stated in the investment contract or
agreement except the unfair value stated in the contract or agreement.
4) The initial cost of a long-term investment obtained by the exchange of non-monetary assets and the initial cost of a
long-term equity investment obtained by debts restructuring shall be ascertained in accordance with related Accounting
Standards for Enterprises.
(2) Long-term equity investment continuous measures
For the long-term equity investment in subsidiaries of the Company shall be measured in accordance with the cost
method, and shall be adjusted when preparing consolidated financial statements in accordance with equity method. For
the long-term equity investment of joint venture shall be measured in accordance with equity method. For the long-term
equity investment of the investing enterprise that does not do joint control or does not have significant influences on the
invested entity, and has no offer in the active market and its fair value cannot be reliably measured should be measured in
accordance with cost method. For the long-term equity investment of the investing enterprise that does not do joint control orWafangdian Bearing Company Ltd. 2009-6-30
30
does not have significant influences on the invested entity, and has offer in the active market and its fair value can be reliably
measured should be measured as the assets available for sale.
11. Fixed assets and depreciation
(1) 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.
(2) Classification of Fixed Assets: Housing and building, machines and equipment, motor vehicle, electronic equipment
and other equipment.
(3) Valuation of fixed assets: Fixed assets are valuated based on the actual cost. The cost of purchased fixed asset
including purchase price, value added tax, duty and other related tax and fee, other expenses that bring the fixed asset to the
expected conditions for use and that may be relegated to the fixed asset. The cost of a self-constructed fixed asset shall be
formed by the necessary expenses incurred for bringing the asset to the expected conditions for use. The cost of fixed asset
which was invested by investor should be recorded in accordance with the price stipulated in the contract or agreement, other
than those of unfair value as stipulated in the contract or agreement. The cost of fixed assets which is obtained by financial
leasing should be measured at the lower one of fair value and the minimum lease payment in the beginning of lease.
(4) Depreciation method: the Company withdraws depreciation for all fixed assets except for the fixed assets which had
been fully depreciated and are still being used. The Company withdraws depreciation by adopting straight-line method and
depreciation rate of unit item on monthly basis, and brings it cost or expenses in current period. Estimated net residual value
rate is 3%, useful life, depreciation rate as follows:
Types Depreciation Life (Years) Annual depreciation rate
Housing and buildings
Incl: building 15 6.47%
production purpose housing 30 3.23%
Non-production purpose housing 35 2.77%
Machines & equipment 10-15 6.47%～9.70%
Motor vehicles 6 16.17%
Electronic instruments, meters and equipment
Incl: Computer 4 24.25%
General testing instruments 7 13.86%
Special electronic equipment 8 12.13%
Automation control equipment 8 12.13%
Automation control instruments and meters 8 12.13%
Other equipment
Incl: industrial kilns 7 13.86%
Tools and other production devices 9 10.78%
Conduction equipment 15 6.47%
Non-production equipment and appliances 18 5.39%
(5) Subsequent expenditure of fixed assets: Subsequent expenditure comprises repair expenditure, renewed &
improvement expenditure, decoration expenditure and others, is recorded as cost of fixed asset when relevant economicWafangdian Bearing Company Ltd. 2009-6-30
31
benefit can flow into the Company and be measured reliably. For the parts of displacement, its book value should be
derecognized. All the others subsequent costs should be recorded in profit and loss during current period.
(6) The Company 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.
(7) The Company should derecognized fixed asset when the fixed asset has been disposed, or the fixed assets can’t
generate any future economic benefit through using and disposal. The amount that income resulting from disposal of fixed
asset deducts fixed asset’s book value and relevant tax shall be recorded in the profit and loss for the current period.
12. Construction-in-progress
(1) Measurement of CIP: Construction-in-progress is recognized at actual cost. Self-construction project is recognized at
the cost of material, labor cost and construction expenses. Contractual construction is recognized at project price which should
be paid. Installed construction is recognized at the value of equipment, installation and assembly cost. Besides above, the cost
of CIP comprises borrowing cost and profit and loss resulting from foreign exchange.
(2)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 Company should withdraw depreciation in the next month after completion.
13. Borrowing costs
(1) Capitalization of borrowing costs: The Company should capitalizes the borrowing cost directly attributable to the
acquisition, construction or production of a qualifying asset and record borrowing cost into cost of related asset. The Company
should recognize the other borrowing cost as the current expense and charged it as profit and loss of current period. A
qualifying asset refers to fixed asset, investment property and inventory need be constructed for so long time to its intended
use or sale.
(2) Duration of capitalisation of borrowing cost: When expenditures and borrowing cost are being incurred, and activities
that are necessary to put the asset available for use or sale are in progress, the capitalisation of borrowing costs as part of the
cost of a qualifying asset should commence. Capitalisation of borrowing costs should be suspended during extended periods
in which active development is interrupted and interruption period last for over 3 month. The borrowing cost incurred during the
period should be recognized as expenses and recorded into the profit and loss in the current period. When all the activities for
bringing the asset to its intended use or sale are completed, the capitalization of borrowing costs ceases, and the borrowing
costs should be recognized as an expense in the period incurred.
Measurement of borrowing cost: As for specifically borrowed loans for the acquisition and construction or production of
assets eligible for capitalization, the to-be-capitalized amount of interests shall be determined as the difference of the actual
cost incurred of the specially borrowed loan at the present period minus the income of interests earned on the unused
borrowing loans as a deposit in the bank or as a temporary investment. Where a general borrowing is used for the acquisition
and construction or production of assets eligible for capitalization, the Company shall calculate and determine the
to-be-capitalized amount of interests on the general borrowing by multiplying the weighted average asset disbursement of the
part of the accumulative asset disbursements minus the general borrowing by the capitalization rate of the general borrowing
used. The capitalization rate shall be calculated and determined at the weighted average interest rate of the general
borrowing.Wafangdian Bearing Company Ltd. 2009-6-30
32
14. Intangible assets
(1) Measurement of intangible assets: The intangible assets of the Company 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.
(2) Amortisation method and period: The Company shall amortise land use right on the basis of its useful life by adopting
straight line method from the time of acquiring. ERP system software and other intangible assets shall be amortised on the
basis of shorter of estimated useful life, stated beneficial year in the contract, and legal available year. The amortization
amount should be recorded into the cost or expense of relevant in the current period.
(3)The Company shall check the estimated useful life and amortization method of intangible assets with limited useful life
at the end of each year, if any change has been made, it shall be adjusted. The Company shall check the estimated useful life
of intangible assets with uncertain useful life during the each accounting period. If there are evidences to prove the useful life
of intangible assets is limited, the Company shall estimate the useful life and amortize the intangible assets within estimated
useful life.
15 impairment of non-financial assets
The Company checks the long-term equity investment for its subsidiaries, association and joint venture, fixed asset,
construction-in-progress, intangible asset and others on each balance sheet date. There may be an impairment of asset when
one of following indications occurs. The Company should test impairments. The company tests the impairment of goodwill,
intangible asset with uncertain useful life on the end of every year. When it is difficult to measure the recoverable amount of
asset, it should measure the recoverable amount of asset on the basis of asset group.
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. The recoverable amount of asset refers to the higher one of the net amount of the fair value of asset minus disposal
expense and the present value of estimated future cash flow of asset.
Indications of impairment as follows:
(1) During the period, an fair value of the asset in the market has declined significantly, which exceeds the expected
decline as time passing or normal use;
(2) Significant changes with an adverse effect on the Company have taken place during the period, or will take place in
the near future, in the technological, market, economic or legal environment in which the entity operates or in the market to
which an asset is dedicated;
(3) Market interest rates or other market rates of return on investments have increased during the period, and those
increases are likely to affect the discount rate applied in calculating an asset's value in use and decrease the asset's
recoverable amount materially;
(4) Evidence is available of obsolescence or physical damage of an asset;
(5) The asset has been idle or is becoming idle, discontinued, or plans to dispose of an asset before the previously
expected date;
(6) Evidence is available from internal reporting that indicates that the economic performance of an asset is, or will be,
worse than expected; and
(7) Other evidence indicates impairment of asset.Wafangdian Bearing Company Ltd. 2009-6-30
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16 Employee compensation
(1) Employee compensation
Employee compensation comprises salary, bonus, allowance, welfare, social insurance, housing fund, labor union expenditure,
employee education expenditure and other relevant expenditures of service rendered by the employees.
The Company should recognize the employee compensation as liability during the period of employee provide service to
company. In accordance with the beneficiaries of the service rendered by employee, the Company should record the
employee benefits into relevant cost and expense. For the compensation for employee due to cancellation of labor contract,
the Company should charge the compensation as the profit and loss during the current period.
(2) Termination benefits
Termination benefits are benefits payable as a result of cancellation of labor contract between the company and employees.
Termination benefits comprise: (a) the company decides to terminate an employee's employment before the normal retirement
date; (b) employee's decision to accept voluntary lay-off in exchange for those benefits; (c) the company decides to implement
internal retire plan.
Recognition principle of termination benefits:
1) The company has instituted formal termination plan or voluntary lay-off advice, and will implement them;
2) The company can’t recall the termination plan or voluntary lay-off advice unilateral.
Measurement of termination benefits
1) For the termination benefits with no choice right for employee, the Company recognizes the employee compensation
payable according to employee quantity, and compensation amounts;
2) For the voluntary termination advice, firstly estimates the amount of employees who will accept the termination advice, and
then make the provision for compensation payable according to the expected amount of employees and termination
compensation of each employee etc.
Recognition criteria of termination benefits
For the termination plans with installment or voluntary termination advice, when planning and checking the recognition
condition of contingent liability for each period or stage, then the contingent liability caused by providing termination benefits
shall be confirmed, and charged as management expenses satisfying the confirmation conditions of contingent liability for the
current period.
For the internal retirement plans according to the rules, the Company shall recognize the draft payment for the employees of
internal retirement and social insurance premium, from the date of ceasing working to the date of normal retirement, as
contingent liability, and recorded into management expenses for the current period.Wafangdian Bearing Company Ltd. 2009-6-30
34
17 Contingent liability
(1) Recognition principle of contingencies: The obligation pertinent to a contingency shall be recognized as an estimated debt
when the following conditions are satisfied simultaneously:
1) The obligation is a current obligation of the Company;
2) It is likely to cause any economic benefit to flow out of the Company as a result of performance of the obligation; and
3) The amount of the obligation can be measured reliably.
(2) Measurement method of contingent liability: The estimated debts shall be initially measured in accordance with the best
estimate of the necessary expenses for the performance of the current obligation, and the Company shall take into full
consideration of the risks, uncertainty, time value of money, and other factors pertinent to the contingencies. If the time value
of money is of great significance, the best estimate amounts shall be determined after discounting the relevant future outflow
of cash. The Company shall check the book value of the estimated debts on the balance sheet date. If there is any exact
evidence indicating that the book value cannot really reflect the current best estimate amounts, the Company shall adjust the
book value in accordance with the current best estimate amounts.
18 Recognition of revenue
The revenue of the Company is mainly from selling goods, providing labor services and abalienating the right of use assets.
The relevant revenue shall be recognized, when the relevant economic benefits may flow into the Company, and the relevant
amount of revenue can be measured reliably, and also satisfying the following recognition standards,
(1) Revenue of selling goods
The revenue from selling goods shall be recognized, when the significant risks and rewards of ownership of the goods have
been transferred to the buyer by the Company, and the Company remains neither continuous management right that usually
keeps relation with the ownership nor effective control over the sold goods.
(2) Revenue from providing labour services
If the Company can, on the date of the balance sheet, reliably estimate the outcome of a transaction concerning the labor
services it provides, it shall recognize the revenue from providing services employing the percentage-of-completion method.
(3) Revenue from abalienating the use right of use assets
The revenue from abalienating of use right of assets shall be recognized, when the relevant economic benefits are likely to
flow into the Company, and the amount of revenues can be measured reliably.
19 Leases
The leases of the Company refer to operating lease. The rents from operating leases shall be recorded by the lessee into the
relevant asset costs or the profits and losses of the current period by using the straight-line method over each period of the
lease term.Wafangdian Bearing Company Ltd. 2009-6-30
35
20 Government subsidies
A government subsidy of the Company shall be recognized if the Company can meet the conditions for the government
subsidy and also can obtain the government subsidy. If a government subsidy is a monetary asset, it shall be measured in the
light of the received or receivable amount. If a government subsidy is a non-monetary asset, it shall be measured at its fair
value; if its fair value cannot be obtained in a reliable way, it shall be measured at its nominal amount (RMB 1).
The government subsidies pertinent to assets shall be recognized as deferred income, equally distributed within the useful
lives of the relevant assets, and included in the current profits and losses. The government subsidies pertinent to incomes
shall be treated respectively in accordance with the indications as follows: (1) those subsidies used for compensating the
related future expenses or losses of the Company shall be recognized as deferred income and shall included in the current
profits and losses during the period when the relevant expenses are recognized; or (2) those subsidies used for compensating
the related expenses or losses incurred to the Company shall be directly included in the current profits and losses.
21 Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liability should be recognized at the differences (taxable temporary differences) between
the tax base of an asset or liability and its carrying amount. The Company shall recognize the deferred income tax assets
arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to
obtain and which can be deducted from the deductible temporary difference. At the balance sheet date, deferred tax asset and
deferred tax liability should be measured at applicable tax rate.
The Company shall recognize the deferred tax assets arising from a deductible temporary difference to the extent of the
amount of the taxable income which is most likely to obtained which can be deducted from the deductible temporary difference.
For the deferred tax assets which already have been recognized, where there is any evidence showing that the Company is
probably unable to acquire sufficient amount of taxable income tax in a future period to offset against the deductible temporary
difference, the book value of the deferred tax assets shall be deducted. Where it is likely to acquire sufficient amount of
taxable income tax, the amount deducted shall be reversed.
22 Income tax
The Company shall recognize income tax by balance sheet liability method. The income taxes of the current period and
deferred income tax of the Company shall be treated as income tax expenses or incomes, and shall be recorded into the
current profits and losses, excluding the income taxes incurred in the following circumstances: (1) the business combination;
and (2) the transactions or events directly recognized as the owner’s equity. The income taxes of the current period and
deferred income tax related to the transactions or events directly recorded as the owner’s equity shall be recorded into the
owner’s equity.
The income tax expenses for the current period the amount payable to the Tax Office which are calculated and recognized
according to the tax law and transactions and events of the current period, i.e. income taxes payable; the deferred income
taxes refer to the differences recognized between the amounts at the end of the period and amounts recognized originally of
deferred tax assets and liabilities according to the balance sheet liability method.
23 Discontinued operation
Discontinued operation represents the component of the Company that had been disposed or plan to sell, and the component
can be separately divided when operating and preparing financial statements. The component shall be disposed partly orWafangdian Bearing Company Ltd. 2009-6-30
36
wholly in accordance with the Company’s’ plan.
The component of the Company shall be recognized as the component held for selling when satisfying the conditions as
bellows:
1) The Company had made a decision on disposal of the component;
2) The Company had signed the irrepealable Transfer Agreement with transferee; and
3) The transfer shall be finished within one year.
24 Presentation of consolidated financial statements
(1) Recognition principles of consolidation scope: Scope of consolidated financial statements should include all subsidiaries
and the special purpose entities.
(2) Accounting methods of consolidated financial statements: The Company’s consolidated financial statements had been
prepared in accordance with . All
material intragroup transaction and balance had been eliminated in full. The parts of subsidiaries’ equity non-attributable to
parent company shall be as minority equity lined separately in the owner’ equity on the face of consolidated financial
statements.
Where there are inconsistent accounting policies and accounting period, when preparing the consolidated financial statements,
the Company shall adjust the subsidiaries’ financial statements in accordance with the Company’s accounting policies and
accounting period.
For the subsidiary obtained under different control, when preparing the consolidated financial statements, the Company shall
adjust the separate financial statements based on the fair value of identifiable net assets at the purchase date; for the
subsidiaries combined by the Company under the same control, regard the subsidiaries that they have been existing since the
beginning of the period, and the assets, liabilities, operation performance and cash flows shall be consolidated into the
financial statements of the beginning of the combination period according to their original book value.
III. Taxes and Others
Taxes and tax rates applicable to the Company are as follows:
1. Business income tax
The business income tax rate of the Company and its subsidiary –Liaoyang Bearing Manufacture Co., Ltd. (hereinafter
referred to Liaozhou Co.) is 25%;
The business income tax rate of the Company’s subsidiary – Wafangdian General Bearing Co., Ltd. (hereinafter referred to as
Watong Co.) is an enterprise with foreign investment is 24%. According to Articles 7 and 8 of the Enterprise Income Tax Law
of the People’s Republic of China, Watong Co. enjoys the preferential tax policy of “exemption for 2 years and reduction by a
half for another 3 years”.
In the report period, there is no change in the aspect of tax comparing to the last period.
2 Value-added tax
Value-added tax is applicable to the sales income of the Company’s commodities, where: the output VAT rate for the
commodities sold in the domestic market is 17%; zero tax rate is applied to the Company’s products exported and the export
tax-rebating policy of “exemption, offsetting and rebate” is implemented.Wafangdian Bearing Company Ltd. 2009-6-30
37
The payable VAT amount is the balance of the output VAT of the current period less the input VAT of the very period.
3. Business tax
The applicable business tax of the Company’s housing lease income is based on the rate of 5%.
4. Urban construction tax and educational surcharge
Both the urban construction tax and educational surcharge are all based on the payable value-added tax and business tax
with applicable tax rates of 7% and 3% respectively.
5. Real estate tax
Real estate tax is calculated based on 70% of the cost of the real estate and the tax rate is 1.2%; the real estate lease tax is
based on the rental income with tax rate of 12%.
6. Land use tax
Liaozhou Co. pays the land use right tax based on RMB 1.50 per square meter of the land use right.
7. River Course Surcharge
Liaozhou Co. pays the river course surcharge based on 1‰ of the product sales income.
IV. Controlled subsidiaries and joint ventures
About the subsidiaries whose equity capital is held by the Company by over 50% and that are listed in the Company’s
consolidated accounting statements:
Entity Names Registered capital Investment
amount
Proportion of
shares held
Principal business Remark
Watong Co. USD 4,510,000.00 28,030,385.50 75% Production of bearings
and relevant products
A
Liaozhou Co. 19,350,000.00 17,337,259.95 100% Production and sales of
bearings and machinery
manufacture
B
A. Approved by Dalian Municipal Commission of Foreign Economic Relations and Trade with Document DCFERT WAI ZI ZI
[1996] No. 98 dated March 27, 1996 and the Approval Certificate (WAI JING MAO DA ZI [1996] No. 199) dated March 28,
1996, Wazhou Group and US General Bearing Co., Ltd. jointly invested and establish Watong Co. and the capital contribution
proportions of both parties of the joint venture were 75% and 25% respectively. On November 1, 1996, with decision by a
board meeting of Watong Co., Wazhou Group was approved to assign its owner’s equity in Watong Co. to the Company upon
formal foundation and it was determined that the equity assignment in terms of accounting came into force on June 30, 1996.
On December 27, 1996, Dalian Municipal Commission of Foreign Economic Relations and Trade approved the aforesaid
equity assignment with Document DA WAI QI ZI [1996] No. 18. On August 13, 1997, approved by Dalian Municipal
Administration for Industry and Commerce, Watong Co. handled the procedures for change of the registration with the industry
and commerce authority and was granted the corporate business licence in the same year with the registration No.: QI HE
LIAO DA ZONG ZI No. 05418.
B. Liaozhou Co., whose former name was Liaoyang Bearing Plant, was entirely merged to Wazhou Group with approval by
Dalian Municipal Commission of Foreign Economic Relations and Trade with Document LIAO JING MAO FA [1996] No. 420.Wafangdian Bearing Company Ltd. 2009-6-30
38
On November 22, 1996, Liaozhou Co. was granted corporate business licence with registration No. 122822243 and was
renamed to the present name.
On June 15, 1997, the board of directors of Wazhou Group, the Company and Liaozhou Co. formed respectively a resolution
which approved Wazhou Group to assign the equity capital held by it in Liaozhou Co. by 100% to the Company; for return, the
Company assigned the secured short term accounts receivable with the equal amount to Wazhou Group. On November 7,
1997, Wazhou Group and the Company executed the Ownership Assignment Agreement, according to which the equity
assignment on accounting basis would come into force on January 1, 1998. The said equity assignment was approved by the
Company’s Shareholders’ General Meeting on November 8, 1997.
According to the Request for Instructions on Assignment of the Equity Held by the Chinese Party in Liaozhou Co. and Huamei
Co. issued by Wazhou Group with Document WA ZHOU JI ZI [1998] No. 2, approved by Dalian Municipal State-owned Assets
Supervision and Administration Bureau, the assignment price was determined based on the net asset determined by Liaozhou
Co. through appraisal by Dalian Zhonghua Certified Public Accountants and confirmed by Dalian Municipal State-owned
Assets Supervision and Administration Bureau with Document ZI PING GUAN REN ZI [1997] No. 102 after the appraisal on
April 30, 1997 plus the amount of increase/ decrease of the net assets during the accounting period from May 1 to December
31, 1997. The procedures for change of registration with the Industry and Commerce Authority resulted from assignment of
the equity are in process of handling.
Feb.6th,2008,Liaozhou company got the enterprise legal person license with the No. of 2110001100574 ; the name was
changed as “WaZhou liaoyang bearing manufacturing co.,ltd”, the legal person is Shao Yang , and the registered capital is
19.35 millionRMByuan.
1. Joint ventures or associates whose equity capital is held by the Company by below 50% are listed as follows:
Entity Names Registered capital Investment
amount
Proportion of
shares held
Principal Business Remar
k
Dalian SKF Wazhou
Bearings Co., Ltd.
USD16,900,000.00 68,600,000.00 49.00% Production and sales of spherical
roller bearings
A
Shanghai Zhenxin
Wazhou Mechanical
and Electrical
Products Sales Co.,
Ltd.
1,000,000.00 400,000.00 40.00% Distribution of bearings,
mechanical and electrical equipment
and accessories, instruments and
meters, metal materials and
hardware and tools
B
A. Dalian SKF Wazhou Bearings Co., Ltd. (hereinafter referred to as SKF Wazhou Co.) is a joint venture established by SKF
(China) Investment Co., Ltd. and the Company with approval by Dalian Municipal Foreign Economic Relations and Trade
Commission with Document (DFERTC ZI ZI (1998) No. 72) and Dalian Municipal People’s Government with Approval
Certificate (WAI JING MAO DA ZI ZI (1998) No. 0262 with the capital contribution proportion between the two parties to the
joint venture being 51% and 49% respectively.
B. Shanghai Zhenxin Wazhou Mechanical and Electrical Products Sales Co., Ltd. (hereinafter referred to as Zhenxin Co.) was
jointly established by Shanghai Mechanical and Electrical Equipment Corporation, China Mechanical and Electrical Equipment
East China Co., the Company and natural persons.
V. Notes to the principal items in the consolidated statements
1. account receivableWafangdian Bearing Company Ltd. 2009-6-30
39
(1) The details are stated as follows:
2009.06.30 2008.12.31
Account
age Amount
Proportio
n
provision for
bad debt Amount Percentage Provision for bad debt
Less than 1
year
689,120,764.00
84.11 7,254,034.27
609,167,702.59
82.07 5,885,053.43
1 to 2 years 58,625,983.05 7.16 2,931,299.15 69,842,280.35 9.41 3,434,648.41
2 to 3 years 21,177,926.78 2.58 4,235,585.36 18,078,595.84 244 3,628,018.28
over three
years
50,360,952.26
6.15 25,180,476.13
45,195,999.32
6.09 27,694,976.34
Total 819,285,626.09 100.00 39,601,394.91 742,284,578.10 100.00 40,642,696.46
2. Other account receivable
The age of other account receivable are as follows:
2009.06.30 2008.12.31
Account age
Amount
Proportio
n
provision for
bad debt Amount Percentage
provision for bad
debt
Less than 1
year
16,368,462.21
62.62 163,684.62
5,117,176.31
33.81 4,659.46
1 to 2 years 828,627.31 3.17 41,431.37 922,376.13 6.02 1,849.31
2 to 3 years 248,542.19 0.95 49,708.44 640,392.80 4.18 42,575.31
over three
years
8,693,529.92
33.26 4,368,698.68
8,571,843.94
55.99 4,574,439.03
Total 26,139,161.63 100.00 4,623,523.11 15,311,789.18 100.00 4,623,523.11
3. Inventories and provision for devaluation:
2009.7.30 2008.12.31
Merchandise sort
Amount
Provision for the
impairment of the
inventories
Amount
Provision for the
impairment of the
inventories
Raw material 121,281,283.03 2,659,258.07 17
173,693,542.79 2,659,258.07
Packing material 617,817.04 548,899.37
Low value consumption
articles
17,222,167.75
387,266.00
-
Inventories
726,726,997.08
56,521,481.99
753,785,931.90
57,296,044.55
The outsourcing materials 1,261,390.64 1,209,400.25
Semi-products 139,057,508.67 1,974,895.64 214,107,078.31 11,526,152.30
Total 1,006,167,164.21 61,155,635.70 1,143,732,118.62 71,481,454.92Wafangdian Bearing Company Ltd. 2009-6-30
40
4. Long-term equity investment
(1) Long-term equity investment
Items 2009.06.30 2008.12.31
L-T equity investment under cost method 2,000,000.00 2,000,000.00
L-T equity investment under equity method 68,822,454.50 76,810,523.20
Total 70,822,454.50 78,810,523.20
Less:provision for impairment 0.00 0.00
Net amounts 70,822,454.50 78,810,523.20
(2) According to cost and equity method
Investee Equity
%
Vote
(%)
Initial
Amounts 2008.12..31 Increase Decrease 2009.06.31
Cash
dividends
received in
2009
Cost method
Shanghai ME
machine-electrical
equitpment chain
Ltd.
4.76 4.76 2,000,000.00 2,000,000.00 0.00 0.00 2,000,000.00 0.00
Sub-total
2,000,000.00 2,000,000.00 0.00 0.00 2,000,000.00 0.00
Equity method
Dalian SKF
Wazhou Bearings
Co., Ltd.
49.00 49.00 68,600,000.00 76,399,668.08 3,622,010.88 11,610,079.58 68,411,599.38 11,610,079.58
Shanghai Zhenxin
Wazhou
Machinery and
Electricity Co., Ltd.
40.00 40.00 400,000.00 410,855.12 410,855.12 0
Sub－total
69,000,000.00 76,810,523.20 3,622,010.88 11,610,079.58 68,822,454.50 11,610,079.58
Total 71,000,000.00 78,810,523.20 3,622,010.88 11,610,079.58 70,822,454.50 11,610,079.58
(3) No impairment in the long-term equity investment of the Company for the current report period.
5. Fix assets, accumulative depreciation and the reserves for the depreciation of the fixed assets:
Houses and
buildings
Machines and
facilities Transport devices Electronic
devices Other Total
Original value of the
fixed assets
2008.12.31 255,066,851.28 792,859,094.37 19,837,993.93 54,359,023.06 168,069,191.48 1,290,192,154.12
Increase in current
period
440,145.88 45,934,174.00 2,563,921.80 240,765.76 13,713,913.35 62,892,920.79
Including ：transferred
by construction in
progress
22,226,728.44 1,961,548.99 6,482,202.78 30,670,480.21Wafangdian Bearing Company Ltd. 2009-6-30
41
Decrease in current
period
4,705,700.80 27,933,793.97 1,081,544.43 1,308,132.39 35,029,171.59
2008.06.30 250,801,296.36 810,859,474.40 21,320,371.30 54,599,788.82 180,474,972.44 1,318,055,903.32
The accumulated
depreciation of fixed
assets
2008.12.31 147,999,351.75 424,851,791.74 13,340,143.98 38,773,228.29 87,517,520.30 712,482,036.06
Increase in current
period
4,562,980.97 33,410,686.28 821,336.42 886,826.01 16,204,115.17 55,885,944.85
Decrease in current
period
1,951,469.27 9,150,996.59 635,900.48 398.63 18,050,849.54 29,789,614.51
2009.06.30 150,610,863.45 449,111,481.43 13,525,579.92 39,659,655.67 85,670,785.93 738,578,366.40
Provision for the
depreciation of fixed
assets
2008.12.31 4,096,264.56 200,000.00 45,573.75 4,341,838.31
Increase
Transferred
Decrease in other
items
2009.06.30 4,096,264.56 200,000.00 45,573.75 4,341,838.31
Net value of fixed
assets
2008.21.31 107,067,499.53 363,911,038.07 6,297,849.95 15,585,794.77 80,506,097.43 573,368,279.75
2009.06.30 100,190,432.91 357,651,728.41 7,594,791.38 14,940,133.15 94,758,612.76 575,135,698.61
* the details of mortgage of the fixed assets show in the annotation 5(10).
6. Construction in progress:
(1) The details are as follows:
Name Budget 2008.12.31 Increase
Transferred
into fixed
assets
Other
decrease 2009.06.30 Sources
M250Grinding
Machine
Improvement
12,468,057.21 251,029.89 - - - 251,029.89 Self-raising
/loans
fork truck 6,393,742.00 2,105,591.32 18,309.35 920,681.84 94,017.09 1,109,201.74 Self-raising
/loans
Installation
engineering of ultra
precise machine
45,657,252.00 7,367,357.66 778,731.74 2,384,017.67 577,119.35 5,184,952.38 Self-raising
/loans
Reform of the finished
goods warehouse 207,323.00 644,287.27 112,340.81 - - 756,628.08 Self-raising
/loans
Crane engineering 2,745,575.00 52,090.33 795.45 - - 52,885.78 Self-raising
Reform of the 2nd
finished production
channel
763,766.00 299,238.91 654,865.34 400,645.88 21,649.60 531,808.77 Self-raising
/loans
Reform engineering of
roller lines 14,306,343.00 1,428,713.80 2,501,314.45 - - 3,930,028.25 Self-raising
/loans
Computer engineering 14,641,421.25 225,079.27 804,564.82 240,898.93 4,057.42 784,687.74 Self-raising
/loansWafangdian Bearing Company Ltd. 2009-6-30
42
Grinding production
lines 131,110,724.93 7,711,223.92 12,867,099.46 2,622,849.86 4,101,280.29 13,854,193.23 Loans
Reform of the seventh
finished production
channel
31,992,975.00 2,126,336.63 1,358,985.25 987,667.97 - 2,497,653.91 Self-raising
Spherical surface
grinding machine 3,683,300.00 3,088,030.56 4,039,633.79 647,666.64 - 6,479,997.71 Self-raising
Heat treatment 27,015,201.00 258,908.89 2,710,682.91 182,713.92 3,498.51 2,783,379.37 Self-raising
/loans
Digital boring machine 26,252,389.10 4,708,791.64 10,589,183.94 3,338,603.46 184,488.14 11,774,883.98 Self-raising
/loans
Reform of Double
carbonization
production lines
20,713,913.00 1,570,301.39 578,153.56 25,730.02 - 2,122,724.93 Loans
Reform engineering of
flaw detector 4,925,685.00 2,717,261.51 395,150.91 14,451.91 738,901.57 2,359,058.94 Self-raising
/loans
Pressure machine 2,431,258.00 737,074.68 188,234.99 14,000.00 - 911,309.67 Self-raising
/loans
Reform of the first
finished goods
channel
8,232,217.20 2,749,791.48 438,961.73 - - 3,188,753.21 Self-raising
/loans
Instruments 6,167,465.00 1,077,076.23 122,595.15 - - 1,199,671.38 Self-raising
Assembly lines of
tapered bearing 1,432,000.00 987,430.09 67,822.90 348,763.74 - 706,489.25 Self-raising
/loans
Reform of the ground
of factory 54,800.00 89,001.51 682,674.09 - - 771,675.60 Self-raising
Reform of Pu Landian
plant 2,194,104.91 1,282,430.03 115,259.02 419,169.00 - 978,520.05 Self-raising
/loans
Reform of Wa Tong 79,948.92 93,338.60 1,453,366.86 - - 1,546,705.46 Self-raising
/loans
Dalian industry park 654,105.65 7,948,992.06 - - 8,603,097.71 Self-raising
/loans
Other 120,665,839.23 30,672,910.03 12,370,959.42 18,122,619.37 12,295,165.8
5 12,626,084.23 Self-raising
Total 484,135,300.75 72,897,401.29 60,798,678.00 30,670,480.21 18,020,177.8
2 85,005,421.26
capitalization of the
borrowing expense 15,771,421.91 1,400,000.00 17,171,421.91
The capitalized interest which is used for confirming the projects’ interest assets is the averaged weight rate by the actual
using rate of special borrowing and the general borrowings .
(2) Provision for impairment of construction in progress
Name of project 2008.12.31 Increase Decrease 2009.03.31
Carbonization furnace 1,403,093.55 - - 1,403,093.55
Total 1,403,093.55 - - 1,403,093.55
* the foresaid construction in progress has been cancelled since 1999 , and the WaTong company doesn’t plan to build it again
due to the term of construction is too long and the companyhas been overcapacity ,so the reserve for construction in progress
was withdrew according to the balance between the amounts can be received and the book value .
7. Intangible assets
Item sources
Initial amount 2008. 12.31 Increase Mortage Accumulatively
mortage
2009.
06.30
Remain
years
with
mortageWafangdian Bearing Company Ltd. 2009-6-30
43
Land use
right
exhang
e 166,137,027.00 141,065,840.03 1,859,757.72 8,956,427.95 139,206,082.31 37.50
Yongyou
software
purcha
se 177,777.78 88,888.92 29,629.62 108,641.94 59,259.30 1.00
ERP
software
purcha
se 4,985,843.33 3,490,090.44 249,292.14 1,661,947.65 3,240,798.30 6.50
Kaspersky
software
purcha
se 140,000.00 70,000.04 34,999.98 93,333.28 35,000.06 0.50
OA software purcha
se 94,444.44 78,703.68 15,740.76 26,234.60 62,962.92 2.00
Total — 171,440,648.11 144,793,523.11 2,189,420.22 10,846,585.42 142,604,102.89
ERP software is SAP system software with purchased by the Company.
8. Long-term deferred expenses
Items 2009.06.30 2008.12.31
Right to use premise 1,030,090.63 1,064,005.81
License fee of SAP software 349,556.49 582,595.35
Heat fee etc 450,304.25 539,749.97
Others - 90,058.22
Total 1,829,951.37 2,276,409.35
Pursuant to the Premise Use and Lease Contract signed with Finance and Trade Office of Shanghai Zhabei District
Government on March 30, 1993, the Company paid a one-off payment for the right to use the premises located at Qiujiang
Road, Zhabei District, Shanghai. Subject to its estimated economic useful life, the premise use fees is being amortized over a
period of thirty years starting May 1, 1994.
9. Deferred tax
Items 2009.06.30 2008.12.31
Effect of the time difference on the income tax 16,955,726.02 17,927,307.42
Total 16,955,726.02 17,927,307.42
10.shor-term loans
2008.12.31
Category of the
loan
2009.06.30
Credited t loan 359,000,000.00 300,000,000.00
Secured loan 20,970,235.14 20,970,235.14
Guarantee loan 190,000.00 190,000.00
Mortgage loan 4,233,542.61
Total 380,160,235.14 325,393,777.75Wafangdian Bearing Company Ltd. 2009-6-30
44
A Pursuant to the loan contract signed between Liaoyang Bearings and Liaoyang Zhanqian Branch, the Industrial and
Commercial Bank of China, machinery equipments (with original amount RMB 22,930,000.00) were pledged for the loan of
RMB 13,590,235.14 with annual interest rate of 5.31%. The loan has been overdue.
B Liaoyang Bearing obtained a loan of RMB 7,090,000.00 by pleding its buildings (Liao-zi No.00161797 with assessed value
RMB 16,480,000.00) and land use right (Liao-bai No.[2003]101700070). The annual interest rate is 7.254%. The loan has
been overdue.
C Pursuant to the loan contract signed between Liaoyang Bearings and Jiaotong Branch, Liaoyang Commercial Bank, real
estate (Liao-zi No.0012443) was pledged for the loan with the principal of RMB 600,000.00 with annual interest rate 7.956%.
The date of maturity was April 5, 2007. In 2008 Liaoyang Bearings paid RMB 310,000.00. The remaining amounts of RMB
290,000.00 as at December 31 2008.
D Liaoyang Bearings obtained a loan of RMB 190,000.00. The loan was guaranteed by Liaoyang Forging Machine Tool Co.,
Ltd. The loan has been transferred to Dongfang Asset Management Ltd Co.,
11. Welfares payable
Item 2009.06.30 2008.12.31
Accrued payroll 27,534,862.70 29,872,800.60
Total 27,534,862.70 29,872,800.60
12. Taxes payable
2009.06.30 2008.12.31
VAT of products 8,765,912.88 -6,080,140.55
Income tax - 0.00
Urban maintenance and Construction tax 779,607.50 318,326.95
Enterprise income tax 4,753,038.69 3,406,523.71
Individual income tax 74,544.51 35,926.57
House property tax 1,050,425.73 1,050,425.73
Land usage tax 18,341.40 18,341.40
Stamp tax 120,878.97 278,870.80
Added tax for Education 418,908.76 158,565.42
Bank construction and maintenance fee 358,012.64 405,232.02
Local education promotion fee 4,091.94 3,959.91
Others - 1,849.66
Total 16,343,763.02 -402,118.38
13. Long-term borrowings
Conditions 2009.06.30 2008.12.31
Credited borrowing 1,500,000.00 1,500,000.00Wafangdian Bearing Company Ltd. 2009-6-30
45
Secure borrowing
0.00 0.00
Guaranteed borrowing 148,000,000.00 148,000,000.00
Total 149,500,000.00 149,500,000.00
* It is the loan for which Wafangdian Bearing Group provided guarantee to the Company. The term of the loan is from 2007
to 2010/2011/2012. The annual interest rate of the loan is 5.94%. The guarantee period is consistent with the term of loan.
14. Special accounts payable
Item 2009.06.30 2008.12.31
Special appropriation for sewage treatment station renovation project 201,698.98 201,698.98
Total 201,698.98 201,698.98
The special account payable is the special fund appropriated for pollution control, which was approved by Wafangdian
Municipal Financial Bureau and Wafangdian Municipal Environment Protection Administration with Wa Cai Zhi Qi (2004) No.
217 Document.
15. Capital surplus
The capital reserves increase(decrease) items shown as follows :
Items 2008.12.31 Increase Decrease 2009.06.30
Premium on issue of shares 201,956,446.52 0.00 0.00 201,956,446.52
Other capital reserves 283,475,071.55 0.00 0.00 283,475,071.55
Total 485,431,518.07 0.00 0.00 485,431,518.07
16. Income from main operation and cost of main operation
(1) In terms of sales area
Main business income Main business cost
Category 2009.06.30 2008.06.30 2009.06.30 2008.06.30
Main business 900,401,682.61 1,295,056,562.76 743,513,120.84 1,057,966,674.78
Export 55,951,544.16 137,916,195.67 48,351,590.91 132,157,140.44
Home sale 813,858,740.94 1,080,897,785.99 672,942,997.18 862,486,531.77
Inclusive of ： North 253,499,835.53 274,159,624.06 200,582,298.27 247,099,958.28
South 179,806,305.71 148,783,273.06 147,114,691.19 129,219,406.80
East 319,377,765.47 545,016,377.37 272,495,732.76 384,678,395.65
West 61,174,834.23 68,579,075.85 52,750,274.96 64,555,732.06
Industry service income 30,591,397.51 76,242,581.10 22,218,532.75 63,323,002.57
Other business 231,125,668.27 300,959,003.62 219,249,269.20 280,959,269.41
Subtotal 1,131,527,350.88 1,596,015,566.38 962,762,390.04 1,338,925,944.19
Internal offset 19,287,063.68 18,987,408.49 19,287,063.68 18,987,408.49
Total 1,112,240,287.20 1,577,028,157.89 943,475,326.36 1,319,938,535.70
17 . Financial expensesWafangdian Bearing Company Ltd. 2009-6-30
46
Item 2009.06.30 2008.06.30
Interest payment 16,181,946.95 18,454,264.00
Minus interest income 3,061,977.50 542,657.08
Plus :Loss from exchange 1,170,720.19 4,210,548.53
Minus : gains form exchange 1,570,001.49 1,747,171.41
Plus : other expenditure 259,161.20 799,756.79
Total 12,979,849.35 21,174,740.83
19 . Investment income
The details of the shared net profit of invested companies adjusted on equity basis at the end of period are as follows:
Name of invested company 2009.06.30 2008.06.30
SKF Wazhou Company 2,543,309.73 5,682,170.57
Zhenxin Company
Total 2,543,309.73 5,682,170.57
There is no material restriction on the return of the investment revenue from the Company and its subsidiaries.
20. Non-operating income
Item 2009.06.30 2008.06.30
Net income from disposal of non-current fixed
assets 280,423.87 174,914.86
Net income from penalty 51,630.23 116,905.00
Gains from debt restructure 3,490,458.02 312,365.59
Others 1,372,249.59 1,434,211.07
Total 5,194,761.71 2,038,396.52
21. Non-operating expenses
Item 2009.06.30 2008.06.30
Fine expenses 26,839.31 10,000.00
Loss on debt restructure 1,148,734.30 3,017,241.62
Net loss on disposal of non-current fixed assets 6,666.67 58,785.38
Donation expenditure - 1,000,000.00
Others 310,775.30 477,373.34
Total 1,493,015.58 4,563,400.34
VI. Notes to main items of financial statements of parent company
1. Accounts receivable
(1) Account age of accounts receivable are as follows:
2009.06.30 2008.12.31
Item
Amount %
Provision for
bad debt
Item % Provision for bad
debt
Within 1 year 683,931,081.53 85.68 6,839,310.82 600,624,200.61 83.67 5,799,738.09
1－2 years 56,669,180.02 7.10 2,833,459.00 67,898,023.32 9.46 3,337,435.55Wafangdian Bearing Company Ltd. 2009-6-30
47
2－3 years 19,918,136.97 2.50 3,983,627.39 16,772,221.39 2.34 3,353,449.20
Over 3 years 37,709,587.97 4.72 19,088,244.52 32,544,635.03 4.53 21,369,426.51
Total 798,227,986.49 100.00 32,744,641.73 717,839,080.35 100.00 33,860,049.35
2. Other receivables
(1) Account age of other receivables are as follows:
Item 2009.06.30 2008.12.31
Amount %
Provision for
bad debt
Amount %
Provision for
bad debt
Within 1
year 16,354,653.21 83.87 6,354.65 4,999,767.31 58.76 2,885.37
1 － 2
years 794,749.51 4.08 9,737.48 888,498.33 10.44 155.42
2 － 3
years 192,113.49 0.99 30,422.70 583,964.10 6.86 31,289.57
Over 3
years 2,158,682.31 11.07 980,830.76 2,036,996.33 23.94 993,015.22
Total 19,500,198.52 100.00 1,027,345.58 8,509,226.07 100.00 1,027,345.58
3. Long-term equity investment
(1) Long-term equity investment
Item 2008.12.31 Increase Decrease 2009.06.30
Other equity
investment
125,256,859.80 2,543,309.73 11,610,079.58 125,683,757.61
Total 125,256,859.80 2,543,309.73 11,610,079.58 125,683,757.61
（2）Other equity investment
Name of the
company invested Investment
term
Proportion
Original
amount
Balance in the
year-beginning
Increases in
the current
period
Decreased in
current
period
Balance in the
period-end
Calculating by cost
Wa Tong company 15 75.00% 28,030,375.50 28,030,375.50 0 0 28,030,375.50
Liao Zhou Company 10 100.00% 17,337,259.95 17,337,259.95 0 0 17,337,259.95
Aimuyi company 12 4.76% 2,000,000.00 2,000,000.00 0 0 2,000,000.00
subtotal 47,367,635.45 47,367,635.45 0 0 47,367,635.45
Calculating by
equity
Dalian SKF Wazhou 30 49.00% 68,600,000.00 77,478,369.23 2,543,309.73 11,610,079.58 68,411,599.38
Shanghai Zhenxin
Wazhou 10 40.00% 400,000.00 410,855.12 410,855.12
Subtotal 69,000,000.00 77,889,224.35 2,543,309.73 11,610,079.58 68,822,454.50Wafangdian Bearing Company Ltd. 2009-6-30
48
Total 116,367,635.45 125,256,859.80 2,543,309.73 11,610,079.58 116,190,089.95
4. Income from main operation and cost of main operation
(1) In terms of sales area
Income from main operation Cost of main operation
Category
2009.06.30 2008.06.30 2009.06.30 2008.06.30
Main business
revenue
866,359,089.81 1,250,697,127.11 711,697,557.29 1,021,033,635.80
Export sales 55,951,544.16 137,916,195.67 48,351,590.91 132,157,140.44
Domestic sales 779,816,148.14 1,036,538,350.34 641,127,433.63 825,553,492.79
Including:
North
219,457,242.73 274,159,624.06 168,766,734.72 247,099,958.28
South 179,806,305.71 148,783,273.06 147,114,691.19 129,219,406.80
East 319,377,765.47 545,016,377.37 272,495,732.76 384,678,395.65
West 61,174,834.23 68,579,075.85 52,750,274.96 64,555,732.06
Industrial
operation income
30,591,397.51 76,242,581.10 22,218,532.75 63,323,002.57
Other business
revenue
230,300,635.28 297,208,599.99 218,360,307.07 277,577,936.80
Subtotal 1,096,659,725.09 1,547,905,727.10 930,057,864.36 1,298,611,572.60
Internal offset
Total 1,096,659,725.09 1,547,905,727.10 930,057,864.36 1,298,611,572.60
5. Investment income
(1) The details of investment income are as follows:
Item 2009.06.30 2008.06.30
Shared and adjusted the net profits from the companies
invested according to the equity calculating method in the
period-end
2,543,309.73 5,682,170.57
Total 2,543,309.73 5,682,170.57
(2) The details that Shared and adjusted the net profits from the companies invested according to the equity calculating
method in the period-end
Name of invested company 2009.06.30 2008.06.30
SKF Wazhou Company 2,543,309.73 5,682,170.57
Zhenxin Company
Total 2,543,309.73 5,682,170.57
(3) There is no material restriction on the return of the investment revenue from the Company and its subsidiaries.
VII. Relationship and transactions with related parties
(I) Relationship with related parties
1. The related parties with controlling relationshipWafangdian Bearing Company Ltd. 2009-6-30
49
Enterprise name Registered address Main operation
Relationship
with the
Company
Economic nature Legal representative
Wafangdian Bearing
Group
No.1, Section 1 of
Beigongji Street,
Wafangdian City, Dalian
Manufacturing and
sales of bearings and
all kinds of equipment
Parent
company
State-owned
enterprise Wang Lushun
Liaoyang Bearing
Company
61 Weiguo Road, Baita
District, Liaoyang City
Manufacturing and
sales of bearings and
mechanical
processing
Subsidiary Limited company Shao Yang
Watong Company
No.1, Section 1 of
Beigongji Street,
Wafangdian City, Dalian
Production of
bearings and relevant
products
Subsidiary Sino-foreign joint
venture Wang Lushun
2. The registered capital of the related parties with controlling relationship and the change therein
Name of related party 2008.12.31 Increase in
current period
Decrease in
current period
2009.06.30
Wafangdian Bearing Group 360,000,000.00 0.00 0.00 360,000,000.00
Liaoyang Bearing Company 19,350,000.00 0.00 0.00 19,350,000.00
Watong Company USD 4,510,000.00 0.00 0.00 USD 4,510,000.00
3. The shares held by the related parties with controlling relationship and the change therein
Name of related
party
Amount of shares held Shareholding ratio
2009.06.30 2008.12.31 2009.06.30 2008.12.31
Wafangdian
Bearing Group 244,000,000.00 244,000,000.00 60.61% 60.61%
Liaoyang Bearing
Company 19,350,000.00 19,350,000.00 100.00% 100.00%
Watong Company USD 3,382,000.00 USD 3,382,000.00 75.00% 75.00%
4. Nature of the related parties without controlling relationship
(1) Controlled by the same parent company
Name of related party Shares held by the parent
company
Main operation Content of related
transaction with the
Company
Wafangdian slewing Bearing
Co., Ltd. 100.00% Bearing design, processing Processing and
manufacturing, sales
Sell materials and
Purchase products
Dalian Wafangdian Bearing
Group Equipment Manufacturing
Company
100.00%
of special-purpose moulds for bearings,
manufacturing of special-purpose equipment for
bearings and spare parts.
Purchase and sale of
materials
Wafangdian Bearing Precision
Steel Ball Manufacturing Co.,
Ltd.
48.90%
Design, processing, manufacturing and sales of
steel balls, manufacturing and sales of machinery
parts and machinery products
Sales of semi-finished
products and purchase
of materials
Wafangdian Bearing Precision
Forging and Pressing Co., Ltd. 90.00%
Processing of forged pieces and machinery parts,
maintenance of forging equipment, annealing for
forged pieces, etc.
Sales of semi-finished
products and purchase
of materialsWafangdian Bearing Company Ltd. 2009-6-30
50
(2) Joint ventures and affiliated companies of the Company
Name of related party Shares held by the
Company
Main operation Content of related transaction with
the Company
SKF Wazhou Company 49.00% Production and sales of
spherical roller bearings Purchase and sale of products
(II) Related transactions
1. Sales of commodities, raw materials and semi-finished products
2009.06.30 2008.06.30
Name of related party Amount Proportion Amount Proportio
n
The external network of WBGC 689,723.54 0.25% 34,249,338.38 2.16%
SKF WaZhou 22,303,556.29 7.93% 27,303,581.50 1.72%
Dalian Wafangdian Bearing Group Equipment
Manufacturing Company
1,390,059.94 0.49% 1,167,072.41 0.07%
Wafangdian Bearing Precision Steel Ball
Manufacturing Co., Ltd. 3,983,610.40 1.42% 5,327,723.44 0.34%
Wafangdian Bearing Precision Forging and
Pressing Co., Ltd. 124,287,460.53 44.17% 253,453,959.32 15.97%
WBGC Slewing Bearing Co.,Ltd 59,024,236.89 20.97% 35,718,073.44 2.25%
WBGC Precision transmission Bearing Co.ltd 4,563,018.60 1.62%
Total 216,239,186.99 76.84% 357,219,748.49 22.50%
A Products selled by the Company to external network of WBGC are less than the last year in the 1H year of 2009.
The sale price made according to the market.
B The company supplied the semi-products to SKF Wa Zhou based on the agreement price in the 1H year of 2009.
C The company supplied materials to the precise steel ball company based on the market price and charges for
procurement. in the 1H year of 2009.
D The company supplied materials to the precise forging and pressing company based on the market price and
charges for procurement in the 1H year of 2009..
2. Purchase of materials
2009.06.30 2008.06.30
Name of related party Amount Proportio
n Amount Proportion
SKF Wazhou Company 64,358,519.90 6.32% 79,412,206.66 14.28%
Dalian WBGC Equipment Manufacturing
Co.ltd
7,487,469.32 0.74% 10,748,874.85 1.93%
Wafangdian Bearing Precision Steel Ball
Manufacturing Co., Ltd.
3,886,747.94 0.38% 5,114,345.44 0.92%
Wafangdian Bearing Precision Forging and
Pressing Co., Ltd.
91,374,014.97 8.98% 221,988,151.16 39.93%
WBGC Slewing Bearing Co.,ltd 31,060,597.45 3.05% 110,068,863.24 19.8%
WBGC Precision transmission Bearing Co.ltd 5,013,788.48 0.49%
Total 203,181,138.06 19.96% 427,332,441.35 76.86%
A The company procured finished goods from SKF Wa Zhou based on the agreement price in the 1H year of 2009.
B The company procured semi-products of steel ball from the precise steael ball company based on the market price in
the 1H year of 2009. .Wafangdian Bearing Company Ltd. 2009-6-30
51
C The company procured semi-products of rings from the precise forging and pressing company based on the market
price in the 1H year of 2009..
(III) Balance of current accounts with related parties
Name of related party Name of account 2009.06.30 2008.12.31
WBGC Other payable 65,183,818.21 71,393,091.19
The external sales network of WBGC Account receivable 26,739,682.11 27,210,081.57
SKF Wazhou Company Accounts payable 35,498,676.17 55,589,485.20
Dalian WBGC Equipment Manufacturing Co.ltd Accounts payable 12,014,466.92 20,822,521.26
Wafangdian Bearing Precision Steel Ball
Manufacturing Co., Ltd. Accounts payable 231,651.62 3,388,280.71
Wafangdian Bearing Precision Forging and
Pressing Co., Ltd. Accounts payable - 4,313,887.49
WBGC Slewing Bearing Co.,Ltd Accounts payable - 56,565,009.62
WBGC Slewing Bearing Co.,Ltd Account receivable 8,179,773.57 -
WBGC Precision transmission Bearing Co.ltd Accounts payable 2,098,021.61 -649,031.36
VIII. Contingent events
There were no major contingent events in the 1H year of 2009.
IX. mportant issues
1.Trademark
The company uses the WBGC trademark with sales of finished-product, and pays the fee use. 5 million RMB was
provided and paid to WBGC in the report period.
X. Commitments
Ended on June 30 ,2009, no any significant commitment was made.
Ⅺ Approval of the consolidated financial statements
The consolidated financial statements had been approved by the board meeting held on August 20, 2009.
Other financial data
1 Abnormal profits and losses
Unit: RMB Yuan
Item 2009.06.30 2008.06.30
Before tax After tax Before tax After tax
Profits and losses relating to disposal of
fixed assets 273,757.20 205,317.90 116,129.48 87,097.11
Other non-operating incomes and
expenses with the provisions for
impairment of assets depreciation
according to the enterprises’ routine
accounting system
1,086,265.21 645,891.60 63,742.73 47,807.05
Profits and losses relating to the debt
restructure 2,341,723.72 1,181,925.64 -2,704,876.03 -2,028,657.02
Total 3,701,746.13 2,033,135.14 -2,525,003.82 -1,893,752.86
Supplement:
item consolidated Parent
2009.6.30 2008.6.30 2009.6.30 2008.6.30
Gains from sales and disposal ofWafangdian Bearing Company Ltd. 2009-6-30
52
department or invested units
Loss from natural disater
Total profit(+/-) from the account
policy changing
Total profit(+/-) from the account
estimation changing
Loss from the debt restructure (-) 2,341,723.72 -2,704,876.03 1,644,659.95 -2,770,003.37
Others 1,360,022.41 179,872.21 1,502,068.61 289,035.14
The attachment table to the 2009 Midyear Profit Composition Table has been prepared in accordance with the
Notice No. 9 Regulations on Information Preparation and Disclosure of Listed Companies of the Securities
Supervisory Committee of China:
Return on net assets (%) Gain per share (Yuan/share)
Fully diluted Weighted Items average Fully diluted Weighted average
Profit in the
report period
(Yuan) 2009.0
6.30
2008.06.
30
2009.06.
30
2008.06.
30
2009.06.
30
2008.0
6.30
2009.0
6.30
2008.06.
30
Main business profit
156,888,561.77 11.5 18.3 11.8 19.0 0.39 0.59 0.39 0.59
Operative profit 57,336,986.22 4.2 8.8 4.3 9.1 0.14 0.28 0.14 0.28
Net profit 55,313,176.85 4.1 7.3 4.2 7.5 0.14 0.23 0.14 0.23
Net profit after deductions
of abnormal profit and loss
51,611,430.72 3.8 7.5 3.9 7.7 0.13 0.24 0.13 0.24
Chapter Eight. List of reference documents
1. The Accounting statements of the first half year of 2009 which is with the signatures and seals of the
legal representative, finance controller and the director of accounting department of the Company.;
2. The original 2008 annual audit report and the financial statements with the seal of the Certified Public
Accountants and the personal signature and seal of the certified public accountant.
3. Original documents and notices of the Company disclosed in newspapers designated by the Security
Supervisory Committee of China in report period.
The documents above are deposited in the Investment&Security Department of the Company.
