Alibaba Pictures : CONTINUING CONNECTED TRANSACTIONS - RENEWED OPERATING SERVICE AGREEMENT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

(Incorporated in Bermuda with limited liability)

(Stock Code: 1060)

CONTINUING CONNECTED TRANSACTIONS -

RENEWED OPERATING SERVICE AGREEMENT

RENEWED OPERATING SERVICE AGREEMENT

The Board announces that Zhonglian Shengshi, an indirect wholly-owned subsidiary of the Company, entered into the Renewed Operating Service Agreement with the Tmall Entities, both subsidiaries of AGH, on April 1, 2021 for three years commencing from April 1, 2021 and ending on March 31, 2024. Pursuant to the Renewed Operating Service Agreement, the Tmall Entities agreed to use, and Zhonglian Shengshi agreed to provide, the Operating Services, subject to the relevant annual caps.

LISTING RULES IMPLICATIONS

As at the date of this announcement, the Tmall Entities are both subsidiaries of AGH. AGH is the ultimate sole shareholder of Ali CV, which is a controlling shareholder and a connected person of the Company holding approximately 50.26% of the issued share capital of the Company. Accordingly, each of the Tmall Entities is an associate of Ali CV and hence a connected person of the Company. The entering into of the Renewed Operating Service Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Since all of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the highest annual cap for the service fees payable by the Tmall Entities to Zhonglian Shengshi for the transactions contemplated under the Renewed Operating Service Agreement are above 0.1% but below 5%, the entering into of the Renewed Operating Service Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

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INTRODUCTION

Reference is made to the announcement of the Company dated May 11, 2018 in relation to the Operating Services Agreement. As the Operating Service Agreement will expire on March 31, 2021, Zhonglian Shengshi and the Tmall Entities entered into the Renewed Operating Service Agreement on April 1, 2021 to renew the Operating Service Agreement for three years commencing from April 1, 2021 and ending on March 31, 2024. Pursuant to the Renewed Operating Service Agreement, the Tmall Entities agreed to use, and Zhonglian Shengshi agreed to provide, the Operating Services, subject to the relevant annual caps.

RENEWED OPERATING SERVICE AGREEMENT

The principal terms of the Renewed Operating Service Agreement are set out below:

Date:	April 1, 2021
Parties:	(1)	Tmall Network
	(2)	Tmall Technology
	(3)	Zhonglian Shengshi

Term: three years commencing from April 1, 2021 and ending on March 31, 2024

Subject Matter

Pursuant to the Renewed Operating Service Agreement, the Tmall Entities (i.e. Tmall Network and Tmall Technology) agreed to use, and Zhonglian Shengshi agreed to provide, such services (the "Operating Services") which are necessary for Zhonglian Shengshi to operate Tmall on behalf of the Tmall Entities in relation to the Relevant Categories, including exercising rights and discharging obligations under the relevant contracts between the Merchants and the Tmall Entities and their affiliates on behalf of the Tmall Entities, providing customer services and marketing services, conducting evaluations on Merchants and quality control checks on merchandise, and taking action for any breach of contract by any Merchant.

Pricing Basis

The service fees payable by the Tmall Entities to Zhonglian Shengshi will be 50% of the software technology service fees payable by the Merchants to the Tmall Entities based on the volume of completed sales on Tmall for the Relevant Categories. The aforesaid service fees will be determined with reference to, among other things, the operating costs expected to be incurred by Zhonglian Shengshi/the Group in providing the Operating Services including staff costs, forecast marketing and promotional activities and technical support expenses.

Payment Terms

On the second business day of each month, the Tmall Entities will provide details of the net turnover for the Relevant Categories and the amount of the service fees for the preceding month to Zhonglian Shengshi for confirmation.

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The service fees shall be paid by the Tmall Entities in cash on a quarterly basis. Zhonglian Shengshi will issue invoices quarterly and Tmall Technology is required to make the payment within 10 business days upon receipt of the invoice issued by Zhonglian Shengshi.

ANNUAL CAPS AND BASIS OF DETERMINATION OF ANNUAL CAPS

The Board has determined that the annual caps for service fees payable by the Tmall Entities to Zhonglian Shengshi for the transactions contemplated under the Renewed Operating Service Agreement for each of the three financial years ending March 31, 2022, 2023 and 2024 will be RMB100,000,000, RMB120,000,000, and RMB140,000,000, respectively.

The annual caps were determined with reference to (1) the historical transaction amounts paid/payable by the Tmall Entities to the Group under the Operating Service Agreement for each of the two financial years ended March 31,2019 and 2020 and the period from April 1, 2020 to February 28, 2021, being approximately RMB33,456,000, RMB52,628,000 and RMB62,307,000, respectively; (2) the expected rate of usage and demand for the Operating Services during the term of the Renewed Operating Service Agreement; and (3) a certain percentage of buffer for potential increment in the transaction volume year-on-year.

REASONS FOR AND BENEFITS OF ENTERING INTO THE RENEWED OPERATING SERVICE AGREEMENT

Tmall is the world's largest third-party online and mobile commerce platform for brands and retailers, in each case in terms of gross merchandise value in the twelve months ended March 31, 2020. Tmall caters to consumers' ever-growing demand for high quality products and premium shopping experience. AGH has positioned Tmall as a trusted platform for consumers in the PRC and overseas to buy both homegrown and international branded products as well as products not available in traditional retail outlets. Brands and Merchants operate their own storefronts on Tmall with unique brand identities and look and feel, accompanied by full control over their own branding and merchandising. A large number of international and Chinese brands and Merchants have established storefronts on Tmall.

The Group has been engaged in developing intellectual property derivative merchandise for several years. It has gained extensive operational experience in relation to these products and accumulated relevant industry resources. Given Tmall's large user base and the Group's expertise on the Relevant Categories, the Company believes that the collaboration between the Tmall Entities and the Group will be mutually beneficial and the entering into of the Renewed Operating Service Agreement will enable the Group to continue to achieve its commercial objectives and expand its business potential.

Having reviewed the terms of the Renewed Operating Service Agreement, the Directors (including the independent non-executive Directors) are of the view that the terms of the Renewed Operating Service Agreement and the annual caps are fair and reasonable, the transactions contemplated thereunder are on normal commercial terms and that the entering into of the Renewed Operating Service Agreement is in the ordinary and usual course of business of the Group and in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATIONS

As at the date of this announcement, the Tmall Entities are both subsidiaries of AGH. AGH is the ultimate sole shareholder of Ali CV, which is a controlling shareholder and a connected person of the Company holding approximately 50.26% of the issued share capital of the

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Company. Accordingly, each of the Tmall Entities is an associate of Ali CV and hence a connected person of the Company. The entering into of the Renewed Operating Service Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

Since all of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the highest annual cap for the service fees payable by the Tmall Entities to Zhonglian Shengshi for the transactions contemplated under the Renewed Operating Service Agreement are above 0.1% but below 5%, the entering into of the Renewed Operating Service Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

As (1) each of Mr. Fan Luyuan, Mr. Meng Jun and Mr. Xu Hong is an employee of AGH or its subsidiaries, and (2) Mr. Li Jie is currently taking up a management role in a subsidiary of AGH, they are deemed or may be perceived to have a material interest in the Renewed Operating Service Agreement and the transactions contemplated thereunder (including the annual caps). As such, each of Mr. Fan Luyuan, Mr. Meng Jun, Mr. Xu Hong and Mr. Li Jie has abstained from voting on the relevant resolution(s) of the Board in relation to the Renewed Operating Service Agreement and the transactions contemplated thereunder (including the annual caps). Save as disclosed above, none of the other Directors has a material interest in the Renewed Operating Service Agreement and the transactions contemplated thereunder, and therefore none of them has abstained from voting on the relevant resolution(s) passed by the Board.

INFORMATION ON THE COMPANY AND ZHONGLIAN SHENGSHI

The Company is listed on the Stock Exchange (stock code: 1060). The Company focuses on developing the full business potential of integration and innovative applications of the Internet and traditional film and television industries. The core business of the Company includes three major segments: (1) Internet-based promotion and distribution, (2) content production, and (3) integrated development. These segments encompass (1) the operation of an integrated O2O platform for the promotion and distribution of entertainment content, and the provision of online movie ticketing service to consumers and ticketing issuance system to cinemas; (2) the investment and production of entertainment content, such as film and drama series, both domestically and internationally; and (3) centered around copyrights, the development of professional services ranging from financing, business placement, promotion and distribution to merchandising, respectively.

Zhonglian Shengshi, being an indirect wholly-owned subsidiary of the Company, serves mainly administrative and investment holding purposes for the Group.

INFORMATION ON AGH AND THE TMALL ENTITIES

AGH is a company incorporated in the Cayman Islands, with its American depositary shares, each representing eight ordinary shares, listed on the New York Stock Exchange (stock symbol: BABA), and its ordinary shares listed on the Main Board of the Stock Exchange (stock code: 9988). Alibaba Group's mission is to make it easy to do business anywhere. Alibaba Group aims to build the future infrastructure of commerce and envisions that its customers will meet, work and live at Alibaba, and that it will be a good company that will last for 102 years. Alibaba Group's businesses are comprised of core commerce, cloud computing, digital media and entertainment and innovation initiatives.

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Tmall Network, being a consolidated entity of AGH, is primarily involved in the operation of Tmall.

Tmall Technology, being an indirect wholly-owned subsidiary of AGH, is primarily involved in the operation of Tmall.

DEFINITIONS

In this announcement, save as the context otherwise requires, the defined terms shall have the following meanings:

"AGH"	Alibaba Group Holding Limited, a company
	incorporated in the Cayman Islands, with its
	American depositary shares, each representing eight
	ordinary shares, listed on the New York Stock
	Exchange (stock symbol: BABA), and its ordinary
	shares listed on the Main Board of the Stock
	Exchange (stock code: 9988)
"Ali CV"	Ali CV Investment Holding Limited, a company
	incorporated in the Cayman Islands and an indirect
	wholly-owned subsidiary of AGH
"Alibaba Group"	AGH and its subsidiaries
"associate(s)",	each has the meaning ascribed to it under the Listing
"connected person(s)",	Rules
"controlling shareholder(s)"
and "subsidiary(ies)"
"Board"	the board of Directors
"Company"	Alibaba Pictures Group Limited, a company
	incorporated in Bermuda with limited liability and the
	shares of which are listed on the Main Board of the
	Stock Exchange (stock code: 1060)
"Directors"	the directors of the Company
"Group"	the Company and its subsidiaries
"HK$"	Hong Kong dollars, the lawful currency of Hong
	Kong
"Hong Kong"	the Hong Kong Special Administrative Region of the
	PRC
"Listing Rules"	the Rules Governing the Listing of Securities on The
	Stock Exchange of Hong Kong Limited
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"Merchant(s)"	legal entity(ies) which conduct(s) sale of products or
	provide(s) services on Tmall
"Operating Services"	has the meaning ascribed to it under the section
	headed "RENEWED OPERATING SERVICE
	AGREEMENT - Subject Matter" in this
	announcement
"Operating Service	the agreement entered into between the Tmall Entities
Agreement"	and Shouquanbao on May 11, 2018 in relation to the
	provision of the Operating Services by Shouquanbao
	to the Tmall Entities, details of which are set out in
	the announcement of the Company dated May 11,
	2018
"PRC"	the People's Republic of China
"Relevant Categories"	certain product categories offered on Tmall, namely
	action figures, film, TV & entertainment
	merchandise, board & card games, cosplay
"Renewed Operating Service	the renewal of operating service agreement entered
Agreement"	into between Zhonglian Shengshi and the Tmall
	Entities on April 1, 2021 in relation to the provision
	of the Operating Services by Zhonglian Shengshi to
	the Tmall Entities
"RMB"	Renminbi, the lawful currency of the PRC
"Share(s)"	ordinary share(s) of HK$0.25 each in the share
	capital of the Company
"Shareholder(s)"	the holder(s) of the Share(s)
"Shouquanbao"	阿里巴巴授權寶（天津）文化傳播有限公司
	(Alibaba Shouquanbao (Tianjin) Culture
	Communication Co., Ltd.*), a company established
	in the PRC with limited liability and a consolidated
	subsidiary of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Tmall"	a third-party online and mobile commerce platform
	for brands and retailers
"Tmall Entities"	Tmall Network and Tmall Technology
"Tmall Network"	浙江天貓網絡有限公司 (Zhejiang Tmall Network
	Co., Ltd.*), a company established in the PRC with
	limited liability and a consolidated entity of AGH
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"Tmall Technology"浙江天貓技術有限公司 (Zhejiang Tmall

Technology Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly- owned subsidiary of AGH

"Zhonglian Shengshi"中聯盛世文化（北京）有限公司 (Zhonglian

Shengshi Culture (Beijing) Co., Ltd.*), a company established in the PRC with limited liability and an indirect wholly-owned subsidiary of the Company

"%"

per cent

• For identification purposes only

On behalf of the Board

Alibaba Pictures Group Limited

Fan Luyuan

Chairman & Chief Executive Officer

Hong Kong, April 1, 2021

As at the date of this announcement, the Board comprises Mr. Fan Luyuan, Mr. Li Jie and Mr. Meng Jun, being the executive Directors; Mr. Xu Hong, being the non-executive Director; and Ms. Song Lixin, Mr. Tong Xiaomeng and Mr. Johnny Chen, being the independent non-executive Directors.

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