Alibaba Pictures : CONNECTED TRANSACTION IN RELATION TO THE SALE OF ONLINE DISSEMINATION RIGHTS OF DRAMA SERIES (in PDF)

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(Incorporated in Bermuda with limited liability)

(Stock Code: 1060)

The Board announces that, on August 17, 2017, Huameng (Tianjin), a consolidated subsidiary of the Company, entered into the Online Dissemination Rights Transfer Agreement with 1 Verge Information, a consolidated entity of AGH. Pursuant to the Online Dissemination Rights Transfer Agreement, Huameng (Tianjin) has agreed to sell, and 1 Verge Information has agreed to acquire, the Online Dissemination Rights of the Drama Series D, a web drama series currently titled as "Rich House, Poor House" (王子富 愁記) produced by the Group, and Huameng (Tianjin) holds the entire interests and rights

in the Drama Series D.

The consideration for the sale of the Online Dissemination Rights of the Drama Series D is RMB23,100,000, which shall be payable by 1 Verge Information in cash in accordance with the terms of the Online Dissemination Rights Transfer Agreement.

The Board further announced that on August 17, 2017, Huameng (Tianjin) entered into the Business Cooperation Agreement with 1 Verge Information for a term of three years commencing from the date of the Business Cooperation Agreement. Pursuant to the Business Cooperation Agreement, Huameng (Tianjin) and 1 Verge Information agreed to cooperate in respect of distribution, advertising opportunity offering and rights of attribution of the Drama Series D. It is expected that the maximum annual transaction amount under the Business Cooperation Agreement will not exceed HK$3,000,000.

1 Verge Information is a consolidated entity of AGH. AGH is the ultimate sole shareholder of Ali CV which is a substantial shareholder and a connected person of the Company holding approximately 49.49% of the issued share capital of the Company as at the date of this announcement. Accordingly, 1 Verge Information is an associate of Ali CV and hence a connected person of the Company. The sale of the Online Dissemination Rights of the

Drama Series D constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

Since one of the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the sale of the Online Dissemination Rights of the Drama Series D are above 0.1% but below 5%, the entering into of the Online Dissemination Rights Transfer Agreement and the transactions contemplated thereunder are subject to the reporting and announcement requirements but are exempt from the independent shareholders' approval requirement under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.81 of the Listing Rules, the Disposal and the Prior Disposals shall be aggregated and treated as if they were one transaction as they are of similar nature and were entered into within a 12-month period with members of Alibaba Group. All the applicable percentage ratios set out in Rule 14.07 of the Listing Rules in respect of the Disposal and the Prior Disposals, when aggregated, are below 5%.

The transactions contemplated under the Business Cooperation Agreement constitute continuing connected transactions of the Company under Chapter 14A of the Listing Rules. As it is expected that the maximum annual transaction amount contemplated under the Business Cooperation Agreement will not exceed HK$3,000,000 and that all applicable percentage ratios for the amount payable by Huameng (Tianjin) to 1 Verge Information pursuant to the Business Cooperation Agreement will be less than 5%, the entering into of the Business Cooperation Agreement and the transactions contemplated thereunder constitute de minimis continuing connected transactions of the Company under Chapter 14A of the Listing Rules and are fully exempt from shareholders' approval, annual review and all disclosure requirements.

The Board announces that, on August 17, 2017, Huameng (Tianjin), a consolidated subsidiary of the Company, entered into the Online Dissemination Right Transfer Agreement with 1 Verge Information, a consolidated entity of AGH. Pursuant to the Online Dissemination Rights Transfer Agreement, Huameng (Tianjin) has agreed to sell, and 1 Verge Information has agreed to acquire, the Online Dissemination Rights of the Drama Series D, a web drama series currently titled as "Rich House, Poor House" (王子富愁記)

produced by the Group, and Huameng (Tianjin) holds the entire interests and rights in the Drama Series D.

August 17, 2017

1. Vendor : Huameng (Tianjin), a consolidated subsidiary of the Company

2. Purchaser : 1 Verge Information, a consolidated entity of AGH and a

   connected person of the Company

   Subject Matter

   Pursuant to the Online Dissemination Rights Transfer Agreement, Huameng (Tianjin) has agreed to sell, and 1 Verge Information has agreed to acquire, the Online Dissemination Rights of the Drama Series D, currently titled as "Rich House, Poor House" (王子富愁記). The Drama Series D has a total of 30 episodes.

   Pursuant to the Online Dissemination Rights Transfer Agreement, 1 Verge Information has agreed to grant to Huameng (Tianjin) a right to repurchase the Online Dissemination Rights of the Drama Series D in the PRC at a nominal consideration of RMB1.00 after the tenth anniversary of the Drama Series D being first broadcasted on the platforms of 1 Verge Information. It is expected that the fair value of the Online Dissemination Rights of the Drama Series D will significantly decrease after the ten-year period.

   Consideration

   The consideration for the Disposal is RMB23,100,000 (tax inclusive) for 30 episodes, which shall be payable by 1 Verge Information to Huameng (Tianjin) in cash as follows:

3. the first instalment of 20% of the consideration (being RMB4,620,000) shall be payable within 10 business days after the date of the Online Dissemination Rights Transfer Agreement;

4. the second instalment of 50% of the consideration (being RMB11,550,000) shall be payable within 10 business days after 1 Verge Information confirms the receipt of all records of 30 episodes of the Drama Series D; and

5. the last instalment of 30% of the consideration (being RMB6,930,000) shall be payable within 10 business days after the first complete broadcast of the 30 episodes of the Drama Series D on 1 Verge Information's platform. The Drama Series D is expected to be first broadcasted in September 2017.

The consideration for the Disposal was determined after arm's length negotiations between Huameng (Tianjin) and 1 Verge Information after taking into account the estimated market price and the anticipated cost of production per episode of similar drama series.

Completion

Completion of the Online Dissemination Rights Transfer Agreement is not subject to any conditions precedent. Huameng (Tianjin) shall deliver all records of the 30 episodes of the Drama Series D to 1 Verge Information by no later than August 20, 2017.

BUSINESS COOPERATION AGREEMENT

The Board further announced that on August 17, 2017, Huameng (Tianjin) entered into the Business Cooperation Agreement with 1 Verge Information for a term of three years commencing from the date of the Business Cooperation Agreement. Pursuant to the Business Cooperation Agreement, Huameng (Tianjin) and 1 Verge Information agreed to cooperate in respect of distribution, advertising opportunity offering and rights of attribution of the Drama Series D. It is expected that the maximum annual transaction amount contemplated under the Business Cooperation Agreement will not exceed HK$3,000,000.

Pursuant to the Business Cooperation Agreement, Huameng (Tianjin) shall apportion 50% of the net income (after deducting relevant costs and expenses) arising from television station distribution or audio video distribution of the Drama Series D to 1 Verge Information for a term of three years commencing from the date of the Business Cooperation Agreement.

In addition, Huameng (Tianjin) shall apportion 50% (in the case of the advertising opportunity offering being secured by 1 Verge Information) or 30% (in the case of the advertising opportunity offering being secured by Huameng (Tianjin)) of the net income (after deducting 40% of the relevant income as costs and expenses) arising from advertising opportunity offering of the Drama Series D to 1 Verge Information for a term of three years commencing from the date of the Business Cooperation Agreement.

INFORMATION ON THE COMPANY AND HUAMENG (TIANJIN)

The Company is listed on both the Stock Exchange (stock code: 1060) and the Singapore Exchange Securities Trading Limited (stock code: S91). As the flagship unit of Alibaba Group's entertainment arm, 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 businesses of the Company include 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 ticket issuance system to cinemas; (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.

Huameng (Tianjin), being a company established under the laws of the PRC, is a consolidated subsidiary of the Company which is principally engaged in production of broadcasting & television programs.

INFORMATION ON AGH, ALIBABA GROUP AND 1 VERGE INFORMATION

AGH is a company incorporated in the Cayman Islands and its American depositary shares are listed on the New York Stock Exchange.

Alibaba Group's mission is to make it easy to do business anywhere. It is the largest retail commerce company in the world in terms of gross merchandise volume in the twelve months ended March 31, 2017. Founded in 1999, Alibaba Group provides the fundamental technology infrastructure and marketing reach to help merchants, brands and other businesses that provide products, services and digital content to leverage the power of the Internet to engage with their users and customers. Alibaba Group's businesses are comprised of core commerce, cloud computing, digital media and entertainment and innovation initiatives and others.

1 Verge Information, a company incorporated in the PRC and a consolidated entity of AGH, is principally engaged in online video services, online advertising businesses and value-added telecommunication services in China on Youku platform.