Stock abbreviation: Wazhou B Stock code: 200706 No.: 2023-09
Wafangdian Bearing Co., Ltd.
Announcement on the provision for credit Impairment and asset
Impairment in 2022
The Company and all members of the BOD guarantee that the information disclosed is true,
accurate and completed, and that there are no false records, misleading statements or
material omissions.
I. Overview of the provision for asset impairment
Wafangdian Bearing Co., Ltd. (hereinafter referred to as “the company”) held the 4th Session of 9th
Board of Directors and the 4th Session of the 9th Board of Supervisors on April 26, 2023, which
deliberated and passed the Proposal on the Provision for Asset Impairment, the specific situation is
hereby announced as follows:
1. The credit impairment provision and the reason for the asset impairment provision
In accordance with the accounting standards for enterprises and the relevant provisions of the
company’s accounting policies, and in order to provide a true and accurate picture of the company’s
assets and financial position as at 31 December 2022, the company conducted a comprehensive
examination and impairment test of all assets within the scope of the consolidated statements as at
31 December 2022, provision for credit impairment and provision for impairment of assets that may
show signs of impairment as at 31 December 2022.
2.The scope and total amount of the provision for credit impairment and asset impairment
Having regard to the assets within the scope of the consolidated statements of the company as at
31 December 2022 that may show signs of impairment, such as accounts receivable, notes
receivable, other receivables, contract assets, inventory and contract performance costs, fixed
assets, construction-in-progress, etc. , the company's total credit impairment losses and
asset impairment losses due to various impairment provisions amounted to $56.61 million. Details
are as follows:
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Stock abbreviation: Wazhou B Stock code: 200706 No.: 2023-09
Amount
Accrued (ten
Item Reason for Accrual
Project thousand
yuan)
The company estimates the expected credit losses of financial assets measured at amortized cost,
financial assets measured at fair value and the changes in these assets included in other combined
income, etc. . In addition to assessing overdue credit losses on a single-item basis, the company
Loss on also assesses expected credit losses on an aging-portfolio basis using amortized costs to measure
impairment of 130 accounts receivable. According to the characteristics of credit risk, the paper divides the notes
notes receivable receivable into several combinations, and calculates the expected credit loss based on the
combination. The basis for determining the combination is: Bank acceptance bill, commercial
acceptance bill portfolio received from related parties, commercial acceptance bill portfolio received
from non-related parties.
The company estimates the expected credit losses of financial assets measured at amortized cost,
financial assets measured at fair value and the changes in these assets included in other combined
income, etc. . For receivables arising from transactions governed by GAAP 14-income (2017) ,
Loss of regardless of whether they contain significant financing elements, the company always measures its
credit loss provisions in amounts equal to the expected credit losses over the life of the business. In
Loss on addition to assessing overdue credit losses on a single-item basis, the company also assesses
impair
impairment of expected credit losses on an aging-portfolio basis using amortized costs to measure accounts
ment -1348
accounts receivable. According to the characteristics of credit risk, accounts receivable are divided into
receivable several combinations, and the expected credit loss is calculated on the basis of the combination.
The basis of determining the combination is: related party combination, aging combination. For the
accounts receivable divided into a combination, the company refers to the history of credit loss
experience, combined with the current situation and the forecast of future economic conditions, the
preparation of accounts receivable aging and the expected credit loss rate throughout the life of the
table, calculate expected credit losses.
The company estimates the expected credit losses of financial assets measured at amortized cost,
financial assets measured at fair value and the changes in these assets included in other combined
Impairment loss
income, etc. . The group divides other receivables into several combinations according to their
of other -197
credit risk characteristics, and calculates the expected credit losses on the basis of the
receivables
combinations. The basis of determining portfolio is: related party portfolio, aging portfolio, risk-free
portfolio (according to the credibility of the transaction object, the nature of funds, transaction
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Stock abbreviation: Wazhou B Stock code: 200706 No.: 2023-09
security measures, etc. . For other receivables divided into a portfolio, the company refers to
historical credit loss experience, combined with current conditions and forecasts of future economic
conditions, by default risk exposure and expected credit loss rate over the life of the company,
calculate expected credit losses.
Loss from
inventory End-of-period inventory is valued at the lower of cost or net realisable value and the portion of the
depreciation and inventory that is expected to be unrecoverable due to damage, obsolescence in whole or in part, or
loss from the sale price below cost, draw Reserve for inventory decline. The reduction of inventory prices of
impairment of 5,440
inventory commodities and bulk raw materials is to be drawn on the basis of the difference between
contract the cost of a single inventory item and its net realizable value; Other large quantities, unit price lower
performance
raw and auxiliary materials according to the type of stock reserve.
costs
For contract assets formed from transactions governed by GAAP 14-income (2017) , whether or not
they contain significant financing elements, the company always measures its loss provisions in
amounts equal to the expected credit losses over the life of the business. Based on the historical
Contract assets 3
credit loss experience, combined with the current situation and the forecast of the future economic
Loss on
situation, the company compiles the contrast table of the expected credit loss rate between the
impair aging of the contract assets and the whole life period, and calculates the impairment loss.
ment of If there are signs of impairment on the balance sheet date, a impairment test shall be conducted. If
the recoverable amount of an asset is lower than its book value, a provision for impairment shall be
assets
made and the impairment loss shall be taken into account. The recoverable amount is the higher of
the net fair value of the asset less the cost of disposal and the present value of the expected future
Fixed assets 1,402
cash flow of the asset. The provision for impairment of assets is calculated and recognized on the
basis of a single asset, and if it is difficult to estimate the recoverable amount of a single asset, the
recoverable amount of the asset group to which the asset belongs is determined. The Asset Group
is the minimum portfolio that can independently generate cash inflows.
The company inspects construction in progress on each balance sheet date and conducts
impairment tests when there are signs of impairment. Recoverable amounts are determined on the
Construction in
231 basis of the higher ratio between the fair value of the assets, net of disposal costs, and the present
progress
value of the expected future cash flows of the assets. After the impairment test, if the carrying value
of the asset exceeds its recoverable amount, the difference is recognized as impairment loss.
Total 5,661
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Stock abbreviation: Wazhou B Stock code: 200706 No.: 2023-09
II. Influence on the company’s financial condition and operating results
The provision for impairment of the above various types of assets this time is 56.61 million yuan,
which will affect the total profit of the company’s 2022 consolidated statements of 56.61million
yuan.
III. The company’s approval procedures for the provision for asset impairment
this time
The provision for asset impairment this time has been reviewed and approved at the 4th Session of
the 9th board of directors and the 4th Session of the 9th board of supervisors convened by the
company on April 26, 2023. The independent directors expressed their independent opinions on the
matter and agreed to make the provision for asset impairment this time. The case shall be
submitted to the company’s 2022 annual general meeting for consideration.
IV. Explanation of the board of directors on the rationality of asset impairment
this time
In accordance with the Accounting Standards for Business Enterprises and the relevant accounting
policies of the Company, the Company will make provision for 2022
The reserve for impairment of fixed assets and inventories totaled 56.61 million yuan, which can
more objectively and fairly reflect the company's financial position and ending assets.
V. Opinions of the board of supervisors
The board of supervisors believes that the resolution procedure for the company’s provision for
asset impairment this time is legal and has sufficient basis; the provision is in line with relevant
regulations such as the Accounting Standards for Business Enterprises, and in line with the
company’s actual situation, and can more fairly reflect the company’s asset status after the
provision. The provision for asset impairment this time is agreed.
VI. Opinions of independent directors
The independent directors believe that the company has sufficient basis for the provision for asset
impairment this time, and the decision-making procedures are normative, conform to the
Accounting Standards for Business Enterprises and the relevant regulations of the company, can
more fairly reflect the company’s financial status, asset value and operating results as of December
31, 2022, is in line with the company’s overall interests, and helps provide investors with more real,
reliable and accurate accounting information, and there is no situation that damages the interests of
the company and all shareholders, especially small and medium shareholders. We agree to the
provision for asset impairment this time.
VII. Table of contents for documents available for inspection
1. Resolution of the 4th Session of 9th BOD of Wafangdian Bearing Co., Ltd.;
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Stock abbreviation: Wazhou B Stock code: 200706 No.: 2023-09
2. Resolution of the 4th Session of 9th BOS of Wafangdian Bearing Co., Ltd.;
3. Opinions of independent directors.
Hereby notify
Board of director of
Wafangdian bearing Company limited
27 April 2023
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