Stock Code: 600977 Stock Name: China Film

China Film Group Co. Ltd.Corporate Value and Return Enhancement

Action Plan

2024 Assessment Report and 2025 Action Plan

1 / 21China Film Group Co. Ltd.

Corporate Value and Return Enhancement Action Plan

2024 Assessment Report and 2025 Action Plan

In 2024 China Film Group Co. Ltd. (hereinafter referred to as

"China Film" or "the Company") thoroughly implemented the spirit

of the 20th CPC National Congress the Third Plenary Session of

the 20th CPC Central Committee and the Central Economic Work

Conference. The Company took concrete measures to actively

implement the Action Plan of "Improving Quality Increasing

Efficiency and Emphasizing Returns" in 2024 achieving positive

results across various tasks. Based on a comprehensive

assessment of the 2024 execution and considering the Company's

development stage industry characteristics and investor demands

China Film has formulated the Corporate Value and Return

Enhancement Action Plan in 2025. The 2024 Assessment Report

and the 2025 Action Plan are hereby announced as follows.

2 / 21Part I: Assessment Report of Corporate Value and Return

Enhancement Action Plan in 2024

I. Deeply Cultivating the Film Industry and Improving the

Quality of Operation

1. Focusing on Film Creation and Production

In 2024 the Company produced and released 46 films

accounting for 70.19% of the total box office for domestic films. The

Company's productions occupied 9 spots in the annual top 10 box

office rankings and won over 140 domestic and international

awards including the Best Works Award and China Film Golden

Rooster Awards. Among them the epic film The Volunteers: The

Battle of Life and Death which comprehensively depicted the great

course of the War to Resist U.S. Aggression and Aid Korea was a

tribute to the 75th anniversary of the People's Republic of China

winning the National Day holiday box office championship and

topping the audience satisfaction survey. The Journey of a

Legendary Landscape Painting exploring the creative

transformation of China's outstanding traditional culture through

cross-media artistic techniques was hailed by audiences as the

"Most Beautiful Film of the Year". The tribute films celebrating the

25th anniversary of Macao's return to the motherland Until Find

You and Revisit resonated with young audiences reflecting the

enduring and deep kinship bonds where blood is thicker than water.Snow Leopard using Xizang’s cultural elements to convey

philosophical contemplation won multiple awards including "Best

Film" award at the 36th Tokyo International Film Festival. The

3 / 21"China Film Youth Talents Initiative" released 5 films covering

genres such as thriller comedy and romance.

2. Optimizing the Asset Structure and Industrial Layout

The Company completed the reform of the film production

system integrating the production and post-production business

systems to establish a unified layout centered on creation

spanning investment development production and operation.China Film Studio has completed adjustments of organizational

structure personnel composition and business processes. The

Company completed the equity acquisition of China Film Innovation

and Development (Beijing) Co. Ltd. incorporating rural film and

campus film businesses into the industrial chain system creating

conditions for integrating secondary markets and expanding

incremental market space.

3. Taking Various Measures to Promote Lean Management

The Company advanced the digital transformation and

upgrading of financial management with the Company's Treasury

Management System officially launched. The Company deepened

the integration of business and finance strengthened source

control and process monitoring and warning increased operating

cash inflows and reduced bad debt risks. The Company launched

a tax system to enhance the accuracy and standardization of tax

work. The Company formulated the Accounts Receivable

Management Measures strengthening partner credit management

and establishing a negative list based on risk factors such as

4 / 21defaults and solvency.

II. Promoting Scientific and Technological Innovation and

Developing New Quality Productive Forces

1. Promoting the Capacity Building of Sci-tech Innovation

The board of directors formulated and released the Work Plan

for Advancing Film Technology Innovation Capacity Building

(2024-2026). Centering on the core goal of enhancing

technological capabilities the Company systematically integrated

technology-related businesses assets talents and resources

reorganized and established "China Film Technology" as an

innovation entity. Currently this subsidiary has completed

adjustments to its organizational structure personnel composition

and business processes further rationalized its business

framework enhanced synergies and made its core film technology

advantage more prominent.

2. Creating the Source of Original Technology

In 2024 the Company's R&D investment exceeded RMB 60

million a year-on-year increase of 20.73%. The Company

accelerated the implementation of the Ministry of Science and

Technology's National Key R&D Program Systematic Research

Development and Application of Key Technology in the Whole

Cinema Industrial Chain for High-Format Film completing testing

and key system development for high-format cameras

post-production platforms and virtual studios. China Film's CINITY

LED CFL-10 obtained the latest DCI CTP 1.4.1 certification. The

5 / 21pixel pitch has been reduced to the millimeter level achieving

retina-level display effects on cinema screens and filling a gap in

global direct-view projection technology.

3. Accelerating the Commercialization of Sci-Tech

Achievements

The Company expanded the CINITY product line. By the end

of 2024 180 CINITY cinema halls had opened domestically

including 18 CINITY LED cinema halls and over 30 CINITY cinema

halls opened or construction in progress overseas. Following the

China Science and Technology Museum and Shenzhen Science&

Technology Museum the Shanghai Science and Technology

Museum commenced renovation of its CINITY science cinema hall.The CINITY LED Remastering Center has been built and put into

operation in the US.

4. Exploring Applications of Artificial Intelligence in Film

Industry

The Company established the AI Research Institute of CFC

approved as a Beijing Key Laboratory. The Company launched 1

key R&D project and 4 pre-research projects. Among them the

"Film AI Dubbing System" has acquired preliminary dubbing

production capabilities and has been applied to the intelligent

multilingual dubbing of the film Chang An. The pre-research project

"Intelligent Assistant" system has completed foundational R&D.The Company jointly established the Minority Language AI Dubbing

Joint Laboratory with Tian Shan Film Studio to vigorously expand

6 / 21the application of AI dubbing technology achievements.

III. Ensuring Standardized Operation and Enhancing

Governance Effectiveness

1. Strengthening the Construction of the Board of

Directors

The Company's board of directors conscientiously performs its

functions and responsibilities and proactively plays the core role of

"setting strategy making decisions and preventing risks". In 2024

the board of directors actively implemented the new development

philosophy continuously optimized the decision-making research

mechanism strengthened investor communication and brand

building and was selected as a "Best Practice Case for Listed

Company Boards". The Company has been rated "A" for

information disclosure by the Shanghai Stock

Exchange(hereinafter referred to as “SSE”) for 7 consecutive

years maintaining its position as a constituent of the "SSE

Corporate Governance Index" and is the only listed company in the

film and television industry to achieve this consecutively.

2. Improving the Governance Systems

The Company actively responded to independent director

reform initiatives. In accordance with newly promulgated and

revised institutional rules by the China Securities Regulatory

Commission (hereinafter referred to as “CSRC”) and the SSE and

based on the Company's actual situation the Company revised 10

governance policies including the Articles of Association Rules of

7 / 21Procedure for the Board of Directors and Independent Director

Working System and formulated the Working Rules for Special

Meetings of Independent Directors. By clarifying the responsibility

boundaries of independent directors and strengthening

performance requirements and safeguard mechanisms the

Company better leveraged the positive role of independent

directors in decision-making participation oversight checks and

balances and professional consultation.

3. Safeguarding the Legitimate Rights and Interests of All

Shareholders

The Company strictly followed the Articles of Association to

promote the responsible performance of governance bodies and

protect shareholders' legitimate rights and interests.In 2024 the board of directors continuously advanced

corporate governance construction; the Supervisory Board and

independent directors diligently performed their oversight duties

facilitating shareholder participation in governance decisions and

exercise of rights. There were no instances of leveraging

management's advantageous position to infringe upon the interests

of the Company or minority shareholders.IV. Strengthening Incentives and Constraints and Unite

Development Efforts

1. The Controlling Shareholder Holds the Company's

Shares for a Long Time

China Film Group Corporation (hereinafter referred to as

8 / 21"CFG") as the Company's controlling shareholder did not reduce its

shareholding in the Company in any way in 2024.

2. Improving the Restraint and Incentive Mechanism

In 2024 the Company strictly implemented Guideline on

Performance Review for the Heads of State-Owned Enterprises

and relative rules adhering to the unity of responsibility authority

and benefit and combining performance with incentive and

constraint mechanisms. The annual performance evaluation

indicators for the Company's directors supervisors and senior

management included audited operating income total profit return

on net assets asset-liability ratio and other economic indicators.Performance-based annual compensation was linked to annual

performance evaluation results with compensation changes

generally matching operating performance.

3. Fulfilling the Responsibilities of the Capital Market

The Company's directors supervisors and senior

management actively studied the latest regulatory policies

participating in a total of 31 learning activities organized by the local

CSRC bureau SSE and China Association for Public Companies.Through internal intraday reports daily public opinion reports and

monthly securities reports they promptly understood the

Company's market value performance and market dynamics

enabling timely response to public opinion and addressing investor

concerns.

9 / 21V. Improving the Communication Mechanism and

Promoting Positive Interaction

1. Ensuring the Regular Communication Mechanism

The Company actively engaged in investor communication

received investors for over 20 investor research surveys in 2024

organized 5 analyst meetings responded to 450 IR hotline calls

responded to 300 questions on the SSE E-interactive with a 100%

response rate. In 2024 the Company was selected as the "Best

Practice Case in Investor Relations Management for Listed

Companies".

2. Holding Regular Performance Briefing

In 2024 the Company held 3 performance briefings alongside

periodic reports. Led by the Chairman and attended by the Board

Secretary CFO independent directors directors and senior

management these sessions facilitated communications with

investors and media through video Q&A live streaming and text

interaction. The Company was selected the "Best Practice Award

for Annual Report Performance Briefings of Listed Companies" for

three consecutive years.

3. Enriching Communication Methods

Proceeding from investor needs the Company continuously

optimized information disclosure and communication efforts. While

ensuring the truthfulness accuracy and completeness of disclosed

information the Company actively responded to investor concerns

and demands conveying the Company's value accurately. The

10 / 21Company detailed operational information about the Company's

main business and industry in periodic reports and explained in

detail with industry data in temporary announcements which

involving business matters. Following announcements of significant

matters the Company released concise explanatory articles or

video materials via new media and financial media channels to

facilitate investors' quick and intuitive understanding.VI. Focusing on Shareholder Returns and Sharing

Development Dividends

1. Formulating and Disclosing the Medium and Long-Term

Return Plan

The board of directors formulates shareholder return plans on

a three-year cycle. The latest plan is the China Film Shareholder

Return Plan in the Next Three Years (2023-2025) and disclosed on

the SSE website in April 2023. This plan is currently being

implemented.

2. Insisting on Distributing Stable and Reasonable Cash

Dividend

In 2024 actively responding to the "Keeping expectations

stable and Strengthening Confidence" policy the Company

implemented two cash dividends distributing a total cash dividend

of RMB 85.882 million (tax inclusive) accounting for 61.14% of the

net profit attributable to listed company shareholders for the period.Since listing the Company has cumulatively distributed cash

11 / 21dividends of RMB 2.397 billion accounting for 52.71%1 of the

cumulative net profit attributable to listed company shareholders

ensuring the continuity stability and predictability of cash

dividends.

3. Listening to Shareholders’ Demands and Optimizing the

Return Mechanism

In 2024 the board of directors solicited opinions especially

from minority shareholders on the frequency of cash dividends via

telephone interviews and questionnaire feedback covering

shareholders holding 72% of the Company's total shares. For

responding to investor demands and enhancing shareholder

benefits the board of directors proposed the first-ever interim profit

distribution plan for 2024 and the dividend has been distributed

before the 2025 Spring Festival.

1 The dividend payout ratio for 2018 was calculated based on net profit attributable to the listed

company's shareholders after deducting non-recurring investment gains.

12 / 21Part II: Corporate Value and Return Enhancement Action Plan

in 2025

I. Deepening Reform and Innovation to Enhance

Operational Quality

1. Focusing on Film Creation and Production

The Company insists on taking creation as the core and

closely follows the requirements of high-quality development to

push forward film creation and production. At present there are

nearly 90 projects in process of development including nearly 50

original projects. Among them Dead To Rights commemorating

the 80th anniversary of the victory in the Chinese People's War of

Resistance Against Japanese Aggression and the World

Anti-Fascist War is scheduled for release in the summer season.The epic film The Volunteers 3 which shows the War to Resist U.S.Aggression and Aid Korea is planned for release in the second half

of the year. The animated film Fairizest: Rally for Pally full of

gaming elements will be released in the summer season. The

animation film Monkey King Rises highlighting Eastern martial arts

aesthetics is in production. The "China Film Youth Talents

Initiative" will also release works such as INHALE EXHALE Wish

You Well and Take Her Name. The Company will enhance control

over self-managed projects and strengthen film revenue

generation.

2. Rebuilding Distribution Business Advantage

The Company will initiate distribution mechanism reform

13 / 21restructure systems and refine division of labor to further enhance

business focus and leverage professional advantages.First the Company will strengthen promotional investment for

revenue-sharing films and explore the cooperation models of

buyout films to activate the imported film market

multi-dimensionally.Second the Company will increase promotional efforts for

domestic films promote cross-divisional collaboration and strive

for better market performance for self-produced films.Third the Company will build an efficient precise and rapid

integrated technical service platform and strengthen the China Film

network providing solid support and guarantee for full-chain

multi-scenario distribution.

3. Driving the Transformation from Cinema Investment to

Cinema Management

The Company will create the China Film Cinema Management

brand focusing on refined operations to transition cinema

investment towards a cinema management model.The Company will strengthen centralized control build a

professional and efficient management team enhance the

specialization intensification and intelligence level of cinema

management and boost the market competitiveness and

profitability of the Company’s film exhibition sector.II. Driving Scientific and Technological Innovation and

Leading Industry Upgrading

14 / 211. Promoting Integration of Production Research and

Application.The Company will increase R&D investment steadily focusing

on the goals of "core technology localization industrial chain

domestication and technical standards internationalization" and

continuously strengthen R&D of high-format film technology.The Company co-established the BUPT-China Film AI Joint

Laboratory with Beijing University of Posts and

Telecommunications to conduct in-depth research and application

of AI technology in the film and television field building a high

ground for film AI innovation.

2. Accelerating Pace of Technological Product Innovation

The Company will focus on developing acoustically

transparent LED film projection systems covering full aspect ratios

for films and documentaries (1.33:1 1.43:1 1.85:1 2.39:1) with

high perforation rates and ultra-thin screen bodies and promoting

the modular and serialized development of products.The Company will launch multi-specification products such as

20m/23m/26m to further enrich the CINITY cinema product line and

CINITY science application scenarios.

3. Accelerating the Commercialization of Sci-Tech

Achievements

Based on R&D achievements of high-format film standard the

Company will develop the 3.8-meter and 5.4-meter "CINITY

HOME" for diversified scenarios s.

15 / 21The Company will develop and launch the CINITY Camera

natively supporting 4K 120fps 12bit Raw with exclusive features

and then achieve commercialization and deploy in blockbuster films

productions.Building on CINITY AMR (AI Master Reproduction) technology

which enables frame rate up-conversion from 24fps to 48fps/60fps

the Company will carry out core technology development for 60fps

to 120fps up-conversion and further promote the achievement of

high-frame-rate mastering technology in a wider range.III. Improving Corporate Governance and Strengthening

Performance Effectiveness

1. Strengthening Governance System Construction

The Company continuously improves the modern enterprise

system with distinctive Chinese features consolidating the

foundation of governance systems.First actively implementing CSRC’s requirements the

Company completed revisions to 10 governance policies including

the Articles of Association and related rules of procedure in

accordance with the new Company Law and its supporting rules.As of the announcement date of this action plan these policies

have been approved by the shareholders' meeting and disclosed.Second the company revised 16 governance policies including

information disclosure and insider information management that

continuously enhance the relevance and effectiveness of

information disclosure according to the newly revised

Administrative Measures for Information Disclosure of Listed

16 / 21Companies and supporting rules. Third the Company drafted

specialized policies such as public opinion management to further

improve the standardization systematicness and effectiveness of

the Company's governance system framework.

2. Improving SOE Corporate Governance

In 2025 the Company will actively implement the requirements

of the Guideline on Refining the Country's Modern Corporate

System with Distinctive Chinese Features improving the

governance structure and operational mechanisms to lay a solid

foundation for high-quality development.First the Company will implement supporting institutional

reforms following the revision of the Articles of Association further

improving systems and mechanisms and optimizing functional

allocation. Second the Company will actively and prudently

advance the election of a new board of directors to ensure scientific

decision-making effective governance and orderly operations.Third the Company will support the “key few” to participate in the

learning and training organized by the regulatory authorities

provide support to their effective performance and duties in legal

basis so as to enhance their governance capabilities.

3. Strengthening Responsibility of the "Key Few".

When drafting this plan the Company asked CFG about its

shareholding intention and reduction plan. CFG expressed that

based on the confidence in the company’s future development

prospects and high recognition of the company’s long-term value

17 / 21as well as in order to safeguard the rights and interests of investors

and maintain the stability of the capital market CFG will NOT

reduce its shareholding in 2025 in any way and will hold shares for

a long time sharing risks and benefits with the company and small

and medium-sized shareholders.Meanwhile the Company strictly implements the Guideline on

Performance Review for the Heads of State-Owned Enterprises

and relative rules and establishes and improves salary

mechanisms and asset management accountability in a scientific

and reasonable way. The annual performance evaluation indicators

of the directors and senior managers of the company include

audited operating income total profit return on net assets

asset-liability ratio and other economic indicators of the company.The annual salary and performance bonus are linked to the annual

performance evaluation results and the salary changes match the

company’s operating performance. The long-term interests of the

Company's board of directors management and shareholders are

aligned.IV. Strengthening Communication and Convey Company

Value

1. Maintaining Regular Communication

The Company always respects and protects investors as the

starting point and goal of investor relations work. Proceeding from

investor needs the Company continuously improves

communication mechanisms. In 2025 the Company plans to

receive no less than 20 investor research surveys organize or

18 / 21participate in no less than 4 analyst meetings and ensure a 100%

response rate for the IR hotline/email and SSE E-Interactive

inquiries.

2. Regularly Performance Briefings

The Company actively implements the Opinions for Further

Improving the Quality of Listed Companies establishing a good

communication mechanism between the board of directors and

investors.In 2025 the Company plans to hold no less than 3

performance briefings. Led by the chairman or general manager

and attended by the board secretary CFO independent directors

and relevant directors and executives the Company will

communicate with investors through video Q&A text and other

online and offline ways widely soliciting suggestions and opinions

from all sectors of society.

3. Innovating Investor Communication Methods

While standardizing information disclosure obligations the

Company will continuously improve investor communication

channels and formats to actively convey Company value.In 2025 the Company's annual general meeting utilized the

online voting reminder service provided by the SSE facilitating

minority investor participation in corporate governance. In the

second half of 2025 the Company will participate in the "I am a

Shareholder - Visiting Listed Companies activity" hosted by the

SSE. Through site visits and on-site discussions investors can gain

19 / 21a more intuitive understanding of the Company's operations and

development enabling better value judgments.V. Optimizing Return Mechanisms and Sharing

Development Dividends

1. Insisting on Distributing Stable and Reasonable Cash

Dividends

The Company insists on rewarding investors with pragmatic

and effective measures sharing long-term development dividends

with shareholders. In 2025 the board of directors will respond to

policy by fully considering the characteristics of the industry of the

company the stage of development strategic planning profitability

level and major capital arrangements for the next year and draw up

a dividend plan with an annual dividend payout rate of no less than

40% (including interim and annual dividends) as the benchmark.

2. Continuously Optimizing Shareholder Return

Mechanisms

The Company actively implements the spirit of the Several

Opinions on strengthen supervision forestall risks and promote

high-quality development of the capital market enhancing the

stability continuity and predictability of dividends distributions.As of the announcement date of this plan the Company's

board of directors has submitted matters related to the 2025 interim

dividend distribution to the general meeting of shareholders for

approval and has obtained authorization for the board of directors

to execute the distribution. For details please refer to the

20 / 21Announcement of China Film on the 2024 Annual Profit Distribution

Plan and the Authorization of Medium term Profit Distribution for

2025 (2025-007). The Company will promptly disclose subsequent

decision-making progress in accordance with regulations providing

shareholders with clear and predictable guidance.The Company's 2023-2025 Shareholder Return Plan will be

completed by the end of this year. Based on a comprehensive

review of its implementation the board of directors will continuously

optimize the return mechanism and formulate a new three-year

return plan.The board of directors of China Film will continuously promote

Corporate Value and Return Enhancement Action Plan regularly

evaluate the implementation of relevant measures and promptly

fulfill the information disclosure obligations.This action plan is the judgment and working idea formed by

the board of directors based on the actual situation of the company

at present. In the future implementation it may be affected by

factors such as macroeconomic industry policies and market

environment and there is a degree of uncertainty. The business

plans involved in the action plan are not fait accompli but

forward-looking statements that do not constitute a substantial

commitment by the company and the board of directors to investors.Investors are advised to pay attention to relevant risks.