Alibaba Pictures : CONTINUING CONNECTED TRANSACTIONS - SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1060)

CONTINUING CONNECTED TRANSACTIONS - SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT

THE SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT

The Board announces that on March 29, 2021, the Company and AGH entered into the Second Renewal of the Shared Services Agreement to renew the Renewed Shared Services Agreement for three years commencing from April 1, 2021 and ending on March 31, 2024. Pursuant to the Second Renewal of the Shared Services Agreement, AGH agreed to procure the service providers (being AGH and its affiliates as set out in the Renewed Shared Services Agreement or otherwise designated by AGH) to provide certain Existing Services to the Company and its affiliates to continue to support the operation of the Group's business, subject to the relevant annual caps as set out below.

LISTING RULES IMPLICATIONS

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, AGH is an associate of Ali CV and hence a connected person of the Company. The entering into of the Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As 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 Group to AGH and its affiliates under the Second Renewal of the Shared Services Agreement are above 0.1% but below 5%, the entering into of the Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

INTRODUCTION

References are made to (i) the announcement of the Company dated December 31, 2018 relating to, among others, the entering into of the Renewed Shared Services Agreement for a term commenced from December 31, 2018 and ending on March 31, 2021, and (ii) the announcement of the Company dated September 20, 2019 relating to, among other things, the entering into of the Supplemental Agreement to revise the annual caps in respect of the service fees payable by the Group for the financial year ended March 31, 2020 and the financial year ending March 31, 2021 for the transactions contemplated under the Renewed Shared Services Agreement, and (iii) the announcement of the Company dated March 30, 2020 relating to, among other things, the entering into of the Second Supplemental Agreement to the Renewed Shared Services Agreement (as supplemented and amended by the Supplemental Agreement) to (a) expand the scope of the software development and technological services thereunder and (b) revise the annual caps in respect of the service fees payable by the Group for the financial year ending March 31, 2021 for the transactions contemplated thereunder.

As the Renewed Shared Services Agreement will expire on March 31, 2021, the Company and AGH entered into the Second Renewal of the Shared Services Agreement on March 29, 2021 to renew the Renewed Shared Services Agreement for three years commencing from April 1, 2021 and ending on March 31, 2024. Pursuant to the Second Renewal of the Shared Services Agreement, AGH agreed to procure the service providers (being AGH and its affiliates as set out in the Renewed Shared Services Agreement or otherwise designated by AGH) to provide certain Existing Services to the Company and its affiliates to continue to support the operation of the Group's business, subject to the relevant annual caps as set out below.

THE SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT

The principal terms of the Second Renewal of the Shared Services Agreement (as amended and restated) are as follows:

Date:

March 29, 2021

Parties:

• (1) the Company, as service user

• (2) AGH, as service provider

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

Subject matter

Pursuant to the Second Renewal of the Shared Services Agreement, AGH agreed to procure the service providers (being AGH and its affiliates as set out in the Renewed Shared Services Agreement or otherwise designated by AGH) to provide certain Existing Services (i.e. service items (1) to (10) listed below, which were covered under the Renewed Shared Services Agreement) to the Company and its affiliates as follows:

• (1) office space and support services;

• (2) customer services support;

• (3) business intelligence services;

• (4) maintenance service for the database of the Group;

• (5) office system and support services;

• (6) procurement function support services;

• (7) SMS platform services;

• (8) Cloud Services;

• (9) software development and technological services; and

• (10) staff support.

For the avoidance of doubt, save as amended and restated by the Second Renewal of the Shared Services Agreement, all other provisions of the Renewed Shared Services Agreement shall remain the same and effective.

Service fees

The payment terms of the service fees were determined after arm's length negotiations between the parties with reference to specific conditions and market practice of each service type. The service fees shall be charged on a quarterly basis and settled within ten (10) Business Days upon receipt of the relevant invoice(s). The parties may subsequently adopt any other payment terms by mutual agreement, but in any event, such other payment terms shall not be less favorable than those available to any third party independent of AGH and its affiliates.

The service fees for service items (1) to (6) and (9) listed above payable by the Group shall be calculated on the basis of the actual costs and expenses of AGH or its affiliates for providing the respective services by adding a mark-up percentage. Such actual costs and expenses include, among others, staff cost, depreciation cost of the servers and cost of broadband network. However, once the service provider commences providing services of the same or similar nature as that of service item (9) listed above to its independent third parties, the service fees for service item (9) payable by the Group shall be calculated based on the rate of service fees available to those independent third parties for comparable services, subject to adjustment upon mutual agreement but in any event, the service fees for service item (9) listed above payable by the Group to the service provider will not be higher than the fees payable by any independent third party to the same service provider for comparable services. The service fees for service item (10) listed above shall be calculated on the basis of the actual salaries and/or benefits of the relevant supporting staff by adding a mark-up percentage.

The mark-up percentage will be determined based on the recommendations of the professional third-party consultant(s) to be appointed by AGH or its affiliates (being an accounting firm with appropriate qualifications, which will take into consideration various factors including the applicable tax laws and regulations and the statistics from comparable companies when making such recommendations) and arm's length negotiations of the parties, and will be subject to adjustment annually.

The service fees for service item (7) listed above shall be calculated on the basis of the fair market price per SMS message multiplied by the actual number of SMS messages sent. The service fees for service item (8) listed above shall be calculated on the basis of the fair market price of each specific type of Cloud Services.

The "fair market price" refers to the fair market price charged by AGH or its affiliates to any independent third party for comparable services, provided that the service fees for the service items (7) and (8) listed above will not be higher than the service fees payable by the Group to any independent third party for comparable services. The Group will from time to time review the service fees for the service items (7) and (8) listed above by comparing them against market prices for comparable services chargeable by other service providers which are independent third parties of the Group.

Annual caps

The annual caps for the service fees payable by the Group for each of the three financial years ending March 31, 2022, 2023 and 2024 under the Second Renewal of the Shared Services Agreement are RMB105,000,000, RMB110,000,000 and RMB115,000,000, respectively.

The aforesaid annual caps were determined with reference to the following factors:

• (1) the total historical service fees paid/payable by the Group to AGH or its affiliates under the Renewed Shared Services Agreement for the period from December 31, 2018 to March 31, 2019, each of the financial years ended March 31, 2019 and 2020 and the period from April 1, 2020 to February 28, 2021 of approximately RMB13,137,000, RMB71,396,000 and RMB57,061,000, respectively; and

• (2) the estimated total service fees payable by the Group to AGH or its affiliates under the Second Renewal of the Shared Services Agreement for the three financial years ending March 31, 2024 with reference to estimates on usage pattern, volume, demand of the Group's business for the relevant services, the current salaries and benefits that the relevant supporting staff are entitled to, and a certain buffer for potential increment in service fees chargeable by the service providers.

REASONS FOR AND BENEFITS OF ENTERING INTO THE SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT

The entering into of the Second Renewal of the Shared Services Agreement will enable the Group to continue to improve its business operations. Alibaba Group has been providing the Company and its affiliates with the relevant services and supporting staff for the Group's business contemplated under the Renewed Shared Services Agreement. Alibaba Group is familiar with the Group's business requirements and is able to provide reliable and timely services for the Group's business operations. In addition, the entering into of the Second Renewal of the Shared Services Agreement will allow the Company to continue to leverage on the mature infrastructure and coverage already built by Alibaba Group and promote better cooperation between Alibaba Group and the Group.

The terms of the Second Renewal of the Shared Services Agreement are a result of arm's length negotiations between the Company and AGH, and the Directors believe such terms are no more favorable to AGH, nor are they any less favorable to the Group, than those available from independent third parties.

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

As (i) each of Mr. Fan Luyuan, Mr. Meng Jun and Mr. Xu Hong is an employee of AGH or its subsidiaries, and (ii) 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 Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder. As such, Mr. Fan Luyuan, Mr. Meng Jun, Mr. Xu Hong and Mr. Li Jie have abstained from voting on the resolution(s) passed by the Board in relation to the Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder (including the relevant annual caps). Save as disclosed above, none of the other Directors has a material interest in the Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder which requires any of them to abstain from voting on the relevant Board resolution(s).

LISTING RULES IMPLICATIONS

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, AGH is an associate of Ali CV and hence a connected person of the Company. The entering into of the Second Renewal of the Shared Services Agreement, and the transactions contemplated thereunder constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules.

As 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 Group to AGH and its affiliates under the Second Renewal of the Shared Services Agreement are above 0.1% but below 5%, the entering into of the Second Renewal of the Shared Services Agreement and the transactions contemplated thereunder are subject to the reporting, announcement and annual review requirements but exempt from the independent shareholders' approval requirements under Chapter 14A of the Listing Rules.

INFORMATION ON THE COMPANY

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: (i) Internet-based promotion and distribution, (ii) content production, and (iii) integrated development. These segments encompass (i) 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 tocinemas; (ii) the investment and production of entertainment content, such as film and drama series both domestically and internationally; and (iii) centered around copyrights, the development of professional services ranging from financing, business placement, promotion and distribution to merchandising, respectively.

INFORMATION ON AGH AND ALIBABA GROUP

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.

DEFINITIONS

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

"affiliate(s)"

with respect to any person that is not an individual, any other person that directly or indirectly through one or more intermediaries Controls, or is Controlled by, or is under common Control with, such person; for the avoidance of doubt, it shall include any subsidiaries of any person that is not an individual; for the purpose of this announcement, AGH together with its affiliates and the Company together with its affiliates shall not be deemed to be an affiliate of each other

"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)", "connected person(s)", "controlling shareholder(s)" and "subsidiary(ies)"

each has the meaning ascribed to it under the Listing Rules

"Board"

the board of Directors

"Business Day"

any day (other than a Saturday or Sunday or public holiday) on which banks in Hong Kong and the PRC are open for the transaction of normal business

"Cloud Services"

services relating to, among others, elastic compute service, relational database service, open storage service, object storage service, server load balance, open cache service, open table service, open data processing service and content delivery network

"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)

"Control"

the power or authority, whether exercised or not, to direct the business, management and policies of a person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, which power or authority shall conclusively be presumed to exist upon possession of beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be cast at a meeting of the members or shareholders of such person or power to control the composition of a majority of the board of directors (or similar governing body) of such person; the term "Controlled" has the meaning correlative to the foregoing

"Directors"

the directors of the Company

"Existing Services"

service items (1) to (10) as listed under the section headed "THE SECOND RENEWAL OF THE SHARED SERVICES AGREEMENT - Subject matter" in this announcement

"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

"Group"

the Company and its subsidiaries

"PRC"

the People's Republic of China

"Renewed Shared Services	the renewed shared services agreement entered into
Agreement"	between the Company and AGH on December 31, 2018,
as supplemented and amended by the Supplemental
Agreement and the Second Supplemental Agreement
"RMB"	Renminbi, the lawful currency of the PRC
"Second Renewal of the	the second renewal of the Shared services agreement
Shared Services	entered into between AGH and the Company on March
Agreement"	29, 2021, to renew the Renewed Shared Services
Agreement
"Second Supplemental	the second supplemental agreement entered into between
Agreement"	AGH and the Company on March 30, 2020 to (a) expand
the scope of the software development and technological
services contemplated under the Renewed Shared
Services Agreement (as supplemented and amended by
the Supplemental Agreement), and (b) revise the annual
caps in respect of the service fees payable by the Group
for the financial year ending March 31, 2021 for the
transactions contemplated thereunder
"Share(s)"	ordinary share(s) of HK$0.25 each in the share capital of
the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Supplemental Agreement"	the supplemental agreement entered into between AGH
and the Company on September 20, 2019 to revise the
then existing annual caps in respect of the service fees
payable under the Renewed Shared Services Agreement
for the financial year ended March 31, 2020 and the
financial year ending March 31, 2021
"%"	per cent.
Hong Kong, March 29, 2021

On behalf of the Board Alibaba Pictures Group Limited

Fan Luyuan

Chairman & Chief Executive OfficerAs 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.