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.

(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 3636)

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS

FOR 2020 TO 2022

RENEWAL OF CONTINUING CONNECTED TRANSACTIONS FOR 2020 TO 2022

References are made to the Prospectus and the announcement of the Company dated 17 October 2016, containing, among others, certain non-exempt continuing connected transactions entered into between the Company and Poly Group and their proposed annual caps.

As disclosed in the Prospectus and the announcement of the said date, the Company entered into the General Services Framework Agreement, the Commodities Sale and Purchase Framework Agreement, the Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement with Poly Group, and set up the proposed annual caps in respect of the relevant non-exempt continuing connected transactions for 2017, 2018 and 2019. The General Services Framework Agreement, the Commodities Sale and Purchase Framework Agreement and the Cinema Box Office Income Sharing Framework Agreement will expire on 31 December 2019, the Property Lease Framework Agreement will expire on 5 March 2034, and their corresponding annual caps will expire on 31 December 2019. As the Company will continue the continuing connected transactions after 31 December 2019, the Company is required to comply with the requirements of Chapter 14A of the Listing Rules in respect of continuing connected transactions. Therefore, the Company entered into the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement and the New Cinema Box Office Income Sharing Framework Agreement with Poly Group, and proposed the proposed annual caps for 2020, 2021 and 2022 under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement, to renew the related continuing connected transactions.

LISTING RULES IMPLICATIONS

As at the date of this announcement, Poly Group directly holds 43.3% equity interest of the Company and indirectly holds 20.4% equity interest of the Company through Poly International, a subsidiary of Poly Group, hence Poly Group is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Therefore, the transactions under the New General Services

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Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement entered into between the Company and Poly Group constitute the continuing connected transactions of the Company pursuant to the Listing Rules.

As the highest applicable percentage ratio of the proposed annual caps of the New General Services Framework Agreement and the New Commodities Sale and Purchase Framework Agreement entered into between the Company and Poly Group calculated in accordance with the Listing Rules is higher than 0.1% but less than 5%, the continuing connected transactions under the New General Services Framework Agreement and the New Commodities Sale and Purchase Framework Agreement are subject to the relevant reporting, annual review and announcement requirements but exempted from the Independent Shareholders' approval requirement as set out in Chapter 14A of the Listing Rules.

As the highest applicable percentage ratio of the proposed annual caps of the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement entered into between the Company and Poly Group calculated in accordance with the Listing Rules is higher than 5%, the continuing connected transactions under the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement are subject to the relevant reporting, annual review, announcement and the Independent Shareholders' approval requirements as set out in Chapter 14A of the Listing Rules.

As the highest of the applicable percentage ratio calculated in accordance with the Listing Rules in respect of the proposed annual caps for the New Cinema Box Office Income Sharing Framework Agreement entered into between the Company and Poly Group is more than 25% and less than 75%, the transactions under the New Cinema Box Office Income Sharing Framework Agreement also constitute major transactions of the Company and are subject to reporting, announcement and the Shareholders' approval requirements under Chapter 14 of the Listing Rules.

Having considered the pricing policies, bases of determination for the proposed annual caps, reasons and benefits, and internal control procedures, the Directors (including the independent non-executive Directors) are of the view that the terms of the transactions contemplated under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and the proposed annual caps thereunder have been entered into in the ordinary and usual course of business of the Company and on normal commercial terms, are fair and reasonable, and in the interests of the Company and its Shareholders as a whole. When the Board approved the resolutions in relation to the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and their proposed annual caps in the Board meeting, certain Directors who have material interests in the New General Services Framework Agreement,

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the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement have abstained from voting.

EXTRAORDINARY GENERAL MEETING

The Company will submit the relevant proposals to the forthcoming Extraordinary General Meeting to seek the Independent Shareholders' approval on the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022. Poly Group and its associates will abstain from voting on the proposal regarding the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 and the proposal regarding the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022 at such Extraordinary General Meeting, at which the proposals will be passed by way of ordinary resolutions and voting will be taken by way of poll in accordance with the requirements of the Listing Rules. As at the date of this announcement, to the best knowledge and belief of the Directors having made all reasonable enquiries, save as disclosed in this announcement, no other Shareholders will be required to abstain from voting on related resolutions.

The Independent Board Committee (comprising of all the independent non-executive Directors, namely Mr. Li Boqian, Ms. Li Xiaohui and Mr. Yip Wai Ming) has been established to advise the Independent Shareholders in relation to the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022. The Company will appoint Gram Capital as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding such matters. Upon receiving the advice of Gram Capital, the Independent Board Committee will provide its recommendation in a circular expected to be despatched no later than 15 business days after the date of this announcement.

A circular containing, among others, (1) details of the New Cinema Box Office Income Sharing Framework Agreement and Property Lease Framework Agreement as well as the respective proposed annual caps; (2) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022; (3) the advice from Gram Capital to the Independent Board Committee and the Independent Shareholders in respect of the same matters; and (4) a notice convening the Extraordinary General Meeting will be despatched to the Shareholders no later than 15 business days after the date of this announcement.

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  1. RENEWAL OF CONTINUING CONNECTED TRANSACTIONS FOR 2020 TO 2022
    1. New General Services Framework Agreement
    1. Background
      Reference is made to the announcement of the Company dated 17 October 2016, containing, among others, the non-exempt continuing connected transactions and their annual caps under the General Services Framework Agreement entered into between the Company and Poly Group. As disclosed in the announcement of the above date, pursuant to the General Services Framework Agreement, the Company from time to time provides Poly Group and/or its associates with certain types of services, mainly including exhibition service, theatre management service, art appreciation activity service and general service.
      As the General Services Framework Agreement and the corresponding annual caps will expire on 31 December 2019, and the Company will continue the aforesaid transactions under the General Services Framework Agreement subsequent to 31 December 2019, therefore, the Company entered into the New General Services Framework Agreement with Poly Group on 21 October 2019 (after trading hours). Pursuant to such agreement, the Company will from time to time provide Poly Group and/or its associates with certain types of services, mainly including exhibition service, theatre management service, art appreciation activity service and general service. The New General Services Framework Agreement is valid for a term of three years commencing from 1 January 2020 and expiring on 31 December 2022. The Company shall comply with the reporting, annual review and announcement requirements as set out in Chapter 14A of the Listing Rules in respect of the continuing connected transactions for the next three years (i.e. from 1 January 2020 to 31 December 2022).
    2. New General Services Framework Agreement

Date:

21 October 2019

Parties:

Poly Group, as the service receiver

The Company, as the service provider

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Principal terms:

The principal terms of the New General Services Framework Agreement are as follows:

  • the New General Services Framework Agreement is valid for a term of three years commencing on 1 January 2020, and can be renewed for another three years upon its expiry;
  • relevant subsidiaries or associates of both parties will enter into separate underlying agreements which will set out the specific terms and conditions according to the principles provided in the New General Services Framework Agreement; and
  • the price for the service provided under the New General Services Framework Agreement will be determined by reference to the then market price or as agreed by both parties after arm-length negotiations.

Pricing policy:

For all the services provided by the Company to Poly Group and/or its associates pursuant to the New General Services Framework Agreement, the costs will be calculated based on the service contents, including without limitation, the nature and scale of exhibitions, theatres and activities, the time, human resources, materials and transportation costs required for the service, and the complexity of the preparation works. Prices for various services will be determined at a premium of approximately 30%-50% over the costs by reference to the prices for the same kind of services in the market. Such prices are uniform pricing set by the Company, of which the Company will make adjustment based on the market conditions (including service prices offered by other competitors, human resource costs, technological advancement and others) from time to time and inform all customers. Such prices are determined based on normal commercial terms. The Company will provide services to Poly Group and/or its associates and other independent third parties based on such prices.

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  1. Historical amounts
    The amounts of revenue the Company generated from the service provided to Poly Group and/or its associates for the years ended 31 December 2017 and 2018 and the six months ended 30 June 2019 and the annual caps for the years ended 31 December 2017, 2018 and 2019 are set out below:

Unit: RMB million (unless otherwise stated)

For the

six months

For the year ended

ended

31 December

30 June

2017

2018

2019

Total fees

0.93

5.71

1.82

For the year ended 31 December

2017

2018

2019

Annual cap (Note 1)

31.18

32.35

34.02

* Note:

    1. The actual transaction amount in 2019 has not and is not expected to exceed the annual cap for the year 2019.
  2. Annual caps and basis of determination
    Annual caps: The maximum aggregate annual amount of fees for the years ending
    1. December 2020, 2021 and 2022 shall not exceed the caps set out below:

Unit: RMB million

For the year ending 31 December

2020 2021 2022

Total fees

22.45

22.30

22.30

Basis of determination:

In determining the above annual caps, the Directors have considered: (i) the historical figures, i.e., our revenue generated from general services provided by the Company to Poly Group and/or its associates as at 30 June 2019; (ii) the anticipated receivable amount under the existing General Services Framework Agreement between the Company and Poly Group; (iii) the future level of demand of Poly

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Group and its associates for these services; (iv) the future expansion plan of the theatre and cinema circuit networks of the Company; (v) the future changes in market price due to increase in costs such as labour, materials and transportation cost; and (vi) the expected increase in provision of general services by the Company to Poly Group and/or its associates from the years 2020 to 2022, including exhibition service, theatre management service, art appreciation activity service, cultural real estate design and consulting service and general service.

  1. Reasons for and benefits of entering into the New General Services Framework Agreement
    1. Poly Group is engaged in the business of real estate development and conducts promotion activities for high-end real estate projects by hosting art appreciation activities from time to time. Beijing Poly Art Centre Co., Ltd., a wholly-owned subsidiary of the Company, is engaged in exhibition undertakings and organization of art communication activities. While Poly Group and its subsidiaries are promoting their sales and marketing activities all over the country, services of Beijing Poly Art Centre Co., Ltd. in holding exhibitions and providing selected exhibits are needed, which will enhance the market influence of Poly Group. Beijing Poly Art Centre Co., Ltd. can also earn profits therefrom. Poly Group is also dedicated to the integration of real estates and culture by introducing some cultural elements, such as Poly Theatre in order to enhance the cultural content and commercial value, and benefit each other between Poly Group and Poly Culture. Thus, Beijing Poly Theatre Management Corporation Limited, a wholly-owned subsidiary of the Company, also provides relevant theatre management service for Poly Group. At the same time, Poly Group is also committed to promoting the integration of cultural and real estate businesses. Therefore, the Company will provide cultural real estate design and consulting service to Poly Group.
    2. The above-mentioned provision of general service by the Company to Poly Group has been and will be conducted in line with the market practice in order to exert the strength and advantage of both the Company and Poly Group.
  3. Listing Rules implications
    As at the date of this announcement, Poly Group directly holds 43.3% equity interest of the Company and indirectly holds 20.4% equity interest of the Company through Poly International, a subsidiary of Poly Group, hence Poly Group is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Therefore, the transactions under the New General Services Framework Agreement entered into between the Company and Poly Group constitute the continuing connected transactions of the Company pursuant to the Listing Rules.

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As the highest applicable percentage ratio of the annual caps of the New General Services Framework Agreement entered into between the Company and Poly Group calculated in accordance with the Listing Rules is higher than 0.1% but less than 5%, the continuing connected transactions under the New General Services Framework Agreement are subject to the relevant reporting, annual review and announcement requirements but exempted from the Independent Shareholders' approval requirement as set out in Chapter 14A of the Listing Rules.

2. New Commodities Sale and Purchase Framework Agreement

  1. Background
    Reference is made to the announcement of the Company dated 17 October 2016 containing, among others, the non-exempt continuing connected transactions and their annual caps under the Commodities Sale and Purchase Framework Agreement entered into between the Company and Poly Group. As disclosed in the announcement of the said date, pursuant to the Commodities Sale and Purchase Framework Agreement, the Company from time to time sells commodities, mainly including art products and theatre tickets to Poly Group and/or its associates.
    As the Commodities Sale and Purchase Framework Agreement and the corresponding annual caps will expire on 31 December 2019, and the Company will continue the aforesaid transactions under the Commodities Sale and Purchase Framework Agreement subsequent to 31 December 2019, therefore, the Company entered into the New Commodities Sale and Purchase Framework Agreement with Poly Group on 21 October 2019 (after trading hours). Pursuant to such agreement, the Company will from time to time sell commodities mainly including art products, theatre tickets and cinema tickets to Poly Group and/or its associates. The New Commodities Sale and Purchase Framework Agreement is valid for a term of three years commencing from 1 January 2020 and expiring on 31 December 2022. The Company shall comply with the reporting, annual review and announcement requirements as set out in Chapter 14A of the Listing Rules in respect of the continuing connected transactions for the next three years (i.e. from 1 January 2020 to 31 December 2022).
  2. New Commodities Sale and Purchase Framework Agreement

Date:

21 October 2019

Parties:

Poly Group, as the buyer

The Company, as the seller

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Principal Terms:

The principal terms of the New Commodities Sale and Purchase Framework Agreement are as follows:

  • the New Commodities Sale and Purchase Framework Agreement is valid for a term of three years commencing on 1 January 2020 and can be renewed for another three years upon its expiry;
  • relevant subsidiaries of both parties will enter into separate underlying agreements which will set out the specific terms and conditions according to the principles provided in the New Commodities Sale and Purchase Framework Agreement; and
  • the price of the commodities sold under the New Commodities Sale and Purchase Framework Agreement will be determined through arm's length negotiations by parties thereto with reference to market price.

Pricing policies:

The price of the commodities sold by the Company to Poly Group under the New Commodities Sale and Purchase Framework Agreement will be determined through arm's length negotiations by parties thereto with reference to the followings: (1) overall market conditions and public offer prices regarding the sale of relevant commodities or relevant comparable commodities in various regions; (2) the price of relevant commodities or relevant comparable commodities determined by the theatre performance providers which are independent third parties; and (3) the price and terms of comparable quantity of commodities sold to at least two independent third parties by the Company.

  1. Historical amounts
    For the years ended 31 December 2017 and 2018, and the six months ended 30 June 2019, the revenue the Company generated from sales of art products to Poly Group and/or its associates and the revenue the Company generated from sales of theatre tickets and cinema tickets and the annual caps for the years ended 31 December 2017, 2018 and 2019 are set out below:

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Unit: RMB million (unless otherwise stated)

For the

six months

For the year ended

ended

31 December

30 June

2017

2018

2019

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

art products

0

0

0

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

tickets

5.60

5.28

2.41

For the year ended 31 December

2017

2018

2019

Transactions under the following

agreements

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

art products

5.00

6.50

8.00

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

tickets

10.75

14.15

15.85

Total annual cap (Note 1)

15.75

20.65

23.85

* Note:

1. The actual transaction amount in 2019 has not and is not expected to exceed the annual cap for the year 2019.

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  1. Annual caps and basis of determination
    Annual caps: The maximum aggregate annual amounts of fees from sales of art products and sales of theatre tickets and cinema tickets for the years ending 31 December 2020, 2021 and 2022 shall not exceed the caps set out below:

Unit: RMB million

For the year ending 31 December

2020 2021 2022

Transactions under the following

agreements

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

art products

5.00

6.50

8.00

New Commodities Sale and

Purchase Framework Agreement

- Total fees from sales of

theatre tickets

19.00

20.00

21.00

Total

24.00

26.50

29.00

Basis of determination:

In determining the above annual caps, the Directors have considered: (i) the historical figures, i.e. the revenue generated from the sales of theatre tickets provided by the Company to Poly Group and/or its associates for the six months ended 30 June 2019 and the growing trend of historical figures of the Company; (ii) the anticipated receivable amount of theatre tickets under the existing Commodities Sale and Purchase Framework Agreement between the Company and Poly Group;

  1. the future level of demand of Poly Group and its associates for the theatre tickets and movie tickets; (iv) the future changes in market price due to increase in costs such as labour, materials and transportation cost; and (v) the future expansion plan of the theatre circuit networks and cinemas of the Company.

- 11 -

  1. Reasons for and benefits of entering into the New Commodities Sale and Purchase Framework Agreement
    1. It is the Company's ordinary and usual course of business to sell art products, theatre tickets and cinema tickets. There is a need for Poly Group and/or its associates to purchase theatre tickets for market promotion from time to time and/or purchase art products for gifts, interior decoration of their office building or other legal purposes from time to time.
    2. With continuing expansion of the business scale of Poly Group, the demand in art products, theatre tickets and cinema tickets of Poly Group has exceeded the original anticipation.
    3. The above-mentioned provision of commodities sale and purchase services by the Company to Poly Group has been and will be conducted in line with the market practice and can exert the strength and advantage from both the Company and Poly Group.
  3. Listing Rules implications
    As at the date of this announcement, Poly Group directly holds 43.3% equity interest of the Company and indirectly holds 20.4% equity interest of the Company through Poly International, a subsidiary of Poly Group, hence Poly Group is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Therefore, the transactions under the New Commodities Sale and Purchase Framework Agreement entered into between the Company and Poly Group constitute the continuing connected transactions of the Company pursuant to the Listing Rules.
    As the highest applicable percentage ratio calculated in accordance with the Listing Rules in respect of the annual caps for the New Commodities Sale and Purchase Framework Agreement entered into between the Company and Poly Group is more than 0.1% but less than 5%, the continuing connected transactions under the New Commodities Sale and Purchase Framework Agreement are subject to the reporting, annual review and announcement requirements but exempted from the Independent Shareholders' approval requirement as set out in Chapter 14A of the Listing Rules.

- 12 -

3. New Cinema Box Office Income Sharing Framework Agreement

  1. Background
    Reference is made to the announcement of the Company dated 17 October 2016, containing, among others, the non-exempt continuing connected transactions and their annual caps stated in the Cinema Box Office Income Sharing Framework Agreement entered into between the Company and Poly Group. As disclosed in the announcement, pursuant to the Cinema Box Office Income Sharing Framework Agreement, Poly Group and/or its associates may provide new film prints and encryption keys to the Group and the Group will then arrange movie screening in cinemas of the Group. Both parties agree to split the net cinema box office income (i.e., box office income after deducting the National Film Development Special Fund and VAT and surcharges) generated from the movie screening based on the pre- agreed sharing percentage. In turn, Poly Group and/or its associates may then further share the revenue generated from such split with movie distributors and producers pursuant to separate agreements among themselves. Such net cinema box office income sharing arrangement is in line with the current film industry practice in China.
    As the Cinema Box Office Income Sharing Framework Agreement and the corresponding annual caps will expire on 31 December 2019, and the Company will continue the aforesaid transactions under the Cinema Box Office Income Sharing Framework Agreement subsequent to 31 December 2019, therefore, the Company entered into the New Cinema Box Office Income Sharing Framework Agreement with Poly Group on 21 October 2019 (after trading hours). Pursuant to such agreement, Poly Group and/or its associates will provide new film prints and encryption keys to the Group and the Group will then arrange movie screening in cinemas of the Group. Both parties agree to split the net cinema box office income (i.e. the box office income net of special fund for national film development and value-added tax and additional tax) generated from the movie screening based on the pre-agreed sharing percentage. In turn, Poly Group and/or its associates may then further share the revenue generated from such split with movie distributors and producers pursuant to separate agreements among themselves. The New Cinema Box Office Income Sharing Framework Agreement is valid for a term of three years commencing from 1 January 2020 until 31 December 2022. The Company shall comply with reporting, annual review, announcement and the Independent Shareholders' approval requirements as set out in Chapter 14A of the Listing Rules in respect of the continuing connected transactions for the next three years (i.e. from 1 January 2020 to 31 December 2022).

- 13 -

  1. New Cinema Box Office Income Sharing Framework Agreement

Date:

21 October 2019

Parties:

Poly Group

The Company

Principal Terms:

The principal terms of the New Cinema Box Office Income Sharing Framework Agreement are as follows:

  • the New Cinema Box Office Income Sharing Framework Agreement is valid for a term of three years commencing on 1 January 2020, and can be renewed for another three years upon its expiry, subject to the further approval by Independent Shareholders according to the Listing Rules;
  • Based on the number of cinemas, relevant subsidiaries of both parties, namely Poly Wanhe Cinema Circuit will enter into a new specific contract with Poly Film Investment Corporation Limited (representing itself and its more than 70 existing subordinate cinemas) to renew the existing specific contracts, and Poly Wanhe Cinema Circuit will enter into new specific contracts with the newly established cinemas when they are established. Such specific contracts will be entered into according to the pricing policies, the principal terms and conditions provided in the New Cinema Box Office Income Sharing Framework Agreement, including but not limited to the sharing percentage (no less than 50% to 55% of the net cinema box office income to be shared by the Group), service contents and term. The term for each specific agreement term is three years, and the specific terms and conditions are same with the New Cinema Box Office Income Sharing Framework Agreement; and
  • Poly Group and/or its associates will provide new film prints and encryption keys to the Group and the Group will then arrange movie screening in cinemas of the Group. The Group will first receive the net cinema box office income (i.e. the box office income net of special fund for national film development and value-added tax and additional tax) generated from the film screening and then split a portion of such revenue with Poly Group and/or its associates in accordance with the respective sharing percentage as set out in the specific agreements (no less than 50% to 55% of the net cinema box office income to be shared by the Group) and pricing policies as agreed by both parties after arm-length negotiations; the Group will pay the net cinema box office income to Poly Group in cash on a monthly basis.

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Pricing Policy:

After the Group and Poly Group's arm's length commercial negotiations according to the principles of fairness and reasonableness, the sharing of box office income is determined pursuant to the followings: (i) the requirements of the Guiding Opinions on Adjusting Income Sharing Percentage of Domestic Films ((2008) Ying Zi No.866) and Guiding Opinions on Promoting the Coordinated Development of Film Production, Distribution and Screening ((2011) Ying Zi No.992) issued by Film Bureau under the State Administration of Press, Publication, Radio, Film and Television, which stipulates the percentage of film screening income sharing for the cinema shall not be more than 50% in principle (the "SARFT Guiding Opinions") and set a principle of sharing the net cinema box office income between the cinema circuit and cinemas under the cinema circuit system in China; and (ii) the income sharing standard of the industry during the same period, which is currently at 40% to 45% for the comparable average net cinema box office income sharing of the market. The relevant transactions will be conducted on normal commercial terms and on terms and consideration no less favourable than those offered to independent third parties.

During the implementation of the New Cinema Box Office Income Sharing Framework Agreement, the Group has the right to negotiate with Poly Group pursuant to the New Cinema Box Office Income Sharing Framework Agreement, according to the market changes in the net cinema box office income sharing in the PRC and the changes of the net cinema box office income sharing policy of the PRC. Meanwhile, the Group will conduct research on the income sharing policy of at least two independent cinemas with similar size based on the similar services provided by Poly Group every half year, and report to the Directors at once. If the Group finds the sharing percentage offered by Poly Group is less favorable than any other independent third parties based on similar terms and conditions, the Group has the right to negotiate with Poly Group at arm's length, and Poly Group agrees to adjust the net cinema box office income sharing percentage in connection with the Group and/or its subsidiaries, to make sure that the Group implements the New Cinema Box Office Income Sharing Framework Agreement with the income sharing percentage no less favorable than any independent third parties in the market.

  1. Historical amounts
    The number of films provided by Poly Group to the Group for screening, the cinema box office income generated by the Group under the existing framework agreement, the actual transaction amount between the Group and Poly Wanhe Cinema Circuit for the years ended 31 December 2017 and 2018 and for the six months ended 30

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June 2019 under the Cinema Box Office Income Sharing Framework Agreement, and the historical annual caps for the years ended 31 December 2017, 2018 and 2019 are set out below:

Unit: RMB million (unless otherwise stated)

The number of films provided by Poly Group to the Group for screening

The cinema box office income generated by the Group under the existing framework agreement (Note 1)

The average cinema box office income sharing percentage by the Company

The average cinema box office income sharing percentage by Poly Group

The actual transaction amount (Note 2)

For the

six months

For the year ended

ended

31 December

30 June

2017

2018

2019

552 films

535 films

283 films

561.93

626.51

319.76

60.23%

59.01%

60.05%

39.77%

40.99%

39.95%

223.47

256.82

127.74

For the year ended 31 December

2017 2018 2019

Annual cap (Note 3)

405.95

516.50

619.47

* Note:

  1. Such cinema box office income includes the special fund for national film development and taxes.
  2. The actual transaction amount refers to the cinema box office income shared by Poly Group.
  3. The actual transaction amount in 2019 has not and is not expected to exceed the annual cap for the year 2019.

Once Poly Wanhe Cinema Circuit receives the shared income from the Company, it will further split such income with movie distributors and producers pursuant to separate agreements among themselves.

Depending on the types and popularity of new movies to be screened such as Hollywood films and domestically produced movies, for the years ended 31 December 2017 and 2018 and for the six months ended 30 June 2019, the Group usually retained no less than 50%-55% of the net cinema box office income and shared the remaining income with Poly Wanhe Cinema Circuit based on the underlying agreements between both parties.

- 16 -

  1. Proposed annual caps and basis of determination
    Proposed annual Caps: The maximum aggregate annual amount of the net cinema box office income shared by the Group for the years ending 31 December 2020,
    2021 and 2022 shall not exceed the proposed caps set out below:

Unit: RMB million

For the year ending 31 December

2020 2021 2022

Proposed annual cap

346.04

388.96

417.45

Basis of determination:

In determining the above proposed annual caps, the Directors have considered: (i) the industry standard of sharing the net cinema box office income (the current comparable average net cinema box office income sharing in the market is 40% to 45%) between cinema circuit and cinemas according to the SARFT Guiding Opinions, as well as the features of the cinema circuit system in China; (ii) the historical figures and the growing trend of income sharing between the Group and Poly Wanhe Cinema Circuit from 2017 to 30 June 2019; (iii) the scale and growth of the Group's investment and construction on new cinemas continue to grow. As at the date of this announcement, there are over 70 cinemas under the operation of the Group. The Group expects to open 5 new cinemas in 2019, of which 1 cinemas have already been opened. According to our strategic plan, 5, 4 and 5 new cinemas will be opened from 2020 to 2022 respectively and the net cinema box office income will continue to grow correspondingly; (iv) the existing agreement entered into between Poly Wanhe Cinema Circuit and Poly Film Investment Corporation Limited; and (v) the price of movie tickets will maintain its increasing trend due to the rapid development of the film industry in China, the increasing audience and films with more production of 3D films, as such, the net cinema box office income of the Group is expected to increase as well in the future.

  1. Reasons for and benefits of entering into the New Cinema Box Office Income Sharing Framework Agreement
    At present, the current comparable average net cinema box office income sharing percentage of the Chinese film screening industry is approximately 40% to 45%. The Group usually retained no less than 50%-55% of the net cinema box office income based on the long-term cooperation relationship between the Group and Poly Group. With the increasing bargainning power of the movie producers, the income sharing percentage for the cinema circuits may decrease in the future. During the implementation of the New Cinema Box Office Income Sharing Framework Agreement, the Group has the right to negotiate with Poly Group pursuant to the

- 17 -

New Cinema Box Office Income Sharing Framework Agreement, according to the market changes in the net cinema box office income sharing in the PRC and the changes of the net cinema box office income sharing policy of the PRC. Meanwhile, the Group will conduct research on the income sharing policy of at least two independent cinemas with similar size based on the similar services provided by Poly Group every half year, and report to the Directors at once. If the Group finds the sharing percentage offered by Poly Group is less favorable than any other independent third parties based on similar terms and conditions, the Group has the right to negotiate with Poly Group at arm's length, and Poly Group agrees to adjust the net cinema box office income sharing percentage in connection with the Group and/or its subsidiaries, to make sure that the Group implements the New Cinema Box Office Income Sharing Framework Agreement with the income sharing percentage no less favorable than any independent third parties in the market. Pursuant to such agreements, Poly Wanhe Cinema Circuit will provide the Group with new film prints and encryption keys, which the Group will then arrange to be screened in cinemas of the Group. After the signing of the New Cinema Box Office Income Sharing Framework Agreement, the Directors expect that, taking into consideration the long-term business relationship between Poly Wanhe Cinema Circuit and cinemas of the Group since the date of formal commencement of business, as well as the sharing percentage offered by Poly Wanhe Cinema Circuit which is more favorable than the average market sharing percentage, it is in the Company's long-term interests that the Company continue to maintain relationship with Poly Wanhe Cinema Circuit. Any cessation of such cooperation will cause unnecessary disruption to the movie screening operation of cinemas of the Group, incurring significant business losses to the Company.

  1. Listing Rules implications
    As at the date of this announcement, Poly Group directly holds 43.3% equity interest of the Company and indirectly holds 20.4% equity interest of the Company through Poly International, a subsidiary of Poly Group, hence Poly Group is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Therefore, the transactions under the New Cinema Box Office Income Sharing Framework Agreement entered into between the Company and Poly Group constitute the continuing connected transactions of the Company pursuant to the Listing Rules.
    As the highest of the applicable percentage ratio calculated in accordance with the Listing Rules in respect of the proposed annual caps for the New Cinema Box Office Income Sharing Framework Agreement entered into between the Company and Poly Group is more than 5%, the continuing connected transactions under the New Cinema Box Office Income Sharing Framework Agreement are subject to reporting, annual review, announcement and the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

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As the highest of the applicable percentage ratio calculated in accordance with the Listing Rules in respect of the proposed annual caps for the New Cinema Box Office Income Sharing Framework Agreement entered into between the Company and Poly Group is more than 25% and less than 75%, the transactions under the New Cinema Box Office Income Sharing Framework Agreement also constitute major transactions of the Company and are subject to notification, announcement and the Shareholders' approval requirements under Chapter 14 of the Listing Rules.

4. Property Lease Framework Agreement

  1. Background
    References are made to the Prospectus and the announcement of the Company dated 17 October 2016, containing, among others, the non-exempt continuing connected transactions and their annual caps stated in the Property Lease Framework Agreement entered into between the Company and Poly Group. As disclosed in the Prospectus and the announcement, pursuant to the Property Lease Framework Agreement, the Company may lease properties from Poly Group and/or its associates for the purpose of office premises, cinema operation, theatre operation, auction business operation and ancillary services.
    As the corresponding annual caps under the Property Lease Framework Agreement will expire on 31 December 2019, and the Company will continue the aforesaid transactions under the Property Lease Framework Agreement subsequent to 31 December 2019, therefore, pursuant to the Property Lease Framework Agreement, the Company will lease properties from Poly Group and/or its associates for the purposes of office premises, cinema operation, theatre operation, auction business operation and ancillary services. the Company shall comply with reporting, annual review, announcement and the Independent Shareholders' approval requirements as set out in Chapter 14A of the Listing Rules in respect of the continuing connected transactions for the next three years (i.e. from 1 January 2020 to 31 December 2022).
  2. Property Lease Framework Agreement

Date:

14 February 2014

Parties:

Poly Group, as the lessor

The Company, as the lessee

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Principal terms:

The principal terms of the Property Lease Framework Agreement are as follows:

  • the Property Lease Framework Agreement is valid for a term of 20 years commencing on the Listing Date (i.e. 6 March 2014);
  • relevant subsidiaries or associates of both parties will enter into separate lease agreements which will set out the specific terms and conditions according to the principles provided in the Property Lease Framework Agreement;
  • basis of determination of rentals: the rentals shall be determined by reference to the then market price or as agreed by both parties after arm-length negotiations;
  • the property management fee shall be determined by reference to the then market price or as agreed by both parties after arm-length negotiations;
  • the energy charge and other facilities fee shall follow the government prescribed price or where no such government-prescribed price is applicable, it shall then be determined by reference to the then market price or as agreed by both parties after arm-length negotiations; and
  • the term of the separate underlying lease agreements entered into under the Property Lease Framework Agreement shall be for a maximum of 20 years. The Company may request to renew the lease by issuing a written notice to relevant members of Poly Group at least one month before expiry of the lease. Relevant members of Poly Group shall, upon receipt of the said notice, consent to the request for renewal and shall renew the lease with members of the Group before its expiration.

Pricing policies:

The rent payable by the Group pursuant to the Property Lease Framework Agreement shall be determined between the parties at arm's length commercial negotiations according to the principles of fairness and reasonableness with reference to the rent of the properties at similar locations leased by Poly Group to independent third parties during the same period. The relevant transactions will be conducted on normal commercial terms and on terms and consideration no less favourable than those offered to independent third parties.

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  1. Existing leases
    Based on the Property Lease Framework Agreement entered into between the Group and Poly Group, the Group leased several properties from Poly Group and/or its associates with a total gross floor area of approximately 52,907.58 sq.m. as of 30 June 2019. Such properties are located in Beijing, Guangzhou, Shenzhen and Foshan and are mainly used for office premises, cinema operation, theatre operation, art business operation and ancillary services.
  2. Historical amounts
    The actual rental expense incurred under the Property Lease Framework Agreement for the years ended 31 December 2017 and 2018 and the six months ended 30 June 2019 and the annual caps for the years ended 31 December 2017, 2018 and 2019 are set forth below:

Actual transaction amount

Annual caps (Note 1)

Unit: RMB million (unless otherwise stated)

For the

six months

For the year ended

ended

31 December

30 June

2017

2018

2019

37.96

36.64

23.34

For the year ended 31 December

2017 2018 2019

58.91 78.37 86.71

*Note:

1. The actual transaction amount in 2019 has not and is not expected to exceed the annual cap for the year 2019.

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  1. Proposed annual caps and basis of determination
    Proposed annual caps: The maximum aggregate annual amount for the years ending 31 December 2020, 2021 and 2022 shall not exceed the caps set out below:

Unit: RMB million

For the year ending 31 December

2020 2021 2022

Total rental

84.28

84.28

84.28

Basis of determination:

In determining the above annual caps, the Directors have considered: (i) the rentals of the existing property leases (for the six months ended 30 June 2019, according to the Company's unaudited interim report for the six months ended 30 June 2019, the rental expense incurred was approximately RMB23.34 million); (ii) the steady and continuous increase in rentals of properties in the vicinity of the relevant properties and the overall future development of the property market in the PRC; (iii) as of 30 June 2019, the Group leased 17 pieces of properties from Poly Group and/or its associates; (iv) the Group plans to expand office premises and the premises for art business and auction; and (v) the Group's future plan to expand its cinema and theatre management business during 2020 to 2022 in the PRC may require the Group to lease properties from Poly Group and/or its associates.

  1. Reasons for and benefits of the transactions under the Property Lease Framework Agreement
    The Group has been leasing and using the above properties for its business operation for a long period. Any relocation may cause unnecessary disruption to our business operation and incur unnecessary costs.
    The Directors are of the view that maintaining long term and stable property lease is of great importance to the operation of the cinema investment and theatre management business of the Group as well as the stability of the art business and auction and the secure storage of art works, and the long term nature of the property lease agreement would enable the Group to secure locations for its business operation at fair market price and to prevent unnecessary cost, time and interruption of business caused by relocation in the case of short term lease. As such, the Directors are of the view that the lease term of 20 years is appropriate for the Property Lease Framework Agreement and is the normal business practice for lease agreements of this type to be of such duration.

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  1. Listing Rules implications
    As at the date of this announcement, Poly Group directly holds 43.3% equity interest of the Company and indirectly holds 20.4% equity interest of the Company through Poly International, a subsidiary of Poly Group, hence Poly Group is a connected person of the Company pursuant to Chapter 14A of the Listing Rules. Therefore, the transactions under the Property Lease Framework Agreement entered into between the Company and Poly Group constitute continuing connected transactions of the Company pursuant to the Listing Rules.
    As the highest of the applicable percentage ratio calculated in accordance with the Listing Rules in respect of the proposed annual caps for the Property Lease Framework Agreement entered into between the Company and Poly Group is more than 5%, the continuing connected transactions under the Property Lease Framework Agreement are subject to reporting, annual review, announcement and the Independent Shareholders' approval requirements under Chapter 14A of the Listing Rules.

Internal Control Procedure and Corporate Governance Measures

The Company will endeavour to carry out adequate supervision over the transaction amounts under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement entered into between the Company and Poly Group against the corresponding annual caps, with a view of ensuring that necessary measures and appropriate actions for the compliance with applicable requirements under the Listing Rules will be promptly taken. The Company has formulated a series of measures and policies, including contract policies, projects management policies, connected transaction management measures, to ensure the continuing connected transactions be implemented in accordance with the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and their pricing policies. The New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and the transactions contemplated thereunder will be examined and approved by the Audit Committee of the Board, the Board and various internal departments of the Company, including but not limited to, financial department and audit and inspection department of the Company, thus to ensure the terms of such agreements be complied with relevant regulatory guidelines, if applicable, and market practice, and will not deviate from the terms of the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement as disclosed in

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this announcement. The Audit Committee of the Board, the chief accountant and various internal departments of the Company will also supervise the implementation of those agreements and the process of the transactions on a regular basis.

In addition, the management of the Company will review its pricing policies on a regular basis; the independent non-executive Directors will conduct an annual review of the implementation and enforcement of the continuing connected transactions (including the relevant pricing mechanism); the auditors of the Company will perform evaluation and review on the internal control measures of the Company annually and review the continuing connected transactions under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement annually in accordance with the requirements of Listing Rules, to ensure, among which, such transactions are conducted under the pricing policies of the Company and relevant contracts that govern the transactions, if any.

Having considered the above pricing policies, bases of determination of the proposed annual caps, reasons and benefits, and internal control procedures, the Directors (including independent non-executive Directors) are of the view that the terms of the transactions contemplated under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement, the Property Lease Framework Agreement and the proposed annual caps thereunder have been entered into in the ordinary and usual course of business of the Company and on normal commercial terms, are fair and reasonable, and in the interests of the Company and Shareholders as a whole. Meanwhile, the Company is of the view that it has adequate mechanism, internal control procedures and external supervision measures to ensure the continuing connected transactions be complied with and strictly in accordance with relevant regulatory guidelines and the terms of the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement.

Opinions of the Board

As the chairman Mr. Xu Niansha (chairman of Poly Group), vice chairman Mr. Zhang Xi (vice general manager of Poly Group), Director Mr. Huang Geming (assistant to general manager of Poly Group) and Director Mr. Wang Keling (deputy party secretary of Sinolight Corporation) of the Company all serve at Poly Group, they are considered to be connected with the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and the transactions thereunder, and they have abstained from voting on Board resolution for approving the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement, the Property Lease Framework Agreement and the proposed annual caps. Save as disclosed above, there are no other Directors who have any material interest in the New General Services Framework Agreement, the New

- 24 -

Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement and no other Directors need to abstain from voting on the Board resolution for considering and approving the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement, the Property Lease Framework Agreement, and the proposed annual caps.

Having considered the above pricing policies, basis of determination of the proposed annual caps, reasons and benefits, and internal control procedures, the Directors (including independent non-executive Directors) are of the view that the terms of the transactions contemplated under the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement, the Property Lease Framework Agreement and the proposed annual caps thereunder have been entered into in the ordinary and usual course of business of the Company and on normal commercial terms, are fair and reasonable, and in the interests of the Company and its Shareholders as a whole. When the Board approved the resolutions in relation to the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement, the Property Lease Framework Agreement and the proposed annual caps in the Board meeting, the said Directors who have material interests in the New General Services Framework Agreement, the New Commodities Sale and Purchase Framework Agreement, the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement have abstained from voting.

Information on Parties to the Transactions

  1. Information about the Company
    The Company is a joint stock limited company incorporated in the PRC on 14 December 2010, and is a leading diversified cultural arts company in China. The Company is mainly engaged in art business and auction, performance and theatre management, and cinema investment and management.
  2. Information about Poly Group
    Poly Group was established in 1992 as a large state-owned enterprise under direct supervision and administration of the State-owned Assets Supervision and Administration Commission of the State Council of the PRC. Apart from the culture and art business conducted through the Company, Poly Group is primarily engaged in international trade, real estate development, development and engineering service in the light industry field, operation and service of raw materials and products for crafts, production and sale and service of explosives for civilian uses, and financial business.

- 25 -

  1. EXTRAORDINARY GENERAL MEETING
    The Company will submit the relevant proposals to the forthcoming Extraordinary General Meeting to seek the Independent Shareholders' approval on the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022. Poly Group and its associates will abstain from voting on the proposal regarding the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022, and the proposal regarding the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022. The proposals will be passed by way of ordinary resolutions and voted on by way of poll in accordance with the requirements of the Listing Rules. As at the date of this announcement, to the best knowledge and belief of the Directors having made all reasonable enquiries, save as disclosed in this announcement, no other Shareholders shall abstain from voting on related proposals.
    The Independent Board Committee (comprising of all the independent non-executive Directors, namely Mr. Li Boqian, Ms. Li Xiaohui and Mr. Yip Wai Ming) has been established to advise the Independent Shareholders in respect of the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022. The Company will appoint Gram Capital as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding such matters. Upon receiving the advice of Gram Capital, the Independent Board Committee will provide its recommendation in a circular expected to be despatched no later than 15 business days after the date of this announcement.
    A circular containing, among others, (1) details of the New Cinema Box Office Income Sharing Framework Agreement and the Property Lease Framework Agreement as well as their respective proposed annual caps; (2) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the New Cinema Box Office Income Sharing Framework Agreement and the proposed annual caps for 2020, 2021 and 2022 as well as the proposed annual caps under the Property Lease Framework Agreement for 2020, 2021 and 2022; (3) the advice from Gram Capital to the Independent Board Committee and the Independent Shareholders in respect of the same matters; and (4) a notice convening the Extraordinary General Meeting will be despatched to the Shareholders no later than 15 business days after the date of this announcement.

III. DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions have the following meanings.

"associate(s)"

has the meaning ascribed to it under the Listing Rules

- 26 -

"Board"

board of directors of the Company

"Cinema Box Office Income

the cinema box office income sharing framework agreement

Sharing Framework

entered into between the Company and Poly Group on 17

Agreement"

October 2016

"Commodities Sale and

the commodities sale and purchase framework agreement

Purchase Framework

entered into between the Company and Poly Group on 17

Agreement"

October 2016

"Company"

Poly Culture Group Corporation Limited (保利文化集團股份

有限公司), a joint stock limited liability company

incorporated in the PRC on 14 December 2010 and its H

Shares are listed on The Stock Exchange and the stock code is

03636

"connected person(s)"

has the meaning ascribed to it under the Listing Rules

"connected transaction(s)"

has the meaning ascribed to it under the Listing Rules

"continuing connected

has the meaning ascribed to it under the Listing Rules

transaction(s)"

"controlling shareholder(s)"

has the meaning ascribed to it under the Listing Rules

"Director(s)"

director(s) of the Company

"Extraordinary General

the 2019 first extraordinary general meeting of the Company

Meeting"

to be held at 2:30 p.m. on Friday, 20 December 2019

"General Services Framework

the general services framework agreement entered into

Agreement"

between the Company and Poly Group on 17 October 2016

"Gram Capital"

Gram Capital Limited (嘉林資本有限公司), a licensed

corporation to carry out Type 6 (advising on corporate

finance) regulated activity under the Securities and Futures

Ordinance, to be appointed as the independent financial

adviser to give advice to the Independent Board Committee

and the Independent Shareholders in respect of the New

Cinema Box Office Income Sharing Framework Agreement

and the proposed annual caps for 2020, 2021 and 2022 as well

as the proposed annual caps under the Property Lease

Framework Agreement for 2020, 2021 and 2022

- 27 -

"Group"

the Company and its subsidiaries

"Hong Kong"

the Hong Kong Special Administrative Region of the PRC

"Independent Board

the independent committee of the Board comprising of all the

Committee"

independent non-executive Directors, namely Mr. Li Boqian,

Ms. Li Xiaohui and Mr. Yip Wai Ming. The purpose of

setting up the Committee is to provide advice to the

Independent Shareholders in respect of the New Cinema

Box Office Income Sharing Framework Agreement and the

proposed annual caps for 2020, 2021 and 2022 as well as the

proposed annual caps under the Property Lease Framework

Agreement for 2020, 2021 and 2022

"Independent Shareholder(s)"

the Shareholders who are not required to abstain from voting

in respect of the New Cinema Box Office Income Sharing

Framework Agreement and the proposed annual caps for

2020, 2021 and 2022 as well as the proposed annual caps

under the Property Lease Framework Agreement for 2020,

2021 and 2022

"Listing Rules"

the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited

"New Cinema Box Office

the new cinema box office income sharing framework

Income Sharing Framework

agreement entered into between the Company and Poly

Agreement"

Group on 21 October 2019

"New Commodities Sale and

the new commodities sale and purchase framework agreement

Purchase Framework

entered into between the Company and Poly Group on 21

Agreement"

October 2019

"New General Services

the new general services framework agreement entered into

Framework Agreement"

between the Company and Poly Group on 21 October 2019

"Poly Group"

China Poly Group Corporation (中國保利集團有限公司), a

state-owned enterprise incorporated in the PRC and our

controlling shareholder, and (when the context requires)

including its subsidiaries

"Poly International"

Poly International Holdings Company Limited (保利國際控股

有限公司), a state-owned enterprise incorporated in the PRC,

a wholly-owned subsidiary of Poly Group and a substantial

Shareholder of the Company

- 28 -

"Poly Wanhe Cinema Circuit"

Chongqing Poly Wanhe Cinema Circuit Co., Ltd. (重慶保利

萬和電影院線有限公司), a company incorporated on 26 July

2005 in the PRC and a then subsidiary of the Company before

being disposed to Poly Group in 2013, 51% and 49% of its

equity interest are currently respectively held by Poly Group

and Chongqing Wanhe Film Co., Ltd. (重慶萬和影業有限責

任公司, an independent third party, which is currently a

subsidiary of Poly Group, and thus constitutes a connected

person of the Company

"PRC" or "China"

the People's Republic of China

"Property Lease Framework

the property lease framework agreement entered into between

Agreement"

the Company and Poly Group on 14 February 2014

"Prospectus"

the Company's prospectus dated 24 February 2014

"RMB"

Renminbi, the lawful currency of the PRC

"Share(s)"

share(s) in the share capital of the Company, with a nominal

value of RMB1.00 each

"Shareholder(s)"

holder(s) of the Share(s)

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

"%"

percent

By order of the Board

Poly Culture Group Corporation Limited

Xu Niansha

Chairman

Beijing, China

21 October 2019

As at the date of this announcement, the executive directors of the Company are Mr. Xu Niansha, Mr. Zhang Xi, Mr. Jiang Yingchun and Mr. Li Weiqiang, the non-executive directors are Mr. Huang Geming and Mr. Wang Keling, and the independent non-executive directors are Mr. Li Boqian, Ms. Li Xiaohui and Mr. Yip Wai Ming.

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Poly Culture Group Corporation Ltd. published this content on 21 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 October 2019 14:50:13 UTC